A major announcement was made by the US central bank as Janet Yellen was named the successor to Ben Bernanke from January 2014, which is when the current leader of the Federal Reserve is due to step down from his post.

Yellen has worked at the Federal Reserve for more than 15 years and this appointment sent a clear message from Obama that he is eager to continue making big decisions, despite the ongoing bickering between political parties over the US government shutdown. US markets struggled to sustain recent levels as the impact of the shutdown begins to take full effect.

On the UK front, the International Monetary Fund was the latest institution to increase its growth forecasts for the economy. Annual growth estimates were revised up to 0.9 per cent in July, and have been increased even further to 1.4 per cent as a result of the impressive economic indicators released from the UK last quarter.

Growth levels for 2014 have also been revised up to 1.9 per cent, which marks a huge turnaround after the IMF’s chief economist, Olivier Blanchard, was quoted six months ago as saying Osborne was “playing with fire” in reference to the chancellor’s fiscal policy.

Sterling

The pound received further support from the IMF after it revised up its growth forecasts for the UK economy for both 2013 and 2014. Economic growth is expected to reach 1.4 per cent this year and 1.9 per cent next year, which marks a huge turnaround over the past six months, after the IMF’s chief economist questioned Osborne’s fiscal strategy earlier in the year.

US dollar

The greenback received some support after traders reacted positively to Obama’s appointment of Janet Yellen as successor to Ben Bernanke as head of the Federal Reserve. Bernanke’s current term comes to an end in January 2014 and many investors saw this decision as a positive sign during a time of huge political uncertainty as a result of the current US government shutdown.

Euro

German industrial output is due for release, with forecasts expecting output to have returned to positive growth levels in August of this year. Inflation data is also due from Europe’s largest economy as investors continue to question Germany’s ability to lead the eurozone into a strong period of economic recovery.

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