USD No More Red Flag For This Week - September 3,2012

As earlier post (USD Economists Anticipating Disappointing News - August 31, 2012) predicted after seeing the Beige Book report, Fed head Bernanke gave vague statements on whether QE3 was necessary or not during his latest speech in Jackson Hole. Bernanke simply stated the obvious, which was that the U.S. labor market wasn't doing so well and that higher unemployment could be their economy's undoing. He also pointed out that the U.S. economy was still facing several risks from the euro zone debt crisis and from their very own Fiscal Cliff.

With U.S. traders on a bank holiday today, the rest of the market participants could be left mulling about Bernanke's latest speech. Should expect QE3 for the upcoming FOMC statement? Or will the Fed simply reiterate their pledge to keep rates exceptionally low for an extended period?

Don't forget that, with the August NFP figure due on Friday, this week is a crucial one when it comes to the Fed's assessment of U.S. economic performance and not to mention their monetary policy decision. Other than the ISM manufacturing PMI due tomorrow and the non-manufacturing PMI due Thursday, there are no other red flags on the U.S. calendar, which means that we might see a lot of consolidation prior to NFP Friday.