I can't emphasize enough the idea and the importance that as a trader you must always be prepared for the unexpected and always taking in consideration the other side of the market. Basically this was the main idea behind my take on tapering decision.

The most awaited news for the year has just happened and again this was a strategic move from the Fed, if you remember not long ago Fed has given very strong signals to the market that they will end QE in September, but that shocked the market with a No tapering decision. For the December meeting the market expectation for a taper where considerable low, however FED is shocking the market again with a taper decision. If you try to make a reasoning of WHY now tapering? my take is that this was last appearance for Bernanke and his last change to make a good impression in front of the public, and it was also a good strategy for the Fed because if something would have gone terribly wrong, Yellen the New Chairman could have promise that she will do changes and fix the problem, and this would certainly send confidence signals to market participants

As expected market reaction was in both direction and we saw a big whipsaw as volatility was very high during the news release and also during the Q&A session. Although Fed decided to do a small tapering and only cutting back their stimulus programs by a minor 10B, Ben Bernanke has said during the press conference that any further cut in QE is data depending and "end of QE certainly won't be at mid-year" suggesting that it will take longer before they will end the QE programme for good. And this can easily extend through the whole 2014 year and beyond, but that remains to be seen.

Best Regards,
Daytrader21.
Перевести на Английский Показать оригинал