020 7898 0500A strong start to the week for the US dollar as better than expected Pending Home Sales data increased speculation that the Federal Reserve would taper bond-buying this Autumn. Whilst the figures did reveal a decline, the decline was not as big as expected after reaching the highest level in over six years in June. On Wednesday, despite better-than-forecast GDP data, the US dollar experienced high levels of volatility across the board and movements in both directions as traders held their collective breath ahead of the evening’s statement from the Federal Open Market Committee. Traders had been speculating the statement might reveal further clarity regarding the so called tapering of the Federal Bank’s bond buying program. However, no such details were given and the committee stated that it was “prepared to increase or decrease” its bond buying program where necessary, whilst stating that deflation could hard harm the US economy. Gains were seen yesterday in response to more convincing economic data. Both unemployment and manufacturing data from the US were better than expected which fuelled speculation once again that the central bank could taper its monthly asset purchases at some point this year. Looking ahead to today, we have the highly influential non-farm payrolls data released. Given the rhetoric from the Federal Bank that tapering would only be considered when the labour market has shown significant improvements, this release is likely to cause volatility in the market. Additionally, a member of the Federal Open Market Committee is speaking in the afternoon and will comment on future policy deliberations. Call your trader now to see how the latest data is received.
