The Federal Open Market Committee minutes showed that Fed officials were not in agreement over when to halt the Quantitative Easing (QE) programs. Some officials wanted to continue the programs to the end of 2013, some wanted to end the programs before then, and other officials wanted to end the QE programs immediately.
Just as the bad economic numbers this year have caused the stock market to go higher (and USD lower) due to the increased chance of more QE, now good economic numbers could cause the USD to significantly strengthen and equities to drop as it signals an increased chance of the end of QE.
We believe these minutes will lead to the USD strengthening
over the medium term, with a sell-off in equities likely to follow
improvements in the labor market. This turns tomorrow's jobs report into a catalyst that could potentially trigger a significant move in USD.
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