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

Fed taper talk approaching fever pitch, dollar edges up again

10 August 2021

The first response by Fed policymakers to last week’s stellar jobs report left investors in no doubt that the US central bank is closing in on its criteria of achieving “substantial further progress” towards its goals. The presidents of the Atlanta Fed Raphael Bostic and the Boston Fed Eric Rosengren both hinted that the Fed could announce it will start tapering its $120 billion in monthly asset purchases as early as September. Richmond Fed President Tom Barkin seemed to think inflation is now sustainably back at 2% but was less certain about how much progress has been made towards the Fed’s employment goal.

Fed leaves little doubt tapering is coming soon

Their comments could be paving the way for a more formal communication at this year’s Jackson Hole symposium due to take place at the end of the month. However, it’s likely that policymakers will want to wait for at least one more strong NFP print before deciding anything so investors might be kept in the dark through summer.

Yesterday’s better-than-expected numbers on job openings, which set a new record high in June, underscored the view that the US labour market is well and truly on the mend. However, policymakers have yet to reach a consensus on how progress in the jobs market should be measured.

Nevertheless, all the indications are that the Fed will begin to withdraw some of its stimulus later this year, whether that’s in September, November or December, and the moves in the bond market reflect the growing expectations of a taper announcement at one of those meetings.

Dollar on a roll as yields climb

Treasury yields spiked up again on Monday following the fresh Fed remarks, extending the rebound from last week’s lows. The 10-year yield is now back above 1.30%, recovering sharply from a 6-month low of 1.1270% and significantly boosting the US dollar.

The dollar index was flirting with the 93 level on Tuesday for the first time since July 23 before the latest selloff took hold. The euro appears to be the worst hit from the greenback’s resurgence, tumbling to a fresh 4-month low of $1.1724 today. The ECB’s recently reinforced dovish stance is weighing heavily on the euro, not just against the dollar but against all the majors.

The pound brushed a 17-month high versus the euro on Monday and was edging marginally higher against the dollar today. The loonie was also slightly firmer as oil prices stabilized somewhat along with other commodities. This helped the Australian dollar too, which was flat, offsetting a large drop in business confidence in July according to a NAB survey. However, the New Zealand dollar remained unusually weak even though the RBNZ is widely expected to hike interest rates next week.

Commodity selloff eases, for now

Metal prices such as copper bounced off their lows to head higher on Tuesday and oil prices were sharply up too. WTI futures jumped 2% to test the $68.00/barrel level, while Brent futures climbed back above $70/barrel. However, gold was struggling to hold onto earlier gains and was last hovering around $1,730/oz to stand barely up on the day. With the end of ultra-loose monetary policy now in sight in some countries, the non-yielding bullion is not as appealing as it was at the height of the pandemic. And although the Covid threat is far from over and the Delta variant continues to spark panic, most recently in China, there doesn’t seem to be much safe-haven flow coming in gold’s way.

Stocks maintain positive tone

In equities, European stocks followed Asian markets higher, though US futures were lacking direction. Overall, the reaction on Wall Street to the latest taper signals has been surprisingly benign.

The exceptional earnings season could be bolstering US shares even as the Fed moves closer to removing some of the cheap money, while expectations that the Senate will approve a $1 trillion infrastructure package in a vote due later today could also be shoring up sentiment.

If the bill goes through, the Democrats plan to follow it up with a $3.5 trillion spending plan so perhaps this new fiscal boost, which at one point was looking very uncertain, is easing the pain from the soon-to-be reduced monetary stimulus.

By XM.com




The Euro rebounded from the low
The Euro rebounded from the low

After updating its multi-year lows again, the major currency pair rebounded. The current quote for the instrument is 0.9656. Last night, the local interest in risks improved a bit, helping the asset to successfully correct...

29 Sep 2022

Gold Shows Signs of Life, But Heads Towards Another Losing Month
Gold Shows Signs of Life, But Heads Towards Another Losing Month

The precious metal is largely considered as a hedge to inflation, but it has not confirmed this status during the current year. It did kick it off with a rally, but as the Fed begun hiking rates back...

28 Sep 2022

Forex and Cryptocurrencies Forecast for September 26-30, 2022
Forex and Cryptocurrencies Forecast for September 26-30, 2022

Last week, all the attention of the markets was focused on the FOMC meeting of the US Federal Reserve, which took place on September 21. The probability of another rate hike by 75 basis points (bp)...

26 Sep 2022

Trading the SPDR S&P 500 ETF Trust
Trading the SPDR S&P 500 ETF Trust

The Standard & Poor’s (S&P) 500 Index measures the market capitalisation of the top 500 US largest corporations. Many traders and investors use the S&P 500 Index as a benchmark...

23 Sep 2022

Gold pauses as traders await Fed decision
Gold pauses as traders await Fed decision

The anticlimactic performance of gold continues as the prospect of aggressive rate hikes by central banks around the world amid heightened inflationary pressures...

21 Sep 2022

Developing a forex trading plan: All you need to know
Developing a forex trading plan: All you need to know

All forex traders have different backgrounds, market views, risk appetite, thought processes and expectations. Therefore, traders should not just blindly follow what other traders do...

20 Sep 2022

Editors' Picks

HFM information and reviews
IronFX information and reviews
FXCM information and reviews
NordFX information and reviews
Vantage information and reviews
FP Markets information and reviews
FP Markets

© 2006-2022 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.