Fed cautious on recovery, focused on joblessness

(Reuters) - The Federal Reserve showed on Wednesday it was in no rush to cut short its rescue of the U.S. economy, saying high unemployment still justified its $600 billion bond-buying plan even though the economy has shown some signs of improvement.
In a statement that was a bit more upbeat than after its meeting in December, the Fed acknowledged for the first time a rise in commodity prices that has fueled global inflation, but signaled it would not throw the U.S. central bank off course.The Fed noted that underlying U.S. inflation has been "trending downward," a contrast in tone with other central banks around the world worried about price growth.
"The economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions," the Fed said after a two-day policy meeting.
Policymakers unanimously backed continuation of the Fed's bond purchases, the first time there was no dissent since December 2009.
Analysts said the Fed, which detailed the headwinds the economy faces, may have been hesitant to sound too upbeat for fear financial markets would see any optimism as a sign that a tightening in monetary policy was drawing nearer.
"Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit," the Fed said.
U.S. interest rate futures showed traders paring bets that the central bank would start raising overnight interest rates this year. The U.S. dollar slipped and prices of U.S. government debt fell, while stocks held gains and closed marginally higher.
"The statement doesn't acknowledge the uptick in U.S. economic data that we've seen over recent weeks to the extent that we had expected that it would," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Leading U.S. economists boosted their expectations for U.S. growth this year, according to a Reuters poll conducted after the Fed's policy statement.
The Fed's calm view of price pressures is in sharp contrast to the European Central Bank, whose president has warned that the surge in commodity prices poses an inflation threat. While headline inflation has picked up in the United States, core inflation has held near a five-decade low.
Inflation is a rising concern in emerging economies around the world. China and India both face increasing public dissent due to inflationary pressures and central banks in Latin America are considering raising rates despite worries about hurting exports.
POLICY HAS BACKING, FOR NOW
The unanimous vote suggested a firm consensus to see the bond purchase plan through, even as two known skeptics rotated into voting spots on the central bank's policy panel.
Some analysts thought at least one of the vocal inflation hawks -- Philadelphia Federal Reserve Bank President Charles Plosser or Dallas Fed President Richard Fisher -- would dissent.

By Mark Felsenthal
WASHINGTON | Wed Jan 26, 2011 7:07pm EST

GBP/USD ( 1 hours )

Dari awal Januari, pasangan mata uang gbp/usd bergerak atas. Setelah mencapai level tertinggi di awal tahun di level 1,6016, ponds kembali jatuh ke level terendah di 1.5749 . Baru-baru ini, harga mengidentivikasi untuk rebound kembali
setelah tahanan 1,5875 kembali terlewati. Pivot : 1.5881 resisten: 1.5971 support: 1.5826

TARP programs could turn profit: U.S. watchdog

(Reuters) - The U.S. government may turn a profit on its most controversial bailout programs but ordinary Americans, particularly struggling homeowners, are still not benefiting, a bailout watchdog said on Tuesday.
More than two years after the Treasury Department spend billions in taxpayer money to prop up Wall Street, the financial system has stabilized and the Treasury is recouping the funds from the Troubled Asset Relief Program.

"Not only did TARP funds help head off a catastrophic financial collapse, but estimates of TARP's ultimate direct financial cost to the taxpayer have fallen substantially," the special inspector general for TARP, Neil Barofsky, said in the report.
Treasury officials have been optimistic that the government would be able to recoup the bulk of the $700 billion bank bailout fund.

In remarks to be delivered to Congress on Wednesday, the Treasury's top bailout official, Assistant Secretary Timothy Massad, said the overall cost to taxpayers could fall as low as $25 billion to $50 billion, with most of that attributable to housing rescue efforts.

Massad added that Treasury hoped to recover most of the remaining $166 billion from other TARP programs within two years.

The inspector general's report said there is now a chance that TARP could "break even or possibly turn a profit" on its most controversial programs.

The tone of the report was a marked turnaround from Barofsky's scathing audits of a year ago, when he sharply criticized the New York Federal Reserve's handling in 2008 of the bailout of insurer American International Group (AIG.N). Timothy Geithner, who is now Treasury secretary, at the time was president of the New York Fed.

