Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

The Taper Trade and the U.S. Dollar

Taper is here and our trade is clear.

Markets have responded definitively in the first six trading days of the year. Assets which have benefited from the Federal Reserve's bond-buying largesse are down. The dollar (which has been debased by Fed printing) is up.

Central bank commentary over the past 24 hours has further reinforced what markets are already telling us: Tapering is happening because recovery in the U.S. is happening faster than in Europe.

Bloomberg tracks 84 foreign exchange strategists, and collectively they forecast a decline for the euro of 5 percent to 1.29 by year end. Looking at the dollar index, which measures the dollar against a basket of currencies including the euro, the recent 80 level has provided consistent support and sets the stage for a potential rally.

As Citigroup strategist Bryan Zarnett wrote to clients this morning:

We have modest changes in the overlay portfolio this week, adding further to our CAD and SEK shorts, offset by increasing our US long.

We agree with the dollar bulls.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.