Dollar Firms After Bullard Comments and Other Top Forex News.
The U.S. dollar was broadly higher against most major currencies on Friday after St. Louis Federal Reserve Chairman James Bullard, told reporter that the taper decision was a close run thing and there is a possibility the Fed could taper in October.
Bullard’s comments come after the Fed shocked markets on Wednesday by holding back from from reducing the pace of its $85 billion monthly asset purchase program, which weakens the dollar.
During the U.S. session, the dollar held steady against the euro, with EUR/USD easing 0.01% to 1.3528.
Investors have an eye on the result of Germany’s general election on Sunday, with Chancellor Angela Merkel looking to secure a third term.
In the U.K., sterling weakened despite official data showing that public sector borrowing fell more-than-expected in August, rising by £11.5 billion after a downwardly revised 1.1% decline the previous month. Analysts had expected public sector net borrowing to rise by £12 billion last month.
The dollar edged higher against the pound, with GBP/USD sliding 0.09% to 1.6018.
Meanwhile, the dollar was fractionally higher against the yen, after Bank of Japan Governor Haruhiko Kuroda reiterated his call for the Japanese government to bring its finances under control, saying that sustainable finances are “indispensable” to achieve sustainable growth.
USD/JPY strengthened 0.10% closing at 99.36.
Elsewhere the dollar clawed back recent gains against the commodity currencies, strengthening against the Canadian, Australian and New Zealand dollars, with USD/CAD rising 0.26% to 1.0292, AUD/USD falling 0.39% to 0.9403 and NZD/USD dipping 0.01% to 0.8376.
The Canadian dollar weakened further after official data showed that core consumer price inflation, which excludes the eight most volatile items, rose 0.2% in August, more than the expected 0.1% increase, after a flat reading the previous month.
Consumer price inflation in Canada remained flat last month, confounding expectations for a 0.1% rise, after a 0.1% increase in July.
Heading into next week, market sentiment will be dominated by U.S. debt ceiling talks. Both Republicans and Democrats will have to decide how to continue funding the government and whether to increase the their borrowing authority by raising the debt ceiling.
If President Barack Obama’s administration can not come to an agreement with Republicans to raise the nation’s borrowing cap before October, the U.S. Treasury may not be able to avoid exceeding the USD16.7 trillion debt limit, which could send the country into default.
More coverage of today’s top story.
- WSJ: Wall Street dips as market digests Fed Bullard’s comments. – U.S. stocks edged slightly lower on Friday following comments by a senior Federal Reserve official that sparked concerns that the central bank’s stimulus efforts could be scaled back from October.
- FT: Fed decision not to taper was ‘borderline’ says Bullard. – The U.S. Federal Reserve’s decision not to taper its bond buying programme this week was “borderline” and if economic data improved, it could begin reducing asset purchases as early as next month, a senior Fed official said.
More Top Stories:
FT: Fed still has cred but taper bulls do not. – Nobody likes being embarrassed. This week, the Federal Reserve caught most of the world market community on the wrong foot, by saying that it was not, after all, going to start reducing its $85bn monthly “QE” purchases of bonds, with which it is attempting to spark the US economy.
Trading Floor: Post-FOMC follow through so far lacking. – While the Federal Open Market Committee (FOMC) non-taper was a shocker, we haven’t seen much of a follow through across markets, with commodity currency weakness particularly noteworthy. The odds for a post-FOMC reversal are growing in places.
Bloomberg: Canada dollar falls for second day Amid renewal of taper bets. – Canada’s dollar fell for a second day as Federal Reserve Bank of St. Louis President James Bullard said the decision not to slow bond buying was a close call and “small” tapering is possible next month.
The Australian: Forecasts for Australian dollar revised after Fed holds. – Australian dollar was lower late today, pulling back only slightly from the three-month highs it reached yesterday after the US central bank’s surprise decision to leave its monthly bond buying program unchanged at $US85 billion.
WSJ: New Zealand dollar falls from 4-month high after solid U.S. data. – The New Zealand dollar Friday came off a four-month high of US$0.8437 as the U.S. dollar rebounded on upbeat data.
Investing.com: USD/JPY slightly lower despite strong U.S. data. – The U.S. dollar traded modestly lower against the Japanese yen during Friday’s Asian session despite several encouraging U.S. economic data points that were released Thursday.
Investing.com: Gold futures decline on profit-taking. – Gold futures tumbled during European early afternoon trading hours on Friday, as investors locked in profits after the rally in the precious metal’s price due to the Federal Reserve announcement that it will not begin tapering its bond purchases this year.