Week in FX Americas – Bernanke Giveth and Bullard Taketh away

A couple of days after the FOMC decision of “no” taper sideswiped the market St. Louis Fed President James Bullard has returned, reminding investors that taper is still on the way. Bullard, a voter and moderate, stated first thing Friday in an interview that a taper in October is possible. His comments immediately sent fear into the hearts of equity and bond investors, the biggest net winners from Wednesday “no change decision.” He insists that the US economy is not that fragile and that a $10b taper versus no taper is not a big thing. The difference between “no” taper and “small” taper was a “borderline” call in midweek.

Both dealers and investors will now have to decide what key data to focus on over the coming weeks to shift their allegiance again. They have been bruised hurt and burnt on the first go around from the supposed new “transparent” communication policy of the Feds.

On a day with no economic releases, but with a plethora of Fed speakers, the most “hawkish” of Fed views will be expected to carry the momentum. A taper next month will not be decided by only the Feds view. In mid-week Bernanke pointed the blame towards Capitol Hill as a contributor to this week’s “no” taper decision. Next month, the budget battle in Washington begins and that will have an impact.


* USD Consumer Confidence
* USD Durable Goods Orders
* GBP Gross Domestic Product
* JPY National Consumer Price Index
* EUR German Consumer Price Index

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