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21 Oct 2013
European open: FX subdued while equities continue to climb
FXstreet.com (London) - The Asian session overnight saw a continuation of the Fed liquidity-driven trend as the prospect of tapering delayed until 2014 put the dollar under some pressure on quiet trading and helped to boost equities.
The Nikkei gained 0.76 percent and the S&P Asia 50 0.9 percent. EUR/USD pared most of its mis-session losses to finish 0.05 percent down at USD1.3680. GBP/USD gained 0.04 percent to USD1.6173.
Expectations of the Federal Reserve tapering its USD86bn monthly asset purchases have been pushed into 2014 thanks to the stop-gap nature of last week’s agreement by Congress to extend the debt ceiling until 7 February 2014, as well as the fragile nature of US growth. Before political spats pushed the government into its first shutdown in 17 years there had been rumours of a possible October taper. But it is now likely that any tapering will be delayed at least the Fed’s March 2013 meeting, providing some risk support in the interim.
With a lack of top-tier data, focus will be on tomorrow’s Non-Farm Payroll numbers, delayed from the first Friday of the month thanks to the government shutdown. Consensus expectations are for a +180k for September, with the unemployment rate unchanged at 7.3 percent. Any shortfall will be dollar negative, confirming convictions about a Fed taper delay.
In Europe, we have German and Italian PPI numbers. Later in the week the ECB will publish further details of its Asset Quality Review and at the end of the week we have the EU Leaders’ Summit.
The Nikkei gained 0.76 percent and the S&P Asia 50 0.9 percent. EUR/USD pared most of its mis-session losses to finish 0.05 percent down at USD1.3680. GBP/USD gained 0.04 percent to USD1.6173.
Expectations of the Federal Reserve tapering its USD86bn monthly asset purchases have been pushed into 2014 thanks to the stop-gap nature of last week’s agreement by Congress to extend the debt ceiling until 7 February 2014, as well as the fragile nature of US growth. Before political spats pushed the government into its first shutdown in 17 years there had been rumours of a possible October taper. But it is now likely that any tapering will be delayed at least the Fed’s March 2013 meeting, providing some risk support in the interim.
With a lack of top-tier data, focus will be on tomorrow’s Non-Farm Payroll numbers, delayed from the first Friday of the month thanks to the government shutdown. Consensus expectations are for a +180k for September, with the unemployment rate unchanged at 7.3 percent. Any shortfall will be dollar negative, confirming convictions about a Fed taper delay.
In Europe, we have German and Italian PPI numbers. Later in the week the ECB will publish further details of its Asset Quality Review and at the end of the week we have the EU Leaders’ Summit.