Trying to decipher the messages emanating from the Fed with regard to the timing and amount of its reduction to quantitative easing has not been easy. Last night’s minutes have all but confirmed that tapering will start before the end of the year, but it is not yet known whether this will happen in September or December. The second question that went largely unanswered last night was the amount of tapering that would take place. The general consensus is that it will be $10 billion, but as yet this has neither been confirmed nor denied.
With this being the case, it has painted a confusing backdrop for currency traders to interpret, and many will feel even less sure of the markets today.
In Europe this morning, we have a frequently seen pattern of slightly disappointing French but better-than-expected German services and manufacturing PMI figures. Luckily for the EU, Germany outweighs all of its counterparts and has dragged the EU’s total services and manufacturing PMI figures higher. Of course, the strengthening of the euro this morning could be outshone by this afternoon’s US unemployment claims figures or the country’s own manufacturing PMI.