Guesswork continues
Market participantscontinue to analyze the probability that Fed’s Chairman Bernanke announces tomorrow the beginning of stimulus reduction program of the national economy, which has lasted more than one year and is the third in a series of such measures that the Fed applied since the beginning of the global economic crisis.
Goodstatistical data is in favor of this possibility. Data shows a steady recovery of the U.S. economy - reducing the unemployment rate to 7% and a number of other indicators which at the time Bernanke referred to as a condition to continue stimulating the economy because of its weakness, have become noticeably better and shows a positive trend.
In addition, the agreements reached between the main parliamentary parties in Congress for the adoption of the Federal budget, have ceased to hold down Bernanke’s hands and can really contribute to the decision on stimulus reduction.
WhatBernanke reports we’ll find out tomorrow. Following the two scenarios we can assume that if it is decided to start reducing the volume of repurchasing of government bonds, it will be a good local support for the U.S. dollar and all along the front of the currency market.
At the sametime, if such a decision will not be accepted and the reasoning will be that the economy has not yet matured enough and incentives are still needed, theninvestors’ inclination to increase purchasing risky assets will grow significantly and the dollar will be under tremendous pressure.
Semyon Kamensky