Bell FX Currency Outlook: The US Federal Reserve pulls the trigger on fresh stimulus measures, boosting risk assets.
Australia: The Australian dollar has surged to its highest level in a month as the Fed announced an open-ended scheme to purchase $40 billion worth of mortgage-backed securities a month. As the general US dollar weakness against the majors took hold, the local unit surged to1.0560; up more than one US cent from yesterday's trade.
REUTERS/Tim Wimborne (AUSTRALI
Solid bids for the Aussie were noted as the central bank decided to maintain interest rates
With this week's highly anticipated events now over, a return to fundamental trading is more than likely. With weakening commodity prices the risk is still to the downside for the AUD with importers suggested to consider cover at these levels. A relatively quiet day on the domestic data front though the AUD will remain supported from overnight events.
Majors: The EUR continued its rally against a weakening US dollar to 1.3000 - a level not seen since May. European equities ended the session mostly lower as markets closed before the US Fed announcement.
The German DAX fell 0.5% to 7,310, whilst the FTSE rose 0.7% to 5,820. US equities rose sharply on the back of the Fed announcement. The DJIA rose 1.5% to 13,540 with the S&P 500 touching its highest level since 2007 at 1,460.
The FOMC announced it will purchase US $40 billion mortgage backed securities per month for an open ended period. This
combined with the continuation of "Operation Twist" will increase the FOMC's holdings of long term securities by $85 billion per month till December 2012.
Until a substantial improvement in the US labour market is seen, the Fed is committed to its purchase plan and may undertake
additional purchases till an improvement is achieved.
The FED also extended the period rates shall be left unchanged to "at least through
2015". Spot gold prices strengthened on the QE3 news rising 1.9% to USD 1,765 per ounce. Oil prices also rose with Brent ending up 0.3% to USD 115.6 per barrel, while WTI futures rose 1.0% to USD 98.0 per barrel. Tonight will see the release of US inflation, Retail Sales and Consumer Sentiment data.
14 SEPT EU Euro-zone CPI
EU Euro-zone Employment
US Consumer Price Index
US Industrial Production
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