Fed announces taper decisions
04 November 2021
FOMC announced their decision to start tapering asset purchases but left the rates unchanged at the November rate decision on Wednesday.
Persistently strong inflation numbers prompted Federal Reserve to tighten their policies and reduce asset purchases to the tune of $15 billion per month. According to Fed Chair Powell, this decision is not expected to leave a permanent persistent mark on inflation.
As a knee-jerk reaction, US Dollar went down modestly against most of its rivals. The EUR/USD pair could not advance beyond 1.1615, but the GBP/USD pair closed near 1.3700. Even weaker oil prices could not help the USD/CAD pair and it fell down to below 1.2400.
The dovish Fed inflicted a blow on Gold prices, and it dipped to $1,759 initially before finding some buying pressure to settle around $1,770. However, the Fed decision more or less stalled the recovery of Gold, although the XAU/USD pair has registered some gains as Asian session begins on Thursday.
AUD/USD, on the other hand, bounced after the Fed meeting, but got contained by mixed Australian data for the month of September. Now all eyes are on RBA monetary policy statement and US NFP release that is due on Friday.