Morning outlook: FOMC minutes showed Notaper was close run but shutdown renders it moot

FXstreet.com (London) - FOMC minutes released yesterday showed that it was a close run decision to hold off on QE tapering. The Fed doves defeated the (relative) hawks, arguing that economic recovery remained too fragile to risk a reduction in Fed asset purchases. Newly nominated successor to Chairman Ben Bernanke confirmed assumptions that the new boss will be the same as the old boss, sitting firmly in the dove camp and supporting a continuation of ultra-loose monetary policy.

While the minutes may have been more significant in normal circumstances, opening up the possibility of an “Octaper”, the government shutdown and debt ceiling crisis have kicked any possibility for a taper firmly into 2014.

USD/JPY continued to gain, but is showing signs of running out of steam. It currently stands at JPY97.6750.

Today we have industrial production reports from France and Italy. There is a +0.6 percent month-on-month consensus expectation for Italy, which should have little room for surprises, while France may beat its 0.6 percent expectation.

Today’s Bank of England decision should be a non-event, with Threadneedle street holding rates at their record-low levels.

Furloughed government agencies mean any US macro data remains thin on the ground. However, focus today will be on the jobless claims numbers, which are compiled by state rather than federal employees. It is expected that we will see a rise to 312K, from 308K last week