Emmanuel Ng of OCBC Bank comments that a confluence of factors worked to drag the majors lower against the dollar with the FOMC minutes hinting of a need to “taper or end” QE3 before a “substantial improvement in the outlook for the labor market”.

He feels that these comments outweighed other comments discussing the potential and significant costs of prematurely ending asset purchases. Overall, he thinks that the mere discussion of the exit strategy does not signal a sea change in the Fed’s thinking (but the discussions remain a work in progress) and only provided a convenient catalyst to nudge the greenback higher in a day littered with negatives for the rest of the G10 currencies. Note that US Treasuries still managed to gain on the day.

Ng comments that NZD scythed lower yesterday after the RBNZ’s Wheeler stated that the NZD is significantly overvalued, although he added that there were no quick fixes. Elsewhere, he sees that GBP was also sabotaged after the BOE MPC minutes reinforced the central bank’s recent stance that the importance of inflation may have to be relegated while the prospect of further QE remained visible. he finishes by writing, “On other fronts however, the JPY found some support after PM Abe noted that the need to establish a fund to purchase foreign bonds had faded.”