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18 Apr 2013
Forex: USD Fails to Benefit from Fed's Beige Book - DailyFX
FXstreet.com (Córdoba) - The Fed's Beige Book failed to prop up the US dollar on Wednesday "as the survey continued to point to subdued inflation, and the FOMC may retain its highly accommodative policy stance throughout 2013 as wage pressures remain contained", David Song, analyst at DailyFX commented.
Although the report highlighted 'moderate' growth in the US, "it seems as though the Fed will retain its asset purchase program at $85/month in an effort to encourage a stronger recovery, but the resilience in private sector consumption along with the budding recovery in the housing market may prompt a growing number of central bank officials to scale back their willingness to expand the balance sheet further as the region gets on a more sustainable path", Song said.
"In turn, the shift in the policy outlook should prop up the U.S. dollar over the near to medium-term, and we may see the FOMC start to discuss a tentative exit strategy in the second-half of the year as growth prospects improve", the analyst concluded.
Although the report highlighted 'moderate' growth in the US, "it seems as though the Fed will retain its asset purchase program at $85/month in an effort to encourage a stronger recovery, but the resilience in private sector consumption along with the budding recovery in the housing market may prompt a growing number of central bank officials to scale back their willingness to expand the balance sheet further as the region gets on a more sustainable path", Song said.
"In turn, the shift in the policy outlook should prop up the U.S. dollar over the near to medium-term, and we may see the FOMC start to discuss a tentative exit strategy in the second-half of the year as growth prospects improve", the analyst concluded.