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What’s on Ben Bernanke’s mind?

Price Markets morning brief – 29 october 2013 European equities are set to open flat as traders hunker down ahead of this weeks FOMC meeting. Markets wobbled a little yesterday as bulls eased off the accelerator and are expected to keep trading within a tight range until the Fed gets the formalities of what is expected to be a non event meeting out the way.

With Ben Bernanke now in the autumn of his tenure at the Fed and no press release scheduled for this meeting the overwhelming consensus is that nothing will happen on the taper front, but the wrong footing at the September meeting has traders a little cautious and reminded them that the ‘consensus’ can be 100% wrong.

Until Thursday, expect markets to tread water. The US economic figures released yesterday continued to add to worries that a slowdown might be on the cards. Specifically this time, pending home sales numbers plunged faster than predicted in September, the fourth dive in a row. That provided good support for the equities which were on a retracement path after a sharp rally in early trading overnight. Overall, the Dow Jones gained 18 ticks to 15,574.

Ahead of the Federal Reserve meeting due to start later today, investors took the view that it was safer to take some profits off the table in the currency market. As a result the euro moved back below 1.38 level versus the dollar, losing 24 pips to close at 1.3785. On this side of the Atlantic officials expect a gradual economic improvement going into the New Year which coupled with estimates the Fed will stay rather on standby should continue to act as support for EUR/USD pair. For once the mood in the energy complex was driven by growing expectations that Fed will maintain its monetary stimulus as the pace of economic recovery is still too weak.

If lately a weaker greenback failed to have the traditional supportive effect on oil prices (they actually went down) this time the WTI crude prices climbed 66 cents to $98.50. It is true that a report of a drop in the Libyan output was also a bullish feature. Gold prices oscillated around their 6 weeks high at $1353.5 on views that postponing the tapering is more likely than not. In addition, a weaker US dollar observed since early September could not be ‘ignored ‘too long as the two have usually an inverse correlation.

Tuesday, 29 Oct, 2013 / 9:41

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