US Announce Tapering – USD Exchange Rates
In his last meeting as Chairman of the US FED he announced that as of January 2014 they will begin tapering down their asset purchasing plan by $10bn down to $75bm. There had been a lot of speculation surrounding when the FED would begin tapering following comment from Bernanke earlier in the year, however the FED have given no further details on future tapering but have said the Central Bank will take measured steps. It is expected that as economic growth in America continues to strengthen tapering will likely continue but at the same time in a message from the FED last night they hinted that their interest rates would remain low for some time yet, probably at least until 2015. In reaction to this news we have actually seen very little USD movement but we have seen Sterling strengthen against a number of currencies, pushing up against the EUR, AUD, NZD, and several others. The fact the US will start tapering next year has provided the markets with some stability and so Sterling has strengthened.
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