Forex Today: Central bankers facing the tapering challenge

What you need to know on Thursday, September 9:

The dollar maintained the strength throughout the first half of the day, with demand for the greenback easing after Wall Street’s opening. Nevertheless, it finished the day with gains against most major rivals.

The US published the Beige Book, which showed that several districts indicated that businesses anticipate significant hikes in their selling prices in the months ahead, somehow reviving tapering speculation.

In the UK, BOE policymakers testified before the House of Commons in the Monetary Policy Report Hearings, as they lifted speculation on soon to come tapering in the UK. Bank of England Governor Andrew Bailey noted that the minimum conditions for a rate rise have been met but are not sufficient for one at the time being. Other members of the Government Council have given similar messages, although most of them focused on the medium-term

On Thursday, the European Central Bank will announce its decision on monetary policy, and the focus will be on whether they decide to start reducing financial support, as no changes are expected to rates and the bond-buying program.

EUR/USD fell for a third consecutive day and settled around 1.1820. GBP/USD trimmed intraday gains and ended the day unchanged around the 1.3780 level.

 Commodity-linked currencies lost some ground to the greenback, with AUD/USD trading around 0.7370 and USD/CAD at around 1.2680.

European and American indexes closed in the red, but off intraday lows. Government bond yields pulled back from weekly highs. The yield on the 10-year US Treasury note settled at 1.33%.

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