Federal Reserve Open Market Committee Meeting Update Thursday| Update January 31, 2013

Content Meeting update Impact

D. Vijiya Rao - Research Analyst Vijiya.d@angelbroking.com (022) 2921 2000 Extn. 6134 Angel Commodities Broking Pvt. Ltd. Registered Office: G-1, Ackruti Trade Centre, Rd. No. 7, MIDC, Andheri (E), Mumbai - 400 093. Corporate Office: 6th Floor, Ackruti Star, MIDC, Andheri (E), Mumbai - 400 093. Tel: (022) 2921 2000 MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302

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Federal Reserve Open Market Committee Meeting Update Thursday| Update January 31, 2013

Federal Reserve Open Market Committee meeting update: The US Federal Reserve in its two day meeting which concluded on January 31, 2013 said that it would continue its bond buying programme. The Federal Reserve asset purchases programme would remain divided into $40 billion a month of mortgage-backed securities and $45 billion a month of Treasury securities. The bank maintained its stance that the purchases would continue until the outlook for the labour market improves substantially. It also kept the interest rate unchanged near to zero as long as the unemployment remains above 6.5 percent and inflation to remain below 2.5 percent. In the earlier Federal Reserve Open Market Committee (FOMC) meeting on December 13, 2012 said that it would purchase an additional $45 billion of Treasuries a month, adding to its third round of quantitative easing and tied its policies to unemployment and inflation. The decision to continue the purchases lifted the prices of commodities but the US benchmark stock indexes retreated. Zinc, aluminum and gold climbed the most in the metals pack.

Source: Reuters; Angel Research

The economic indicators displayed a mixed trend The economic indicators of the nation witnessed a mixed note with some of the data showing signs of growth. The US GDP contracted unexpectedly to 0.1 percent in the fourth quarter on the back of

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weather-related disruptions. Weak economic growth of the nation over shadowed on the jobs report by

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Federal Reserve Open Market Committee Meeting Update Thursday| Update January 31, 2013

the ADP Research Institute which showed that the companies took more workers than projected and added 192,000 workers in January 2013 thus showing that the labour market is making progress. The housing sector also displayed a rebound with housing starts climbing 12.1 percent in the month of December 2012 to 954,000 homes. Rising auto sales also led to the advancement of the consumer spending with core durable goods orders surging 4.6 percent in the month of December 2012. Further, the unemployment claims for getting the insurance benefits is expected to rise by 21,000 to 351,000 for the week ended January 26, 2013 as per the estimates of the US Labour Department. The jobless rate is also expected to come on a steady note of 7.8 percent on February 1, 2013.

Source: Forex factory; Angel Research

Impact Metal prices surged on the announcement to keep the bond buying programme. Broadly, the prices are influenced by the fundamental demand and supply factors and as well as the global liquidity scenario. Base metals might gain traction on the favorable economic data from the US housing sector and the consumer durables coupled with the better data from Europe, China and Japan. The precious metals might also gain ground on the back of increased liquidity amid weak economic growth leading to safe haven buying. This measure is expected to boost the investor confidence thereby causing rise in the risk appetite. This is turn might lead to decline in the demand for the low yielding currency that is US Dollar

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Index (DX), supporting an upside in the commodities and other riskier assets.

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