Week in FX Americas – Token Taper On Offer

Friday’s miss on payrolls was not the worst of it. The nasty lower revisions for the headline job print in June and July (-74k) were not pretty. Initial reaction saw a deflated dollar, while emerging market currencies loved it – dollar BRL and MXN rallied +1%.

In truth, this August payroll report is one of the outliers among recent data reports showing a clear strengthening of activity in the US. However, the details are worrying enough to make the Fed doves more cautious on how tapering will proceed. Analysts not that even if the staunchest of doves, Chicago Fed Evans, stating that he can “be persuaded” about tapering beginning then odd favor tapering happening later this month.

The key to all of this will be the “size.” A poll of Fixed Income dealers found expectations centered on a $15B reduction in liquidity per-month. What would probably be more realistic would be a number closer to $5-10B. A token sum and an amount that would help the US Treasury market to simmer down and get rid of some of that excess noise. Although not a true Fed consideration, a nominal amount that would bring some much needed relief to the Emerging Markets.


* CNY New Yuan Loans
* CNY Consumer Price Index
* NZD Reserve Bank of New Zealand Rate Decision
* AUD Employment Change
* AUD Unemployment Rate
* EUR ECB Publishes Monthly Report
* USD Advance Retail Sales
* USD U. of Michigan Confidence

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell