Talking Points:

  • Most Fed voters still calling for a 2013 taper
  • Minutes from September showed an unchanged Fed outlook
  • USD/JPY rallies temporarily

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The US Dollar rallied to a four day high against the Yen, as minutes from the September Fed showed the no-taper decision was a close call. Furthermore, most voting Fed officials still expect to begin tapering the 85 billion US Dollars of monthly quantitative easing this year and end monetary easing in mid-2014. Those who voted for delaying the taper said they wanted more of a confirmation of an economic improvement, despite knowingly disappointing market expectations.

Before the onset of the government shutdown crisis and the worries over a pending US default, the US Dollar traded heavily on the forecasts of the next Fed taper, with October and December being mentioned by different Fed members as possible taper dates following the September decision.

After Fed Chief Bernanke said in June that the central bank will slow bond purchases later in 2013, market expectations pointed to a September taper date. Therefore, when there was no taper decision in September, some spectators assumed the Fed outlook may have worsened. However, today’s minutes show the outlook remains similar to June and the no-taper decision was a close one, which may be why the US Dollar popped on the release of the minutes.

The dollar rose above 97.50 against the Yen following the release, but the pair has since erased most of those gains. A rising broken support line from January may provide resistance at 97.64 after being breached a few days ago, and the 200 day simple moving average may provide support at 96.77.

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USD/JPY Daily: October 9, 2013

Most_Fed_Voters_Still_Calling_for_2013_Taper_Dollar_Rallies_Briefly_body_Picture_1.png, Most Fed Voters Still Calling for 2013 Taper, Dollar Rallies Briefly

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to .