Week in FX Americas – Fed’s Mixed Signals Weaken Dollar

The last two weeks have seen a back and forth QE statements from Fed members that have confused market participants regarding the timeline of the US quantitative easing program. Hawks and doves at the Fed have said publicly different deadlines on when the bond buying program should stop, and in some cases if it should be stopped at all.

Comments from various Federal Reserve’s members before Chairman Ben Bernanke addressed congress pointed to a possible wind up of the US quantitative easing program as early as June. The different statements lead to a rise of the USD versus the dollar. Bernanke on the other hand warned lawmakers about the dangers a premature stop could have on the moderate recovery of the US economy. The market took the news as a sign to sell the USD which broke through the 1.29 EUR/USD level.

The US continues to occupy the 2nd speed of moderate economic recovery as per the IMF’s Christine Lagarde. While not recovering as fast as the emerging markets the US has more positives than negatives on the economic front. Specially considering the third rung on the speed scale where Europe and Japan keep failing at gathering traction.

Next week US Consumer Confidence and Gross Domestic Product will be released which if they beat market estimates could end up heating up the end of QE arguments again.



* JPY BOJ Governor Kuroda Speech in Tokyo
* JPY Bank of Japan meeting minutes
* USD Consumer Confidence
* JPY Bank of Japan conference
* EUR German Unemployment Change
* EUR German Consumer Price Index
* CAD Bank of Canada Rate Decision
* USD Gross Domestic Product
* USD Gross Domestic Product Price Index
* JPY National Consumer Price Index
* CNY Manufacturing PMI
* EUR Euro-Zone Consumer Price Index
* CAD Gross Domestic Product

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza