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Forex Flash: Qe3 not wound back yet amidst warnings of deflation – UBS

FXstreet.com (Barcelona) - Bullard is considered one of the less dovish FOMC voting members, so his warning that more asset purchases may be needed to prevent deflation should be taken seriously. Sequential core inflation is falling again, as seems to be the case ever year as the US experiences a 'summer price lull'.

The response was announcing more stimuli in Q3 of every year from 2010 to 2012. “If core PCE continues to decline more than expected, the Fed may unequivocally rule out any winding back of stimulus this year.” notes Research Analyst Gareth Berry at UBS. Irrespective of where growth is, this presents a clear threat to our positive dollar call and the USD/JPY in particular will be harmed, as the prospect of minimal yield pick-up in the US will undermine interest from Lifers.

“As such the FOMC's price commentary in upcoming meetings should have equal, if not more emphasis than discussion over their labor thresholds.” Berry warns.

American equity markets a mixed bag Friday

The US stock market finally rallied slightly Friday, offering up a mixed opening for investors in the absence of economic data out of the United States. Beginning with the indices and composites, the NASDAQ climbed +0.20% as it settles in region of 3172.30, up +6.30 points in these moments. In addition, the S&P 500 is trading in positive territory, operating at 1544.13, ascending +2.40 points or +0.19% at the time of writing. Finally, the Dow Jones has edged lower at the opening, trading in the zone of 14492.14, presently -0.31% after a movement of -45.00 points.
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German FinMin suggests ECB should reduce liquidity in EMU

In an interview for the German weekly business news magazine Wirtschafts Woche German finance minister Wolfgang Schäuble urged the European Central Bank to reduce liquidity.
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