Wednesday is a big day for the Forex market, a big day for any market for that matter.
The Federal Reserve’s meeting minutes will be released to the public and investors want clues on the time frame of Tapering.
There’s many people who believe the Fed will begin Tapering in September. Kasper Kirkegaard, Forex strategiest at Danske Bank, according to Reuters says “The Fed minutes are very important, and perhaps some are getting worried that risks are tilted towards a disappointment,”…”Our main scenario is that the Fed will begin tapering in September. If the Fed shows any concerns about low inflation or that they need to see a further improvement in the labor markets before tapering, it could send the dollar lower.”
Recently, from the employment rate, jobless claims, and consumer sentiment, the Fed may assume the economy is strengthening enough for them to reduce their $85 billion in monthly asset purchases. This depends on whether or not their Sept. 2012 “improve substantially” definition has been reached, or if recent conditions are ‘good enough’.
Michael Hanson, U.S. economist at Bank of America Merrill Lynch, said “The market is pretty much set on a September taper, in the $20-$25 billion range, with the only question remaining about how much of the reduction will be Treasurys,” according to MarketWatch.
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