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Markets jump on Larry Summers "u-turn"
As if the Fed’s tapering decision wasn’t enough this week, a new “dramatic” twist in US politics has added to market jitters. Former US Treasury Secretary Larry Summers has withdrawn his candidacy to succeed Ben Bernanke as head of the US central bank.
This leaves current Federal Reserve vice-chairman Janet Yellen as the front-runner of the race.
Ms Yellen is seen by many, as being less inclined towards an immediate scaling back of quantitative easing.
Summers' surprise decision came just before the central bank meets on 17 - 18 September to decide when and by how much to scale back its asset purchases from the current pace of USD 85 billion a month.
Saxo Bank's John Hardy explains that the dollar fell off the back of the news about Summers. He adds that we could see an even bigger drop after the FOMC meeting.
Mr Summers was Treasury Secretary during the Clinton administration from 1999 to 2001 and had also been chief economist of the World Bank from 1991 to 1993.
Mr Bernanke's term as Federal Reserve chief is due to expire at the end of January 2014. If Ms Yellen is chosen to succeed him, she will be the first woman to hold the post.
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