Jannis yellen, tapering asset purchase and the USD

Trading Discussion News and Economy
1

hi xxxx peeps,
so the US has a new head of the central bank and she has recently said somthing like 'i will coninue to gradually reduce the amount of assets the fed will purchase each month, ie wind down QE.
i would like to know what are peoples ideas about how, if at all, you think this will influence the USD over the mid term (for the duration that the tapering takes) and the reasons why you think this will happen?
im no econamist, but i am gonna have a stab at it. ok;
so tapering suggests that the US econamy is recovering - strong econamy = strong currency
there will be less USD’s flowing in to the US financial system, and therefore world FX markets. ie a reduction in supplly / ‘selling’ should = a strenghtening currency.
so i would guess to see the USD broardly strenghten.
how wide of the mark am i?

i feel bad about keeping on asking questions, like baby pips and its contributors are some kind of service.
so thanks to all thoses deseminating their hard won knowledge / ideas.

2

Hey, don’t worry about asking questions at all! The friendly forum folks (myself included) are happy to help you out and share their own thoughts. As for Yellen’s commitment to the Fed taper, I do agree that it could be very dollar bullish in the long-term, unless the US economy shows signs of slowing down because of this decision to reduce stimulus. She did mention that the Fed is focusing on the US economy and less on the volatility and drag caused on other economies, which suggests that the US economy and dollar might stay strong compared to other economies and currencies. Just my two cents!