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Forex Flash: US asset purchased viewed as effective but risky – Deutsche Bank

Looking at the FOMC minutes in more detail, “most participants viewed the asset purchases to date as effective in stimulating the economy, but many participants expressed concerns about potential costs and risks of further asset purchases.” warns Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank. A number of officials said that their evaluation of costs and benefits of the policy "might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labour market had occurred".

Offsetting the hawkish tone, the minutes noted that "several others argued that the potential costs of reducing or ending asset purchases too soon were also significant, or that asset purchases should continue until a substantial improvement in the labour market outlook had occurred". On growth, FOMC members were more upbeat, noting that downside risks had reduced. However, nearly all participants expected inflation for the medium term to remain below the Committee's 2% target.

Portugal: Current Account Balance (Dec): €-2.557B vs €-2.744B (Nov)

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Forex Flash: UK PSNB reveals budget troubles, CBI orders give no signs of turn-around – TD Securities

The January Public Sector Net Borrowing data still shows the overall picture of a government that is falling behind in its fiscal plans. “The government reported a surplus of £11.4bn, which is better than both last year’s Jan reading of £6.4bn and the consensus forecast of £8.7bn, although it was boosted by £3.8bn from the BoE’s transfer of APF profits”, wrote analyst Marcin Budkiewicz. “But with yesterday’s 4G auction raising about £1bn less than expected and a lack of economic growth leading to persistent downside surprises for government finances, the government is going to have a challenge in putting together the annual Budget for 20 March”, Budkiewicz added. CBI orders improved from -20 to -14, but details came in mixed: export orders rose from -29 to -20, but expectations slipping from +8 to +5. “So no signs yet of a substantial turn-around in UK manufacturing based on the CBI survey”, concluded the TD Securities analyst.
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