FOMC Sees QE Effects Waning, Dollar Spikes Higher

by on January 8, 2014 7:30 pm BST

The Federal Open Market Committee (FOMC) released their minutes report which indicated that officials saw diminishing returns from the bond purchasing program. “A majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue,” the minutes report showed. The FOMC officials are concerned about the costs of ongoing purchases when assessing potential risks to financial stability. The minutes cited “excessive risk-taking in the financial sector.”

There has been no set schedule for ongoing tapers or when the program with come to an end. There was an unsuccessful vote to lower the unemployment threshold from 6.5 percent to six percent. The Federal Reserve stated this would be a qualitative measure that will be assessed when the time comes. “Many commented that progress to date had been meaningful, and some expressed the view that the criterion of substantial improvement in the outlook for the labor market was likely to be met in the coming year if the economy evolved as expected,” the minutes stated.

The dollar spiked higher to 81.31, .41 percent higher on the day. The euro was effected and hits 1.3550, and USDCAD holding well above 1.0800 with the target of 1.0855 in sight. The pound is still higher on the greenback. Commodities did not fare well as crude extended its gains from down .77 percent after the EIA inventory data to declining 1.36 percent, falling through $92.50 per barrel. The six-month low of $91.775 is looking like a possibility.

Precious metals fell lower. Gold added to losses, currently trading at $1,219.10 while doubling losses since this afternoon’s COMEX close. Silver sheds over two percent, falling to $19.39. Platinum is down $4.80 to $1,410.60, but it is beginning to trade higher. Palladium is down $5.60 to $736.10.

Copper is down .64 percent to $3.338.