Hello everyone!
I’m curious!
How will the forex market react, if the fed starts the QE tapering in September?
What is your opinion?
The main effect will be in equities/stock market, but how it will affect the currency market?
Every opinion is welcome!
Ezeq
Yes, I wanted to ask this question, i am really sorry to barge In here but i have more questions than answers, tapering means that the FED believe the economy should be improving, so they will gradually reduce their stimulus ( I don’t know I think their QE plan is adding 85 billion dollars per month to banks by buying bonds or something, they will reduce it to 65). How will that affect liquidity, interest rates and inflation?, ultimately how will that reflect on the currency? What side of the trade should we take when we await the news?
Hi Moe!
There is a lot of fundamental analysis, but also a lot of psychology.
The markets are already reacting, SP500 is falling for a few days now, after hitting some hi records. Are investors shifting for a growing market? or are they just going short to capitalize, and reinvest again in the EUA, after the fear pass?
If they reduce the money inflow, then the USD will rise(correct?), and if it is a sing that the EUA economy is going nice, then the USD, will rise again. But if the capital goes abroad, (even for just one month) the USD will go down.
This are my thoughts, but as a newbie there is a lot of uncertain in this logic
Tapering bond purchase will have the general effects of strengthening the dollar and increasing treasury interest rates as the Feds reduction of purchases and better US economic situation will dampen demand for bonds.
market sentiments are already displaying what will happen if they choose to taper in september. dow will crash and usd will lose it’s values as all funds outflow to the rest of the world.
I have the same opinion regarding this.
OK ILPM, that is the theory behind the plan. But do really think that de USA Econ is so good that the Fed will rise interest rates?
Today, AUG 20. The news were not the best. Tomorrow the “housing” will make the day.
I’m starting to think that the FED has found a new Psy arm, the stock is sky high, they say “We will cut something”, the market falls, they say “well, better later”, and the money comes flowing in again.
How good, is good enough? How fast will be the cuts?
It looks like it
[QUOTE=“Ezeq101;521078”]OK ILPM, that is the theory behind the plan. But do really think that de USA Econ is so good that the Fed will rise interest rates?
Today, AUG 20. The news were not the best. Tomorrow the “housing” will make the day.
I’m starting to think that the FED has found a new Psy arm, the stock is sky high, they say “We will cut something”, the market falls, they say “well, better later”, and the money comes flowing in again.
How good, is good enough? How fast will be the cuts?[/QUOTE]
I think it was Lacker… A member of the FOMC… Who released an article or statement this week which explained in detail how the asset purchase program has not had the benefit that the Feds were hoping/expecting… This would lead to the conclusion that if they aren’t seeing the benefits that they want, then they will be inclined to bring an end to it as the costs for the increased balance sheet is mounting.
If they don’t taper September they will absolutely begin December… That will be Bernankes last chance to get the ball rolling before he leaves. My money is on a small reduction ($5-10B) in September, with perhaps a more symbolic importance if anything else.
The Feds won’t ease interest rates (overnight cash rate) till unemployment is 6.5%… Which they have stated will probably be late next year or early 2015. Treasury rates however will respond to the tapering and will rise, albeit not in a straight line.
The fed is gonna talk whatever game moves the markets where they want. They’re going to put taper on the table… then take it off. They’re gonna put more QE on the table… then take it off.
They’re gonna f*** with your heads til you don’t know what they’re going to do… then they’re going to do a 3rd thing you weren’t even thinking of 
[QUOTE=“Roarrr;521096”]
The feds are gonna talk whatever game moves the markets where they want. They’re going to put taper on the table… then take it off. They’re gonna put more QE on the table… then take it off.
They’re gonna f*** with your heads til you don’t know what they’re going to do… then they’re going to do a 3rd thing you weren’t even thinking of ;)[/QUOTE]
Uh huh… They will do whatever it takes to make eurusd form a perfect Judas Swing on an OTE right???
No. They will simply do whatever it takes to get enough people on the wrong side that they can exit their foolishly entered positions
I’m in chat… face me live if you got the Ballz
[QUOTE=“Roarrr;521100”]I’m in chat… face me live if you got the Ballz[/QUOTE]
The iPhone app doesn’t have a chat feature.
I think we would see a temporary rally in USD before it reverts back to reality and continues to weaken for the rest of this year and beyond.
Prolly want to buy usdjpy now after FOMC minutes… Looks like tapering will happen September unless some dismal data is released between now and then.
Once the trend line resistance that it is struggling with is cleared we are looking at 98.50
I’m in at 97.75 with a 30 pip SL and 60 pip TP
No doubt that Septaper is coming. Not so sure that in mid 2014, all QE will be done, and all Fed targets reached. There are a lot more tapering months to come.
… It only hurts the first time
[QUOTE=“ILovePizzaMore;521396”]Prolly want to buy usdjpy now after FOMC minutes… Looks like tapering will happen September unless some dismal data is released between now and then.
<img src=“http://forums.babypips.com/attachment.php?attachmentid=49954”/>
Once the trend line resistance that it is struggling with is cleared we are looking at 98.50
I’m in at 97.75 with a 30 pip SL and 60 pip TP[/QUOTE]
I don’t mean to toot my own horn… But toot toot!
