Forex: A Recovery or Mere Pause Before the FOMC Taper?
• The Federal Reserve's is expected to announce its second 'Taper' Wednesday to trim QE3 to $65 billion
• Beyond the Fed's decision, the market's confidence stability is of greatest importance
• For dollar contrast, UK GDP printed in-line to offer the GBP limited follow up and the RBNZ is due
If the global financial markets are on the verge of a more prolific deleveraging of 'risk', the FOMC's expected Taper Wednesday can prove a powerful catalyst. The Fed isn't the only major central bank acting to limit its support following years of buildup on leverage and uneven growth prospects. The ECB has watched yields rise as its balance sheet shrinks, the BoJ has backed off of QE expansion rhetoric, the market is projecting a BoE hike this year and the PBoC has warned of locking down on excessive credit. Add to that a recent scare in Emerging Markets - that is unlikely resolved - and we have a market ripe for a systemic change in sentiment. We discuss risk trend, the Fed decision, Emerging Markets and the RBNZ in today's Trade Video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.