Dollar suffers broad based selloff and stocks surge after WSJ reported that Fed is considering to stop shrinking it’s massive balance sheet earlier. That is, the eventual size of the portfolio of treasury securities could be larger than originally expected. Further discussion on when to stop the roll-off would take place in next week’s FOMC meeting.
This is seen as move in response to the adverse stock market condition back in December. Some policy makers might want to take the balance sheet reduction off autopilot.
At the time of writing, DOW is up more than 1.1% and is heading towards 25000 handle.
AUD/USD’s break of 0.7166 suggests that fall from 0.7235 is merely a corrective pull back and has completed. Rise from 0.6722 might be resuming.
