Flash: Fed taper to disappoint - BBH

FXstreet.com (Barcelona) - As noted by Marc Chandler, Head of Currency Strategy at BBH, despite the WSJ survey shows two-thirds expect the FOMC to announce tapering this week, the USD should weaken on the outcome given likely disappointment.

Key Quotes

"If they do so, it is hardly a secret and it appears to have been largely discounted. We suspect that even with the scaled back expectations, a taper-lite in response to a taper-tantrum, if you will, there is scope for disappointment."

"It can take the form of buy the rumor, sell the fact type of activity. The FOMC could offer other guidance to keep the signal clear that this is not tightening of policy. It is possible, and a third think likely, that the Fed holds off altogether."

"We suspect the dollar may weaken after the FOMC decision. The Fed is more likely to do less rather than more relative to market expectations."