Flash: QE tapering well and sound - BTMU

FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, noted that recent Fedspeak backed a continuation of QE exit.

Key Quotes

"Another record closing high for the S&P 500 in the US has helped support risk appetite during the Asian trading session with most equity markets higher again today. There was little on the event front from Asia today with the ECB decision yesterday and comments from New York Fed President Dudley gaining the most attention."


"Indeed, the Fed rhetoric has been quite consistent and explicit in the message that QE tapering will continue. Fed President Dudley stated that the threshold for changing the pace of tapering was high while Atlanta Fed President Lockhart (non-voter, but alternate FOMC member) confirmed that QE is likely to “completely end” this year unless the economy takes a “major turn for the worse”."

"Finally Philadelphia Fed President Plosser (voter) went further by suggesting that the current pace may be too slow given the US economy is about to accelerate. What is clear from recent Fed comments is that the recent spate of weak economic data has not changed the thinking of the FOMC. The continued record highs in US equities is probably also playing a role in the Fed’s interpretation of the data."