On what has been a relatively quiet weak for the pound most eyes this evening will focus on the release of the FED interest rate decision and accompanying FOMC minutes for any hint as to when the FED may begin to taper QE. For me it is highly unlikely they will do anything before the New Year but it is certain to be on their mind.
Any hint from the minutes as to when it may occur it and we could see some strength for the US dollar. For me currency movements across the board will hinge on the FED and its ‘will they wont they’ approach to QE. When they eventually do look to reduce QE it is likely the so called ‘riskier’ currencies such as the AUD, NZD and ZAR will be the major losers as a reduction in liquidity in the market will reduce investment flows to these currencies and so cause a reduction in their respective value, the problem we have is how long will it take for the FED to cut QE? The answer is likely to be months not weeks.
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