Intraday Market Thoughts

Lockhart Dims Hopes for October Taper

by Adam Button
Sep 23, 2013 23:24

Almost as quickly as the Fed's Bullard put an October taper on the table, Lockhart took it off. Risk trades were soft to start the week with the yen leading and euro lagging. The Asia-Pacific schedule is mute.

Lockhart is seen as a centrist at the Fed so his comments are a good barometer for what's next. The problem, he said, is that the October FOMC meeting is close and it's unlikely there will be enough evidence to dramatically change the picture.

On Friday, Bullard talked about a 'live' meeting in October and fuelled speculation of a taper when most people had shifted expectations to the December meeting.

The euro wrestled with dovish talk from the Fed and the ECB. Draghi reaffirmed an accommodative stance and said rates will be low or lower for an extended period. The Fed's Dudley, meanwhile, said it would take a considerable time to reach 6.5% unemployment.

Economic data was secondary but the September Markit PMI was soft at 52.8 compared to 54.0 expected.

Technically, many eyes were on EUR/CHF as it closed below the 200-day moving average for the first time since Nov 2012. It also broke psychological support at 1.2300.

One rumored event this week likely won't happen. Reuters reports that Yellen is the leading candidate for the Fed job but that no announcement will be made this week.

In the hours ahead, the market could struggle to find a theme. Japan returns from a holiday but there is no meaningful economic data on the calendar.

Act Exp Prev GMT
Flash PMI Manufacturing
51.1 51.8 51.4 Sep 23 8:00

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