Federal Reserve decreases stimulus

Source: Dukascopy Bank SA
On December 15, the US Federal Reserve published its FOMC Statement and Economic Projections. In general, the federal funds rate remained unchanged. However, the bank announced that it would decrease its monthly treasury purchases by $20 billion and mortgage backed securities purchases by $10 billion.

Quoting the statement: "With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have improved in recent months but continue to be affected by COVID-19. Job gains have been solid in recent months, and the unemployment rate has declined substantially. Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

In light of inflation developments and the further improvement in the labor market, the Committee decided to reduce the monthly pace of its net asset purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities. Beginning in January, the Committee will increase its holdings of Treasury securities by at least $40 billion per month and of agency mortgage‑backed securities by at least $20 billion per month.

Released Document

Federal Reserve issues FOMC statement

The announcement caused an initial jump of 35 base points or 0.31% on the EUR/USD charts

On a larger scale, the announcement did not increase the size of the daily candle chart. However, the long term course of the currency, in theory, should change.

Initial Reaction

Larger scale situation

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Actual Topics

Thu, 16 Dec 2021 08:53:06 GMT

SNB keeps policy intact

On December 16, the Swiss National Bank published its Monetary Policy Assessment. In general, the bank kept its policy unchanged. The deposit rate would remain -0.75% and the bank would intervene into forex markets to push the value of the Swiss Franc down. Quoting the Assessment: "The SNB is maintaining its expansionary monetary policy. It is thus ensuring price

Wed, 15 Dec 2021 13:48:32 GMT

USD/CAD moves due to Canadian CPI

On Wednesday, at 13:32 GMT, the Canadian Consumer Price Index was published. The inflation measure hit the forecast of 0.2%. Due to that reason, the market reaction was muted, as the USD/CAD surged only 17 base points or 0.13%.

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