This chart, courtesy of Bloomberg, shows the market’s reaction to the Fed’s decision to reverse its quantitative easing policy. The Federal Reserve took the first tentative steps Wednesday to unwind its history-making economic stimulus. As markets expected, the U.S. central bank announced it will begin to roll back its $4.5 trillion balance sheet in October. Most of those assets consist of the Treasurys and mortgage-backed securities it acquired under a program known as quantitative easing. It is expected that next year this will amount to a 600 billion dollar reduction to the balance sheet.

The initial reaction to the move in the dollar was for the Mexican peso to weaken. The question remains as to whether the peso will move out of its trading range and move above 18 pesos. We should also know more about the direction of the U.S. stock markets in the coming days.

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