Forex News | Currency News by Forexlive

–House Speaker Pelosi Says Dems Passed Historic Reforms
–House Majority Leader Hoyer: Hill Will Extend Middle Class Tax Cuts
–House Minority Leader Boehner Pledges Broad Hill, Budget Reforms

By John Shaw

WASHINGTON (MNI) – With lawmakers on their way back home to
campaign for the Nov. 2 mid-term elections, House Speaker Nancy Pelosi
and her leadership term exchanged jabs with House Minority Leader John
Boehner Thursday on the accomplishments of the past and the agenda for
the future.

In a briefing, Pelosi, House Majority Leader Steny Hoyer and other
Democrats said the current Congress has been a historic success, citing
passage of health care and financial regulatory reform bills.

Pelosi said House Republicans are focusing their current campaign
on process issues rather than offering a coherent policy agenda.

“They have no substantive issue to take to the American people,”
she said.

Hoyer said Republicans have spent the past two years trying to
“create gridlock and failure” in Washington.

Hoyer repeated that Congress will vote by the end of the year to
extend the middle class portion of the so-called Bush tax cuts. “We are
going to do that before the end of the year,” he said.

Boehner, speaking at the American Enterprise Institute, argued that
the House under Democratic leadership has become a chaotic institution
that has failed to accomplish the most basic requirements of governance:
passing a budget resolution and individual spending bills.

He said Congress’ “spending process has broken faith with the
American people.”

Boehner blasted Democrats for failing to extend the Bush-era tax
cuts that are set to expire at the end of the year.

“We could not get a simple up or down vote,” he said.

Boehner said the 111th Congress is not “so much concluding as
collapsing.”

The House Minority Leader, who is in line to become Speaker if
Republicans capture control of the House, said the GOP would open up the
House for more debate and votes on amendments.

He said that he would press for changing the spending process,
breaking up the 12 appropriations bills into smaller bills.

He said the GOP would push a ‘CutGo’ rule that would require any
new program be offset by a reduction or elimination of another program.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

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Last year, the ForexLive community raised a total of $2000. If you are able, a small contribution would be very much appreciated.

If you are so inclined, click here to donate.

By Steven K. Beckner

NEW YORK (MNI) – When it comes to possible further monetary
stimulus, most of the speculation has focused on additional asset
purchases, but there are other tools the Federal Reserve could consider.

However, those other tools — changing Fed communications and
cutting the interest the Fed pays on excess reserves — are less likely
to have a significant impact, according to Boston Federal Reserve Bank
President Eric Rosengren.

Rosengren, a voting member of the Fed’s policymaking Federal Open
Market Committee, put more emphasis on possible large asset purchases –
both Treasury securities and mortgage backed securities — in an
interview with Market News International Wednesday. But he also spoke of
the pros and cons of communications strategy and the IOER.

He noted that Fed Chairman Ben Bernanke “did not rule out” cutting
the IOER or changing Fed policy guidance to imply an even longer
“extended period” of near zero short-term interest rates when he spoke
of them in his Aug. 27 speech to the Kansas City Federal Reserve’s
Bank’s Jackson Hole symposium.

“Which tool you use depends on the circumstances of the economy,”
said Rosengren.

For example, “if the market thought we were going to tighten at the
next meeting then we don’t necessarily have to buy securities,” he said.
“We can just make clear through communication that that’s not the plan,
and that’s not the plan for a reasonable period of time.”

“If instead the market has already factored in an ‘extended
period’ before we start tightening, then going from two years to three
years may not give you that much benefit,” Rosengren said.

“So the communication strategy partially depends on how aligned
private sector forecasts of what we’re going to do are with what we
think is appropriate policy,” he said.

“If those are misaligned that’s a communication issue, and that’s
what we should focus on,” he continued. “If instead the market is pretty
similar to our own view it’s not a communication issue, it’s a do-ing
issue.”

As for possibly reducing the IOER from the current 25 basis points,
Rosengren observed, “We’re pretty low now.” So he said the effect of
cutting it further is “a little bit uncertain.”

But he suggested it is not out of the question to use an IOER cut
as part of a communication strategy.

“If your goal is to have an impact, for example, on making a
commitment to not have further disinflation, then making the connection
publicly between the IOER and that may be difficult to communicate in a
way that’s effective,” he said.

“And so which policy tool we take depends on which channel you’re
trying to affect and where market expectations are at the time,” he
added.

“Right now, large asset purchases are considered because I think
the communication is relatively straightforward, at least on what we’re
doing,” he said.

** Market News International **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,MX$$$$,MT$$$$]

CNBC is now playing down an earlier report that they put out saying that systemically important banks would be required to keep a 2-3% larger capital cushion (almost double) what smaller banks would have to keep. Now they say there is no specific proposal as to the size of any capital cushion.

The initial report hurt EUR/USD as European banks are seen as less-well capitalized than those in the US and UK. Any watering down of those rules would hurt the euro less…

Bernanke feels our pain. He says that even though the economy has stabilized and is now growing it is clearly a difficult time for many Americans.

It is not uncommon for recoveries that follow financial crises to be fairly slow and he says there is still an air of caution among households and businesses that is keeping US growth tepid.

Stocks have recovered all there intraday losses, oil is above $80 and the dollar is sliding once again…

Just when you think the market is about to take on a new direction *whammo*, right between the eyes…

EUR/USD is back above the 1.3625 area that provided intraday resistance and cable is back above 1.5700. Even Aussie has recovered back above the 0.9665 area that provided support on the way down and then resistance on the way up…I give up! This forex stuff is hard…

After weeks of $72/78, oil has suddenly broken out to the upside and is now $80.

They must need it to lubricate all that gold…

Hard to see the dollar recovering dramatically if oil maintains its present gains.

As I just said to a market contact, cable taketh and cable taketh some more…

Buying dips to 1.5720/30 seemed logical, and hell it worked for 50 pips, but here we are blasting lower in thin afternoon trade.  1.5600 is next support of note.

The chart is an absolute poop show now, with an outside day key reversal in the offing (a bearish engulfing for you candlestick guys…).

I hate cable…

On the bright-side, at least two majors (AUD and GBP) are now in corrections. Can the euro be far behind? 1.3550/60 is key on the downside.

If you were on the fence about the likelihood of a BOC hike, you can climb down on the “pause” side after comments from Governor Carney.

• Canada will see more modest growth going forward than in the first part of the year
• The economy has slowed more than the BOC expected. We must be careful in this uncertain environment
• Would have to take further Fed easing into account when setting policy

A bad month for the dollar ended on a modest (very modest) up note today as the greenback staged a recovery late in the European session but one that has moderated during a quiet US afternoon.

We had a bout of correlated dollar short-covering, gold long liquidation and equity profit-taking into the midday period but since that point we’ve pared back those gains.

It is too early to say that the dollar downtrend has ended but we at least had some two way action as well as some topping action in the AUD/USD today, so dollar bulls have something to look forward to for the first time in a while.

For EUR/USD, a close below the 1.3560 level is needed to ring alarm bells while the same can be said for 1.5700 in cable. A close below 0.9660/65 suggests AUD is on the midst of a correction.

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