FOMC member James Bullard already hinted about QE tapering in October, “Octaper†just after the surprise decision not to taper in September. The long lasting political crisis washed these expectations away.
And now, Bullard seems to be preparing the ground for QE tapering by playing down its importance. Coming on the background of the not-so-dovish October decision, are chances of a “Dectaper†now higher? The dollar seems to like his words.
In a first public appearance since the recent rate decision, Bullard stated that a “small taper would still leave very stimulative policyâ€. He also added that everything is data dependent and quite a few standard statements. But the playing down of QE tapering from a member that is usually dovish, is quite telling.
EUR/USD, which already lost a lot of ground and could be in oversold territory (and at critical uptrend support), continues to grind lower, and is only a few pips away from the round 1.35 line. Other currencies are also retreating against the dollar. USD/JPY, which often reacts best to US developments, is on the march towards the 98.50 line.
The last big event for this week is the release of the ISM Manufacturing PMI. See how to trade this event with USD/JPY.