Barofsky said at the time it was unlikely that taxpayers would recoup all of the TARP bailout funds.

AIG, which at one point sucked up $182 billion in government aid, has started to turn the corner, with the insurer positioned for a massive stock offering this spring.

The report was released ahead of the House Oversight Committee's first hearing since Republicans rode a wave of anti-government sentiment to take control of the House of Representatives in January.

Committee Chairman Darrell Issa has targeted TARP as an area to expose government waste, fraud and abuse. But with TARP winding down and institutions repaying their debts, the California Republican may find fewer transgressions to prosecute.

STILL TOO BIG TO FAIL

Despite the more positive tone, Barofsky did criticize TARP for not helping ordinary Americans and not doing enough to thwart market perceptions that some large financial firms are considered too big to fail.

The Dodd-Frank financial reform bill appears not to have solved the perception problem as institutions "continue to enjoy access to cheaper credit based on the existence of the implicit government guarantee against failure," said the report.
By David Lawder and Rachelle Younglai

WASHINGTON | Tue Jan 25, 2011 6:58pm EST

Sterling terlihat dikisaran terendah dalam 2minggu

Pada perdagangan hari ini tampak nilai tukar sterling terhadap dolar masih cenderung bergerak melemah. Sterling terhantam cukup kuat pada perdagangan kemarin sore setelah rilis data preliminary GDP di Inggris untuk kuartal keempat lalu menunjukkan bahwa ekonomi mengalami kontraksi yang tidak terduga..Sterling kemungkinan masih bergerak dalam kisaran sempit. pivot dikisaran 1.5831 resisten dilevel 1.5880 dan support di kisaran 1.5773

Euro at 2-month high, growth bets lift stocks

(Reuters)-The euro hit a fresh two-month high on Monday as hopes for a durable solution to the euro-zone debt crisis pushed the currency past key technical levels, while stocks rose on bets of higher growth in the global economy.

Prices of copper and other metals rose as the optimism about growth triggered worries about supply constraints, driving up shares of miners and natural resources companies.

Asian shares headed to a positive start, with Nikkei futures traded in Chicago up 0.9 percent at 10,415.00.

Speculation that the European Central Bank might raise interest rates also provided support for the euro, pushing it as high as $1.3683 on trading platform EBS, a fresh two-month high against the dollar. It last traded up 0.21 percent at $1.3644.

"They are closer to tightening in the euro zone with a lot less spare capacity, and it is realistic to expect the ECB to tighten before the Federal Reserve," said Kathy Lien, director of research at GFT Forex in New York.Expectations of higher rates in Europe grew after ECB chief Jean-Claude Trichet sounded tougher on inflation.

The European single currency has gained nearly 6 percent from this year's low as investors grew more confident about the euro zone's economic prospects.

Some analysts feared, however, that the rally was close to an end as political turmoil in Ireland was a reminder of the uncertainties plaguing the most indebted European countries.

"The euro's had a sharp rebound recently, but we think it's nearing its top in the bigger picture," said Ian Stannard, senior currency strategist at BNP Paribas.

"It's supported in the near-term by optimism over talks on the European rescue fund, but political problems in Ireland and Portugal show there are still lots of factors out there to hurt the currency," he added.

The U.S. dollar slipped 0.23 percent against a basket of major currencies, according to the U.S. Dollar Index .DXY. Against the Japanese yen, it fell 0.15 percent to 82.46.

STOCKS EXTEND GAINS

Global equities advanced as U.S. stocks found strength in large-cap technology and natural resources shares, which were lifted by bets on global growth prospects and Intel's gains.

The Dow Jones industrial average .DJI extended its rally after eight weeks of gains, rising 108.68 points, or 0.92 percent, to end at 11,980.52. The Standard & Poor's 500 Index .SPX advanced 7.49 points, or 0.58 percent, to close at 1,290.84, while the Nasdaq Composite Index .IXIC added 28.01 points, or 1.04 percent, to 2,717.55.

The blue-chip Dow average came close to touching the psychologically important 12,000 level, with its climb intraday to a fresh 52-week high at 11,982.94.