February 11, 2014

FX Trading Slow for USA

FX Trading

All markets are a little lethargic as September gets closer to ending. It has nothing to do with the autumn season starting up, and everything to do with more Fed tapering talks. Fed speakers are going to announce their reasons for their most recent decisions affecting FX trading. Anticipation has been on all year, 2013, for the Fed to start tapering. Many are seeing it as a sign of better economic outlook for the USA; however, there is still some trouble about the situation. Reports for part of the year suggested the USA economy would stabilise, but after the Syrian issues things changed again. True numbers of labour and GDP came out less than expected creating caution even among the Fed.

The True Story Behind FX Trading and the Taper

It is hard to understand the true story behind the taper when there is so much to contradict what is going to happen. It is little wonder that FX trading is a little slow for this week. Plenty has happened to make people wary of putting their money on the USD let alone in the rest of the market.

First Obama was in favour of Summers taking over the Fed chair, but he accepted Summers removal from running a few days later. It has left his dovish counterpart in the running to take over as soon as January rolls around and Bernanke’s term is over. The Fed then announced its intention of waiting on the tapering given the economic report’s poor results. The results were not detrimental, just not the move the Fed was hoping for. Yet, you have FX trading announcements from Bullard that tapering is not as far off as you might think.

This positive talk could be used to buoy the market rather than allowing the USD to lose anymore than it already has. The market certainly gained in the Asian sector on the announcements, and adding in Chinese positive data and Asia looks better for any trading.
It has left the beginning trader with some confusion as to what is really going to happen. Is the USA really going to start tapering and helping the USD gain? If you can read between the lines you can find the truth.

Statements from Fed affect FX Trading

The Fed statements are telling the world to wait a little longer. The Fed is waiting for economic reports to gain a bit more strength than September was able to show. It does not mean tapering is on hold indefinitely, but that FX trading needs to keep watching.

Talks are going to continue on the expected start to tapering. As soon as the numbers for economic reports are where the Fed wants them things will immediately change with quantitative easing slowly stopping. It is all about timing.

For the moment Asian currencies are desired, but as the next quarter begins there is a chance that the Fed will bring tapering about. It may take until 2014, but tapering is going to happen, thus FX trading investors have to be ready for it.




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