U.S Dollar Rises as Fed Begins $15bn Bond-Buying Cut
The United States (U.S) dollar rose versus its major trading partners early Thursday following the Federal Reserve’s announcement Wednesday that it will taper its asset purchases by $15 billion per month in November and December, with similar reductions expected after that based on economic conditions.
U.S stock market, indices and currency quotation witnessed a moderate adjust after the announcement that bonds tempting will commence in November 2021. Read more: U.S Stocks React as Fed Announces Bond-Buying Tapering
The Fed said that the conditions to begin interest rate increases have still not been met, but Fed Chairman Jerome Powell noted that the maximum employment portion of the mandate could be achieved in the second half of 2022.
If the taper is completed on schedule by the middle of the year, that would give the Fed flexibility to raise rates later in the year.
The US data schedule Thursday includes readings for October layoffs, the September trade gap, weekly initial jobless claims and Q3 productivity and unit labour costs as markets digest the FOMC statement and look ahead for Friday’s October employment report.
A quick summary of foreign exchange action heading into Thursday shows that GBP-USD fell to 1.3628 from 1.3686 at the Wednesday US close, but up slightly from 1.3621 a day earlier.
The Bank of England’s policy announcement will be released in the US morning and there are divided forecasts on whether it will include an interest rate increase or just a reduction in bond purchases.
EUR-USD slipped to 1.1545 from 1.1611 at the Wednesday US close and 1.1586 a day ago. A decline in the Eurozone purchasing manager index (PMI) data put downward pressure on the pair, as did the Fed’s relatively hawkish action compared with the European Central Bank’s wait-and-see approach.
USD-CAD moved up to 1.2419 from 1.2392 at the Wednesday US close but is virtually unchanged from 1.2416 a day ago as the Fed delivered on market expectations with its modest tapering and only slightly more hawkish statement.
Upcoming employment data from Canada and the US Friday will give some direction to the pair. USD-JPY fell to 113.9804 from 114.0223 at the Wednesday US close but remained above the 113.8733 level a day earlier.
The FOMC’s tapering action and statement makes the difference between the Fed and the Bank of Japan’s more dovish stance and less optimistic economic outlook even more stark. # U.S Dollar Rises as Fed Begins $15bn Bond-Buying Cut
