Jan Hatzius, Goldman’s head US economist, says on CNBC that he is in the “soft patch” camp but does not rule out a double dip. The Fed will hold off on quantitative ease unless (until?) unemployment reaches 10%, he forecasts. Asked if the US risks a “lost decade” like in Japan, he notes that the US financial system is recovering much faster than Japan’s did back in the 1990s. There is a risk of deflation however, he says, though it is not his central forecast.
EUR/USD is consolidating gains around 1.2780/75 after topping out in the low 1.2890s as Europe squared up for the day.USD/JPY is holding the 83.50 level and USD/CHF has so far hung into 1.0060/65. AUD/USD is at 0.9350 after topping out at 0.9361 near the London fixing.
