The federal reserve are adamant , that despite recent economic indicators pointing towards a strengthening US economy, the stimulus package designed to keep the recovery underway is still necessary moving forward into 2011. Policy makers have indicated that recent signs of economic strength will not deter them from pumping more money into the financial system providing unemployment remains at an elevated state.
The FOMC has said that growth is “insufficient to bring down unemployment†and inflation has “continued to trend lower.†They went on to confirm that $600 billion worth of bonds will be bought and the policy for an “extended period†of low interest rates will be necessary to keep the recovery underway.
The USD has gained substantial ground against most of the majors in the past few days. From a technical perspective the market has now reversed and we could see an ongoing decline towards key support at 1.5493.
The British Pound has suffered in the past few days being sold off now for three consecutive days. The Jobless claims figures released in the UK this morning were disappointing fuelled the sell off throughout the day. The number of people out of work in the UK rose to 35k taking the overall figure to 2.5 million. This does not bode well for the UK as unemployment is expected to trend higher into 2011.
The market is also fearful ahead of UK retail sales data tomorrow. Adverse weather conditions throughout the UK will undoubtedly have affected the efforts of Christmas shoppers to spend their cash and bolster the economy.
Today’s data could pave the way for a slew of disappointing releases as markets brace themselves for the austerity measures put in place to reign in the UK debt burden.
Best Regards
Luke Zorab
Torfx Currency Dealer
“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.â€
