Fed Chairman postpones decision on QE3

Home » Foreign Currency News » As the UK enjoyed it's last day off until Christmas yesterday, the data released failed to inspire much interest amongst the markets.

As the UK enjoyed it's last day off until Christmas yesterday, the data released failed to inspire much interest amongst the markets. A monthly fall of -8.0% for Australian new home sales didn't effect the Australian Dollar at all and a weaker-than-expected personal spending figure in the US had a similarly limited effect on the US Dollar.

The focus at the end of last week was firmly on US Federal Reserve Chairman Ben Bernanke who was expected to announce a third round of quantitative easing. Investors had been more than half expecting him to announce "QE3" however all Mr Bernanke committed to however, was an extra day's discussion of the subject by the Federal Open Market Committee at its meeting in three weeks' time.

It was not a "no" but it was a "definite maybe". The US Dollar initially strengthened on the lack of news but soon went into reverse. By the time of the US markets closed it was a cent and a half off the day's high against Sterling and the Euro. 

US Dollar supporters weren't helped either by the first revision to second-quarter US gross domestic product (GDP) which was a negative one, revised down from 1.1% to 1.0%. It was not a big change but it was unhelpful. US Dollar sellers found further encouragement in the University of Michigan consumer sentiment index, which fell by 8 points to 55.7.

In the UK on Friday, GDP growth data was as expected. The first revision to the Q2 numbers left the original estimate unchanged at a quarterly 0.2% (an annualised 0.8%) and had a minimal reaction to the figures.

Figures released earlier this morning showed a 13% monthly rise in New Zealand building permits. The equivalent Australian measure was down by 1% on the month and by -15% on the year. It was too stark a contrast for investors to ignore and it cost the Aussie nearly a cent against the Kiwi. 

In the UK private-sector lending and mortgage lending plus three measures of Eurozone confidence are out this morning. In the US, the Case-Shiller index of metropolitan house prices and the Conference Board's consumer confidence index are released along with the minutes of August's FOMC meeting.