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17 Jun 2013
Flash: North America outlook - The Bank of Tokyo-Mitsubishi UFJ, Ltd
FXstreet.com (London) - Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ, Ltd said that the FOMC statement and press conference on Wednesday will be key.
He continues to say that although long dollar positioning has been reduced, these positions remain large and vulnerable to any forceful pull-back on recent tapering rhetoric from Chairman Bernanke. However, he says although Bernanke may try and calm markets, a forceful pull-back from tapering is unlikely. He suggests we may see the timing being pushed back say from September/October to December, or possibly January and that may help stabilise markets.
Indeed, he explains, the FOMC will likely be reassured that despite “market concerns” over tapering, the S&P 500 remains just 2.5% off its record high despite 10-year yields having its most sustained period above 2% since Q1 2012. There are many FOMC members which he says who are eager to reduce the pace of purchases and that will also have to be reflected in comments in some way.
He continues to say that although long dollar positioning has been reduced, these positions remain large and vulnerable to any forceful pull-back on recent tapering rhetoric from Chairman Bernanke. However, he says although Bernanke may try and calm markets, a forceful pull-back from tapering is unlikely. He suggests we may see the timing being pushed back say from September/October to December, or possibly January and that may help stabilise markets.
Indeed, he explains, the FOMC will likely be reassured that despite “market concerns” over tapering, the S&P 500 remains just 2.5% off its record high despite 10-year yields having its most sustained period above 2% since Q1 2012. There are many FOMC members which he says who are eager to reduce the pace of purchases and that will also have to be reflected in comments in some way.