Will the Fed start
tapering?
To
support a fragile economy, marked by the 2008 crisis, the Federal Reserve
decided last year to finance the U.S.
economy through a process of injecting liquidity to the U.S. financial
system through monthly purchase of 85 billion dollars bonds to maintain low
interest rates and a weak dollar.
The
Fed chairman, Ben Bernanke announced that the objectives were to reach 6.5 %
unemployment rate and 2% inflation. But these purchases have huge consequences
on the Fed balance sheet. In October 2013, the balance reached nearly 3.9
trillion dollars. This expensive system pushed investors to speculate on economic
indicators that could lead the Fed to start winding down the program, therefore
the dollar strength will be sustained.
The
latest economic indicators for 2013 are seen as crucial to the monetary policy
of the Federal Reserve.
According
to the government report, appeared Friday, December 6, the economic growth in
Q3 has increased to 3.6 %, US unemployed rate was 7%; about 203,000 jobs were
created in November, a first in nearly five years.
Reaching
the 7% in the unemployment rate is not symbolic, it is also fast, and Bernanke
certainly would not have imagined that this rate can reach this threshold so
quickly.
The
next statements from FOMC members: Fisher and Bullard will allow
us to obtain important information’s on the next policy gathering on December
17-18.
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