Morning Forex Fundamental: USD

Morning Forex Fundamental: USD

I am not prepared to say we are remotely close to substantial improvement on the employment front' - Dennis P. Lockhart, president of the Federal Reserve Bank of Atlanta

Fed to continue buying Treasury securities

Impact High

The Federal Reserve is likely to announce on Wednesday that it will continue buying Treasury securities in order to stimulate growth in the 2013. Moreover, the Fed may expand its asset-purchase programme, known as Quantitative Easing, to $85 billion worth of securities per month. Before easing up the stimulus programme, the Fed wants to see a big improvement in the labour market, with the jobless rate falling below 6%. However, the Fed's decision highly depends on the Congress, where Republicans and Democrats entered a crucial week in the "fiscal cliff" impasse.

'I am not prepared to say we are remotely close to substantial improvement on the employment front,' Dennis P. Lockhart, president of the Federal Reserve Bank of Atlanta, said in a recent speech. 'I expect that continued aggressive use of balance sheet monetary tools will be appropriate and justified by economic conditions for some time, even if fiscal cliff issues are properly addressed.'

'The Fed would not have emphasized the number ‘$85 billion' in securities purchases in its statement if it wasn't prepared to continue at that pace well beyond the end of the year,' said Roberto Perli, a senior managing director at investment research firm ISI