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The dollar gained across the board on Wednesday after the release of the Federal Open Market Committee’s (FOMC) July meeting minutes.

FOMC members have acknowledged that unemployment has dropped significantly since quantitative easing began and, even though markets remain focused primarily on job creation and unemployment, the signs for the market remain broadly positive due to the slight improvement in the economic outlook.

The gains on the dollar come in response to the suggestion that the US Central Bank was on track to taper its assets buying program next month. However, there is still no definitive sign as to whether the $85 billion dollar a month tapering package would be announced in either the September, October or December meeting minutes (the last three meetings of 2013). It is clear, however, that there will have to be a relatively strong shift in the consensus of the members if the rollback is to happen as planned next month.

It is clear from the minutes of the meeting that, at present at least, there is no strong arguments for a quick move and, as a result, the message from investing experts is largely that nothing has changed.

Due to this, the releasing of the nonfarm payroll data on the 6th of September will be closely monitored. It is only when such data is released that we will be able to determine with greater accuracy whether the level of improvement is enough to scale back the stimulus package.

The timing of the stimulus scale back is entirely dependent on the data as the Fed still remains split on the timing (and the scale of) the tapering. Despite this, however, there remains broad agreement in the Fed that the need to end quantitative easing is growing, and it is believed that it will end entirely by the middle of next year.

The lack of swift action, however, is due to uncertainty over the strength of the recovery we have witnessed thus far. It is widely believed that the housing market will struggle once the tapering begins due to the fact that mortgages rates will be forced to rise.  As a result, the Fed remains split on the idea of reducing the stimulus package as the housing market has been the cornerstone of a recovery that remains fragile.

Due to this, there are no strong arguments against a swift move to taper the stimulus and any sign that tapering will not come until December is likely to be welcomed for now at least. However, despite all this, the financial markets generally expect the central bank to pull back by about $20 billion at its September meeting.

Craig Erlam of Alpari had warned this week that there had been “caution in the markets” before the release of the FOMC minutes and “volatility” afterwards.

As a direct result of the announcement, we have seen a surge of interest in the dollar with the euro hitting a season low against the dollar ($1.3334) and the dollar rising to a season high against the yen (97.98).

This slight surge, however, remains dependent on the figures that will be released over the coming weeks as these will give us a key indicator as to whether we will see tapering in September or October rather than December.

Looking globally, the reaction to the announcement from the Asian and developing markets was clear as the rupee hit a new record low and the rupiah and baht remain at their lowest levels since 2009; all but reversing all of this year’s gains entirely.

Contributed by Marcus Holland of – an online guide to the world of stock options.