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The Dow has fallen substantially today, dropping 0.58% to 15,546 by early afternoon in New York. Volumes have been high today, as the day marks ‘quadruple witching’, when index futures, index options, share options and shares futures expire.
Some caution seems to have been sparked amongst investors by comments from James Bullard, the head of the St Louis Federal Reserve, who said in an interview with Bloomberg that mixed data heading into the September meeting meant the committee decided to wait, but that the decision was ‘borderline’. He also mooted October as a possible candidate for tapering.
Mr Bullard still described the quantitative easing as open-ended, however, and suggested the difference between a $10 billion reduction and no reduction was slight. He defended the Fed’s communication policy, saying they were doing as good as job as they can and re-iterated his worries over inflation, saying the Fed should defend their inflation target from the low side. ‘Inflation has been running low in the US and that is something that should concern the committee,’ he said.
His comments have helped to boost the dollar today, which has strengthened against most of its peers. EUR/USD was little changed, though, even with German Federal elections set for Sunday night.
Several other members of the Fed are speaking today: Kansas City Fed President Esther George, Minneapolis Fed President Narayana Kocherlakota and Fed Governor Daniel Tarullo are all slated to speak this evening.