Perfect storm for QE Tapering?

19

One week before the Fed decision, there is more to support a decision on tapering bond buys in December after the better than expected Non-Farm Payrolls report.

Also the Fed’s favorite measure and the political scene seem set. Is the market pricing a decision on QE tapering? Not exactly.

JOLTS

Ben Bernanke is still the man behind the wheel in this FOMC decision, and he likes the JOLTS figure even though it is a lagging figure. For the month of October, which feature the US government shutdown, openings increased and reached the highest levels since 2008, 3.93 million.

While the Fed would probably like to see JOLTS crossing the 4 million mark, the figure is steadily and safely moving in the right direction. Employment is part of the Fed’s mandate.

Political Deal

16 days of government shutdown and a scare of debt default didn’t take the winds of the US economy’s sails, and another government shutdown has now been averted. Contrary to previous dealings, US politicians reached a deal on a budget ahead of schedule. Ryan and Murray agreed to avert a potential government shutdown in January and in October 2014.

Even if the a deal on the debt ceiling wasn’t reached (and the deadline is around February-March), there is a lot more certainty coming from the political scene. The surprising ability to reach a deal not in the last moment is hopefully a sign that the same will happen around the debt ceiling.

In hindsight, the Fed’s decision not to taper in September was justified by the government shutdown that began less than two weeks afterwards. A significant portion of that fear is now behind us.

So, is a “Dectaper” closer? It certainly seems so. Is the market complacent about it? Not exactly. It seems that markets aren’t certain about anything: a “Dectaper” will boost the dollar, and a lack of it will send it falling fast.

Further reading: 5 reasons for QE tapering in December – NFP Analysis

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

19 Comments

  1. So what do you think will happen to UJ when taper happens ? Up because dollar strength or down because equities to fall?

  2. Pingback: Silver Forecast and Gold Price for Wednesday December 11th 2013 | Trading NRG

  3. Pingback: US Job openings soar on robust demand projections | Forex Crunch

  4. Pingback: US Job openings soar on robust demand projections | myfxequipment

  5. Pingback: US Job openings soar on robust demand projections - James Invest | James Invest

  6. Pingback: The Fed Taper Is Almost a Dead Certainty – But May Not Trigger a USD Rally Yet - James Invest | James Invest

  7. Pingback: The Fed Taper Is Almost a Dead Certainty – But May … | Forex

  8. Pingback: 40% of QE tapering in December; more German opposition to ECB moves in 2014 | Forex Crunch

  9. Pingback: EUR/USD set a lower high – is this the beginning of a long downtrend? | Forex Crunch

  10. Pingback: Forex Weekly Outlook December 16-20 | Forex Crunch

  11. Pingback: Tension builds ahead of next Wednesday’s FOMC meeting as markets look for signs of a Fed taper | Forex Crunch

  12. Pingback: Forex Weekly Outlook December 16-20 - James Invest | James Invest

  13. Pingback: Tension builds ahead of next Wednesday's FOMC … | Forex

  14. Pingback: EUR/USD Forecast December 16-20 - James Invest | James Invest

  15. Pingback: NZD/USD Forecast Dec. 16-20 2013 | myfxequipment

  16. Pingback: NZD/USD Forecast Dec. 16-20 2013 - James Invest | James Invest

  17. Pingback: EUR/USD: Trading the German Ifo Business Climate | Forex Crunch

  18. Pingback: QE Tapering in December - 11 reasons | Forex Crunch