October 22, 2014 – (ATFX Currency Management) – With the Fed’s October 28-29 meeting right around the corner, we examine the prospects for an end of the U.S. central bank’s Quantitative Easing program and its potential impact on the U.S. dollar.
Here is the FOMC meeting outlook from the research team at ATFX Currency Management.
All you have to do is look at futures bets to gauge where the market feels the Fed is at this point. Bets on a Fed rate hike in October 2015 currently stand at 49 percent, down from 85 percent at the end of September.
Although the Fed’s outlook will be cautious, given the global economic slowdown, there is no reason for the U.S. central bank to stop tapering at this point.
So, the Fed will most likely announce the end of QE altogether with a final $15 billion reduction in the monthly asset purchases, while at the same time stating its usual promise to keep rates near zero for a “considerable time”.
The odds of a dovish Fed are high, but the USD could still get a boost from the end of QE.