Forex Flash: US monetary policy shakeup in aftermath of election – UBS

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FXstreet.com (Barcelona) - US stocks had yet another bad day yesterday, taking cumulative losses since the US Presidential election to over 5%. President Obama made clear his desire to allow Bush-era tax cuts to expire in January, and said that the US could succumb to the fiscal cliff due to what he called Republican political 'stubbornness'.

Earlier, the FOMC minutes revealed that a number of participants at the October meeting thought more asset purchases would likely be needed after Operation Twist ends. According to Research Analyst Gareth Berry at UBS, "This is the clearest indication yet that the pace of asset purchases under QE3 may accelerate as we cross into the New Year. Indeed our US economists stick to their view that the Fed will expand QE3 on December 12 so that it comprises of not only the current USD $40B worth of monthly MBS purchases, but also an additional USD $45B in monthly UST purchases."

Today, Eurozone GDP and US jobless claims will likely be the key drivers. Fed Chairman Bernanke speaks too on the US housing market, but his appearance at the Economic Club in New York on November 20 will likely be more instrumental in guiding policy expectations.



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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