FXTM information and reviews
IronFX information and reviews
Libertex information and reviews
FXCC information and reviews
FxPro information and reviews
OctaFX information and reviews

Fed officials talk tapering

12 January 2021

Fed remarks about a potential scaling back of the QE program eclipsed everything else in a rather quiet session on Monday, pushing US Treasury yields higher and helping the dollar stay above water. First it was the Fed’s Bostic, who said the central bank is not locked into a paradigm and could change its stance if the economy recovers faster.

Then Kaplan reinforced this message, saying that hopefully enough progress will be made this year in the recovery to begin discussions about a QE taper. All this comes on top of comments by Vice Chairman Clarida lately hinting that tapering could begin in early 2022 if all goes smoothly.

While it is natural for policymakers to discuss the conditions for normalization, the frequency of the latest remarks makes one wonder if this is an orchestrated FOMC attempt to manage market expectations around tapering. With the Democrats promising a new round of relief in the ‘trillions of dollars’ once Biden is sworn in, investors and policymakers alike seem to be positioning for a new phase of booming US growth.

The bond market is enthusiastically dancing to this tune, with the yield on 10-year Treasuries surpassing 1.15% today for the first time since March, giving the dollar some of its old interest rate advantage back.

Stocks retreat from record highs, await Biden’s proposal

Aside from the Fed signals, there wasn’t much else in the news. Wall Street suffered a rare retreat from record highs, with social media giants leading the pullback. Twitter (-6.4%) was in the eye of the storm after it permanently banned President Trump from its platform, sparking concerns of a hit on revenue and backlash from regulators.

That said, there was no sense of panic selling anywhere and the retreat was ‘orderly’ overall, with investors likely taking some chips off the table after such a monster bull run. Futures point to a slightly higher open on Wall Street today.

The main event for markets this week will likely be the details of president-elect Biden’s stimulus proposal, which will be unveiled Thursday. The more relief he promises, the better the US growth outlook. For instance, a package worth $3 trillion – as has been suggested by some reports – would likely reignite the ‘growth trade’, whereas something closer to $1 trillion may even come as a minor disappointment. Leaks around the size and scope of the new relief package could hit the markets before Thursday.

Sterling grinds higher, Fed speakers in focus

In the broader FX market, there is a feeling of cautious optimism early on Tuesday. Defensive proxies like the dollar and yen are slightly weaker, while risk-linked currencies like the aussie and kiwi are a touch higher.

The British pound is having a good day too, after BoE Governor Bailey poured cold water on negative rates. The gains may also reflect the fact that the UK is among the leaders in the global vaccination race so far. This doesn’t mean the UK has done a stellar job with the vaccine rollout, but rather that it has done the least-bad job among the major economies. The European rollout has been abysmal, and while the American one is better, it is far from impressive.

Finally, there’s a ton of Fed-speak today, including the Fed’s Brainard (14:30 GMT), Mester (17:00 GMT), and George (18:00 GMT). Brainard is the most important, and if she echoes Bostic and Kaplan in being open to tapering, that could give the dollar another shot in the arm.




The EUR/USD Price Prediction 2022. The Bulls or the Bears, Who Will Prevail?
The EUR/USD Price Prediction 2022. The Bulls or the Bears, Who Will Prevail?

Euro/US Dollar (EUR/USD), for which we will provide the price forecast for the year 2022, is the most actively traded currency pair on the foreign exchange market, also known as Forex or FX...

2 Dec 2021

The greenback remains calm
The greenback remains calm

EURUSD is rather calm on Thursday; the pair is waiting for the news. The major currency pair reached stability while waiting for the news. The current quote...

2 Dec 2021

EURUSD is "seasick"
EURUSD is "seasick"

EURUSD will have to consider an earlier reduction of the US QE programme. The major currency pair reached stability on Wednesday after "rolling in rough weather" the day...

1 Dec 2021

The demand in the greenback is increasing
The demand in the greenback is increasing

After making a short pause on Friday, EURUSD is falling again. The major currency pair is under pressure again after a short break. The current quote for the instrument...

29 Nov 2021

The Euro's oversold is a sign for more volatility to come
The Euro's oversold is a sign for more volatility to come

The Euro fell against the dollar to 1.1200, a new 16-month low, having lost more than 4% in the last four weeks. The downward trend in the single currency accelerated...

26 Nov 2021

EURUSD is knocked out again
EURUSD is knocked out again

After testing another “bottom”, the major currency pair is consolidating. EURUSD continued falling and tested another low yesterday; right now, it is consolidating....

25 Nov 2021

HotForex information and reviews
XM information and reviews
FXCM information and reviews
AvaTrade information and reviews
LegacyFX information and reviews
FP Markets information and reviews
FP Markets

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.