The Opening Bell: Where currencies start for Thursday, December 19, 2013

The Opening Bell: Where currencies start for Thursday, December 19, 2013

By Dan Bell

The NZD/USD has traded a 100 point range over the last 45 minutes after the Fed announced they will start to tapering their USD$85 bln per month bond purchase program by USD$10 bln.

Key points in their statement are:

- Tapering to begin in January

- Reducing bond purchases by USD$10 bln per month

- Fed cites cumulative progress towards full employment, improved jobs outlook

- Fed to keep rates unchanged "well past" time jobless rate drops below 6.5%

- Unemployment rate has declined; remains elevated

- Fed monitoring inflation developments carefully for evidence returning to target

- Keeps funds range unchanged at 0.0% to 0.25%.

- Voted 9-1 for Fed Funds rate action

- Fiscal drag on economy may be diminishing

- Risks to economy, labour market have become more balanced

- Longer-term inflation expectations have remained stable

The NZD was very volatile in immediate response - and Fed Chairman Ben Bernanke is currently giving a media briefing which is causing further volatility.

NZDUSD               0.8220 / 0.8250

NZDAUD              0.9260/ 0.9290

NZDEUR               0.5980 / 0.6000

NZDGBP               0.5015 / 0.5030

NZDJPY                85.30/ 85.40

From NZ today we get Q3 GDP at 10:45 with the market expecting a 1% outcome (3.2% annualised)

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »

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