Over the previous days, several Fed governors talked to downplay the current rising inflation, reiteration the inflation spike is only temporary and monetary policy will stay accommodative for the next months.
However, some Fed officials have already mentioned the need to tighten monetary policy sooner rather than later. Such as Randal Quarles, the Fed Vice Chairman for Supervision, who said that the Fed would need to start discussing plans to reduce its bond purchases (i.e., to taper) if the economy continues to show improvement as it emerges from the pandemic.
“If my expectations about economic growth, employment, and inflation over the coming months are borne out,” Quarles said Wednesday, “it will become important for the FOMC to begin discussing our plans to adjust the pace of asset purchases at upcoming meetings.”
Later in the day, market participants will focus on the US durable goods orders for April, which are expected to decline slightly from March. Additionally, the revision of the first quarter's GDP will be published. Finally, jobless claims are on the agenda as well.
The USD halted its decline on Wednesday amid the taper chatter but continued to slide today, with the EURUSD pair advancing above 1.22 again, while the USDJPY pair fell toward 109.
Despite the tapering rumours, US yields have fallen notably recently, and the 10-year yield is back below 1.6%, supporting precious metals.