The decision to taper was quite close, according to the FOMC minutes. Tapering in 2013 was still on the table and so was ending QE in mid 2014. The minutes are from the meeting in which surprised the world with its decision not to taper. Given the deadlock in Washington, the decision seems very logical in hindsight. At the time, it was surprising as hints leading into the decision showed a tendency to begin reducing bond buys.
EUR/USD traded at 1.3510 before the release, stabilizing after falling earlier. It is now below 1.35 . USD/JPY traded at 97.33 and is now close to 97.60. Â and GBP/USD remained on low ground 1.5940 after being beaten by weak data and is now even weaker at 1.5920.
Update: After the initial move, the dollar is sliding once again. In fact EUR/USD is now above the pre-release levels.
For many members, the decision not to taper was a close call. Apart from one, the others wanted to see more evidence for economic improvement.
The Fed takes the focus today. Apart from the minutes, there were official reports that Janet Yellen will be nominated as the next Fed Chairwoman. Obama is scheduled to announce the nomination with Yellen quite soon.
While Yellen is considered a dove and close to Bernanke, the expected nomination released a wave of “sell the fact†responses: the dollar rose.
It’s important to remember that Bernanke is still the chief in two more meetings.
Further reading: Central bank intervention can’t be far off as US debt talks stall
