Thoughts? I am looking for clues but can’t seem to find if it affects the USD positively or negatively?
We could see a small bounce, but keep in mind that tapering still means that the Fed will print money and flush it down the toilet which is bearish for the USD.
What if the fed won’t taper today ?
Will it be mean bullish for EURUSD or they’ll only stay to not get hammered ?
Here is part of an [I][B]AP[/B][/I] news item, released earlier this evening, on the Fed’s decision to begin tapering in January:
Dec. 18, 2013 7:01 PM ET
Improving US economy leads Fed to ease stimulus
By MARTIN CRUTSINGER, AP Economics Writer
WASHINGTON (AP) — The Federal Reserve on Wednesday sent its strongest signal of confidence in the U.S. economy since the Great Recession, deciding that the nation’s economic prospects are finally bright enough to withstand a slight pullback in stimulus spending.
Yet the Fed also made clear that it will keep supporting an economy that remains less than fully healthy. It will continue to keep interest rates low and try to boost unusually low inflation, which can be a drag on spending and borrowing.
At his final news conference as Fed chairman before he leaves in January, Ben Bernanke managed a delicate balance: He announced a long-awaited and long-feared reduction in the stimulus. Yet he did so while convincing investors that the Fed would continue to bolster the economy indefinitely. Wall Street roared its approval.
In a statement after a two-day policy meeting, the Fed said it would trim its $85 billion a month in bond purchases by $10 billion starting in January. Bernanke said the bank expects to make “similar moderate” cuts in its purchases if economic gains continue.
At the same time, the Fed strengthened its commitment to record-low short-term rates. It said for the first time that it plans to hold its key short-term rate near zero “well past” the time when unemployment falls below 6.5 percent. Unemployment is now 7 percent.
The Fed’s bond purchases have been intended to drive down long-term borrowing rates by increasing demand for bonds. The prospect of a lower pace of purchases could mean higher loan rates over time.
Nevertheless, investors seemed elated by the Fed’s finding that the economy has steadily strengthened, by its firm commitment to low short-term rates and by the only slight amount by which it’s paring the bond purchases.
The Dow Jones industrial average soared nearly 300 points. Bond prices fluctuated, but by late afternoon the yield on the 10-year Treasury note had barely moved, inching up to 2.89 percent from 2.88 percent.
“We’re really at a point where we’re getting to the self-sustaining recovery that the Fed has been talking about,” Scott Anderson, chief economist of Bank of the West. “It really seems like that’s going to come together in 2014.”
The Fed’s move “eliminates the uncertainty as to whether or when the Fed will taper and will give markets the opportunity to focus on what really matters, which is the economic outlook,” said Roberto Perli, a former Fed economist who is now head of monetary policy research at Cornerstone Macro.
And here is a[B][I] DailyFX[/I][/B] video in which John Kicklighter analyses how this tapering decision will likely affect the dollar:
Forex Strategy Video: What the Taper Means for the Dollar | DailyFX