Markets are tightly range-bound this morning as investors sit on their hands awaiting the FOMC decision at 10:30am (MT) and subsequent press conference at 12:15pm (MT).
The upside of a positive announcement from the Fed (announcing more stimulus/QE) appears limited as markets have priced in this action over the past few weeks. Most analysts peg the Fed’s decision as an open ended quantitative easing program at roughly $75 billion/month and a total of roughly $500 billion. However, continue to expect a rise in risk appetite should the FOMC decision come out favorable.
In Europe, IMF officials have come out publicly indicating that Greece will need a third bailout as they cannot fill their funding gap on their own. Greece will have a tough battle on their hands, convincing the Troika (IMF, ECB and EU) to extend further lending after the struggling nation met only 22% of its targets in 2011. It is only a matter of time before Germany chimes in, letting Greece know the party is officially over. Surprisingly, the Euro remains stable on the news.
US weekly jobless claims missed expectations by the 4th biggest margin this year: 382K vs. the expected 370K. Meanwhile, producer prices rose by 1.7% in August, well above the expected and previous release of 1.2% and 0.3% respectively. Food and energy prices led the way as inflation risk is on the rise.
The TSX is trading marginally lower, down 0.1% while the Dow has gained the same amount since the opening bell. Crude Oil has surged 1.25% to $98.25/bbl while Gold remains unchanged at $1,735/oz. The USD/CAD remains unchanged from yesterday’s close as investors await the FOMC decision.