Could the Fed taper in December after all? Just a week or two ago, a December reduction in the Fed's bond buying program was considered a near impossibility. However, a slew of positive economic reports, especially regarding an improving job market, has revived the chances of a taper this month. In fact, James Bullard, the Fed's St. Louis President has confirmed as much. Yet, Bullard also said any tapering would be modest because the rate of inflation is still too low. Basically, the Fed could engage in a minor cutback of purchases for now, and keep a close eye on inflation data for the next few months. That could result in a shift of investor focus from jobs data to pricing data, such as CPI. Given low inflation expectations, it could also mean QE will be on the table for quite a bit longer. (VIEW LINK)
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Agree Jay - Fed taper more likely to be a softly softly approach and unless we get firm guidance or a timeline (which I don't think we will next week) then USD could continue to slide against EUR, GBP and to a lesser extend the Aussie dollar