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Fed's QE3 end would boost confidence in global recovery - Jameel Ahmad

FXStreet (Łódź) - In the opinion of Jameel Ahmad, Fed's decision to finalize QE3 at the monetary policy meeting on Wednesday would strengthen confidence in the global economic recovery and indicate that the central bank is moving towards normalizing policy.

Key quotes

"But that doesn’t mean they will be raising interest rates anytime soon. If Janet Yellen reminds us just how tentative the US economic recovery has been, and says that the labour market and other aspects of the economy continues to underperform then this should drive home the fact that the Federal Reserve will not be turning hawkish."

"If the Fed really wants to devalue the USD, they could throw a curveball by suggesting a fourth round of QE remains an option. This would spell out to investors that the Fed are still not satisfied with the US economy and dismiss any remaining expectations for a rise in interest rates."

"Saying that, and although James Bullard caused a stir by suggesting QE should be continued if inflation targets become unattainable, last week’s better than expected CPI release seemed to dismiss fears the Fed would continue with QE."

"Should the USD weaken in response to the Fed’s action, potential appreciation in Gold is likely. However, pairs such as the USD/JPY, USD/CAD and USD/CHF look over extended right now and if there is USD weakness, opportunities for a pullback in these pairs are high."

"Although the USD/JPY has already commenced the week by pulling back over 50 pips, the stochastic oscillator still appears heavily overbought and further downside moves will find support at 107.420, 106.870 and 106."

USD/CAD trading heavily again on Tuesday - TD Securities

The TD Securities team of analysts observe that the greenback is dropping against the CAD on Tuesday, pushing a little below last week’s low.
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