News Column

US Ahead: Fed minutes to grab attention, housing data in focus

February 19, 2014

Eyes will focus today on Fed minutes as well as housing starts and building permits data amid their pursuit to expect the future of Fed stimulus taper. Housing starts probably retreated 4.9 percent to 950,000 in January from 999,000 in December, while building permits edged down to 975,000 from a prior of 986,000. Another report will give an update about inflation with the release of the producer price index for last month. However, the focus would be on Fed minutes for February's meeting, which included holding interest rate at its record low while slashing bond purchases by another $10 billion to $65 billion. The minutes will show how was the opinion of policymakers regarding the latest stimulus reduction, given the recent slowdown in economic data. Investors predict that the recent slowdown in recovery may prompt policymakers to slow the pace of stimulus taper. Others, on the other hand, consider that the latest setback is due to cold weather the recovery will gather momentum once again. Fed Chairman Janet Yellen said on February 11 that recovery in the labor market is incomplete, she stressed that stimulus would be cut in "measured steps." She illustrated that the pace of stimulus reduction would depend on the progress in the economy. "These observations underscore the importance of considering more than the unemployment rate when evaluating the condition of the U.S. labor market," Yellen said. As of 11:23 GMT, the U.S. dollar traded slightly higher versus a basket of major currencies around 80.04 from the session's low of 79.96. The greenback fell over the previous three weeks on dismal economic reports, where investors may remain short until the Fed's upcoming monetary decision next month. 

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Source: Financial Markets

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