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Eric Rosengren, president of the the Federal Reserve bank of Boston, is known as a “dove” – a supporter of loose monetary policies, or put more simply: more QE. In his speech in Minneapolis, Rosengren was quite cautious, but still allowed for the possibility of tapering QE in the next few months.

Even though many conditions apply, this supports the general idea that tapering down of QE is the next move from the Fed, and that it will probably happen this year, sooner rather than later.

The main condition that Rosengren put is a monthly gain of 200K in non-farm payrolls, and to see it happen month after month. Big rises have been seen in NFP, but consistency hasn’t.

Rosengren also warned that unemployment is still quite high and inflation well below target. His dovish side was clearly seen in stating that the benefits of QE outweigh the costs and the Fed could go in either direction regarding QE.

However, the FOMC voting member did see growth accelerating to a level of 3% in the second half of 2013 and these words certainly lean to the hawkish side: he sees a modest cut in bond buying making sense after a few months of strong improvement in jobs and the economy.


Rosengren’s speech came late in the US session, after the UK session had already ended. EUR/USD ticked lower, extending its moderate slide from the highs. It is currently trading at 1.2929. EUR/USD was unable to reach the double top at 1.30.  despite the earlier crash in the dollar’s value.

USD/JPY managed to recover and rise above 101 that it struggled with earlier.

GBP/USD is sticking to highs above 1.51 and hasn’t really reacted to the news. So has the Canadian dollar that received a not-so-dovish rate statement earlier. Also the Aussie’s reaction remains muted during the Australian nighttime.

It is also notable that US bond yields are on a roll. Are they front running the QE tapering? Here is analysis on the meaning of bond yields for the US dollar.