The Fed is very good in moving in moderate steps, cushioning the impact of ending its Treasury buying program by extending it a month but keeping the total size of the program unchanged at $300 bln.
In a way it resembles what the BOE did before confounding the market and throwing another GBP 50 bln at the Gilt market. But don’t expect the Fed to extend the program unless conditions take a considerable turn for the worse in the next few weeks, an unlikely scenario given the lean inventory state in the US and the stimulus flowing into the economy.
The dollar is getting a nice lift from the news with EUR/USD now down at 1.4175 and cable at 1.6475.
