"We have inadvertently got to a point where we think that an $85 billion asset-purchase program is somehow a neutral stance. On the contrary, it is incredibly accommodative and would continue to be incredibly accommodative at $65 billion per month."
- Dana Saporta, Credit Suisse economist
While U.S. President Barack Obama is sceptically exploring a diplomatic plan from Russia to force Syria to place its chemical weapons under international scrutiny and control, thus increasing chances of putting off military strike, the latest economic data appeared to be quit discouraging. U.S. small business optimism dropped in August as entrepreneurs are worried about the near-term economic outlook. Nevertheless, hiring plans and gains in sales expectations signalled a pick-up in the economic growth pace. According to the National Federation of Independent Business, the Small Business Optimism Index slid 0.1 point to 94 last month. Also, U.S. job openings declined almost across the board in July, the government report showed Tuesday, hinting at labour market weakness during that month. Job openings, which measures labour demand, dropped 180,000 to a seasonally adjusted 3.7 million, according to the Labor Department. The report could explain the unexpected slowdown in nonfarm payroll growth during that month. Nevertheless, the beginning of the end of the Fed's massive support for the nation's economy is widely expected, when top officials gather next week for one of the most anticipated meetings since the end of the Great Recession. Despite a disappointing August jobs report, the Fed may reduce its $85 billion monthly bond-buying scheme, given the economic progress over the last year.
© Dukascopy Bank SA