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Forex Flash: QE3 won’t prop up the US labor market – Commerzbank

By FXstreet.com,  July 17, 2012, 07:31:00 AM EDT

FXstreet.com (Barcelona) - Focus seems to be shifting back to the US after two straight weeks thinking about the EU/EMU summit. Yesterday's retail sales disappointed and increased the likeliness of further policy easing. Markets will be looking for hints in today's Congress testimony by Fed's Bernanke. "As long as the FOMC pursues a strictly cyclical definition of the legal goal of "maximum employment", the pressure to take action will rise if the unemployment rate exceeds 8%", wrote Commerzbank analyst Ulrich Leuchtmann. "And since the rate of inflation probably amounted to roughly 1.6% year-on-year in June, price trends do not seem to stand in the way of further expansionary measures", he added, pointing however to the market skepticism of the QE3 effects in propping up the US labor market that mostly faces structural problems. So, risk-on trades on rising chances of QE3 are not that likely.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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