Wednesday, June 18, 2014

Major currencies

The major currencies are in a holding pattern on Wednesday, ahead of today’s US Federal Reserve’s policy statement. USD/JPY is no exception, trading at the low-102 range. In economic news, the Bank of  Japan released its monetary policy meeting minutes. Japanese Current Account remained steady in May, easily beating the estimate. In the US, the Fed is in the spotlight, with a policy statement and a follow-up press conference. There are no Japanese releases on Wednesday.
All eyes are on the Federal Reserve on Wednesday, as the US central bank will release a policy statement later in the day. The Fed is expected to trim its QE program by another $10 billion, which would reduce the asset purchase scheme to $35 billion/month. The big question is when the Fed will raise interest rates, but Fed chair Janet Yellen is unlikely to shed much light on that issue. If, as expected, QE is wound up in 2014, we could see a rate hike in the first half of 2015. However, cuts to QE are dependent on the health of the US economy, which continues to move in the right direction, despite some bumps in the road.