The FOMC Meeting Minutes of December 12th will be released today.
At their last conference of 2012, the Federal Reserve did announce additional quantitative easing. They will “continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month.”
That was a mouth full, but in short, this means they have added $45 Billion per month to their QE program.
Today’s Minutes release may not hold any new projected actions, but it could give valuable insight into the December 12th meeting such as, “why exactly was the decision made for more QE?”
One definite factor of additional QE is Operation Twist’s conclusion. More specific insight in Thursday’s Minutes statement concerning why the Fed is extending their holdings of Treasury Securities could shine light on future Fed actions.
The Unfinished U.S. Fiscal Deal
A deal was reached to avert the “fiscal cliff” but the White House still has unfinished business when it comes to the debt ceiling and spending cuts. The republicans have emphasized the need of spending cuts while the majority of democrats ignore the issue. The republicans will likely oppose passing any legislation concerning a debt ceiling without implementing spending cuts.
The market opened this week with a weak U.S. Dollar but the Dollar has gained strength likely as a result of the deal reached on the fiscal cliff.
As this month progresses and the White House comes back into the spotlight, the U.S. Dollar will likely remain very volatile.
Currently the EUR/USD is heading through the 1.31 level. This could be a significant break for a bearish Euro. Depending on today’s daily close, it could alternatively turn into a bounce and continuation. The non-farms Friday will likely keep it from just ranging in the 1.31 area.
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