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Michael Michaud is the founder of Invest2Success.com (http://www.invest2success.com/) and the Invest2Success Blog (http://invest2success.blogspot.com/). He has been investing and trading in the financial markets since 1989. He founded Invest2Success.com to empower individual institutional... More
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  • All Eyes On The US Federal Reserve's Meeting 0 comments
    Oct 30, 2013 5:06 AM

    Euro trade on correction mode, with all eyes in FED's meeting…

    U.S. stocks rose, with benchmark indexes climbing to records as data indicating slower growth fueled bets the Federal Reserve will maintain stimulus. The S&P 500 Index gained 0.6 percent to 1,771.95 in New York, its third straight record, climbed in 13 of the past 15 sessions.

    Asian shares: Japan's Nikkei 1.23%, Hong Kong's Hang Seng 1.61%, Korea's Kospi 0.38%, Australia's ASX 200 0.27% and China's Shanghai 1.48%.

    GBP/USD rejection at the previous top at 1.6262 has now been followed by a break below 1.6138/15 (hourly neckline/pivot) which has increased the risk of having indeed marked a double-top significantly, notes JP Morgan "But to get the main T-zone at 1.6308/23/79 (weekly.-monthly triangle/pivot) off the radar screen it takes additional breaks below 1.6031 (daily trend) and ultimately a break below 1.5819 (int. 38.2 %). Only below the latter we'd see 1.5155 (int. 76.4 %) and 1.4339 (76.4 % on big scale) in focus," JPM projects. In line with this view, JPM maintains a short GBP/USD position.

    The Federal Reserve's balance sheet, which is fast approaching $4 trillion in total assets, won't return to normal until sometime between mid-2019 and mid-2021, according to new projections prepared by central bank researchers. The research suggests the Fed could go as long as 6.5 years without generating enough income to make annual remittances of cash to the U.S. Treasury as it normally does, though that is in an extreme scenario that the researchers don't envision. The Fed's holdings of Treasury and mortgage securities have soared since it began experimenting with bond buying programs during the 2008 financial crisis.

    U.S. retail sales dropped 0.1 percent last month, restrained by the biggest decrease at auto dealers since October 2012. Wholesale prices unexpectedly fell in September as food costs retreated. Inflation has been running below the Fed's 2 percent objective in the near-term, giving policy makers room to maintain monetary stimulus.

    A separate report showed confidence among U.S. consumers declined in October by the most since August 2011 as the budget impasse and debt-ceiling negotiations in Washington took a toll on outlooks.

    The Bank of Japan's massive stimulus is working, the International Monetary Fund's mission chief to Japan said, and there is still room to increase purchases of government bonds and exchange-traded funds if a further boost was needed.

    Moody's Investors Service considered stripping New Zealand of its sole remaining top credit rating amid concern the nation's current-account deficit is exacerbating its vulnerability to external shocks. New Zealand's reliance on overseas investors means it can face difficulties when crises such as the Christchurch earthquakes and Fonterra Cooperative Group Ltd.'s contaminated milk scare occur, Steven Hess, Senior Vice President at Moody's in New York, said. The kiwi fell today to a four-week low.

    Money markets predict central bank Governor Glenn Stevens will hold Australia's cash rate steady for at least a year. History suggests he'll spring a surprise. Stevens, has either raised or cut the benchmark rate 26 times since his tenure began in September 2006, the most among major developed-world peers.

    Australia New home sales increased in both the month and quarter of September 2013. "Total new home sales reached their highest level in over two years in September 2013," said HIA Chief Economist, Dr Harley Dale. "Given the recovery in sales is occurring from a record low and that the upward momentum appeared to be stalling in mid-2013, this September outcome is very positive."

    Watch today: German jobs, EU retail PMI, US ADP payrolls.

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