As expected Fed decided to continue with the current peace of of quantitative easing reduction at 10B/ meeting. In my yesterday blog post I've been highlighting why Fed is going to taper another 10B you can find my last blog post here: FOMC Statement another 10B Taper?

  • Figure 1. FOMC Economists Taper Expectation.
It seems that the recent emerging market turmoil wasn't reason enough for the FED to stop the tapering and Fed decided to continue with the tapering as expected. However I think if they would have pause with the taper, in that case they would have send the wrong message to the market. My personal interpretation is if they would have paused the Taper the market participants would have start worrying more and they would have think that the Fed feels the emerging market risk as a threat and I'm sure the FED would not want to send any wrong message to the market.

  • Figure 2. Dollar Index and the taper.
It seems that everything was in line with market expectation but the dollar was only slightly bid and that was the only missing part from the whole picture to be completed. So the current Fed bond-buying program is at $65B/month. However the dollar started to move as I predicted yesterday only after today's soft German unemployment figures.

Best Regards,
Daytrader21.
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