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9 Oct 2013
European open: Yellen effect muffled by continuing debt ceiling worries
FXstreet.com (London) - News filtering through that Janet Yellen will today be confirmed as Barack Obama’s successor to Ben Bernanke as Fed Chairman helped support risk in markets overnight. However effects were dulled by the continuing deadlock in congress over debt ceiling negotiations.
Barack Obama is expected to announce his nomination of Janet Yellen as Fed chairman at the White House at 3pm EDT (7pm GMT). The confirmation of Yellen comes a month after previous favourite Larry Summers withdrew himself from the race in face of strong opposition from Democrats.
The news is seen as risk supportive, with the ultra dovish Yellen unlikely to aggressively taper the Fed’s USD85bn-a-month asset purchase programme.
The minutes from the last Fed meeting released this today are expected to show that the Fed decision to delay tapering was close run. However, the debt ceiling crisis has helped to kick expectations of a 2013 tapering well into 2014, meaning the minutes will not have the effect they might have had without the government shutdown.
AUD and NZD gained on the risk-positive news, while JPY weakened, continuing yesterday’s USD/JPY gains to 0.55 percent at JPY97.4350. USD/CHF gained 0.37 percent to CHF0.9072.
The Nikkei gained 1.03 percent over the Asian session, undoing some of the debt ceiling-induced losses of yesterday.
Despite the positive news for continuing Fed-aided liquidity, and rallies were slowed by the continuing failure of Congress to form a compromise agreement to extend the debt ceiling and avoid default when the US government hits its hard limit on 17 October, after which it will be unable to service its debts.
Republican House Leader John Boehner continues to push for spending cuts to be tied to any bill to extend the debt limit, with Democrats and President Obama seemingly immoveable on any compromise.
Barack Obama is expected to announce his nomination of Janet Yellen as Fed chairman at the White House at 3pm EDT (7pm GMT). The confirmation of Yellen comes a month after previous favourite Larry Summers withdrew himself from the race in face of strong opposition from Democrats.
The news is seen as risk supportive, with the ultra dovish Yellen unlikely to aggressively taper the Fed’s USD85bn-a-month asset purchase programme.
The minutes from the last Fed meeting released this today are expected to show that the Fed decision to delay tapering was close run. However, the debt ceiling crisis has helped to kick expectations of a 2013 tapering well into 2014, meaning the minutes will not have the effect they might have had without the government shutdown.
AUD and NZD gained on the risk-positive news, while JPY weakened, continuing yesterday’s USD/JPY gains to 0.55 percent at JPY97.4350. USD/CHF gained 0.37 percent to CHF0.9072.
The Nikkei gained 1.03 percent over the Asian session, undoing some of the debt ceiling-induced losses of yesterday.
Despite the positive news for continuing Fed-aided liquidity, and rallies were slowed by the continuing failure of Congress to form a compromise agreement to extend the debt ceiling and avoid default when the US government hits its hard limit on 17 October, after which it will be unable to service its debts.
Republican House Leader John Boehner continues to push for spending cuts to be tied to any bill to extend the debt limit, with Democrats and President Obama seemingly immoveable on any compromise.