The whole world is interconnected from the Black Death to World Wars to the financial crisis of 2009; what the US does to its monetary policy, it will have a trickledown effect thus spilling over on the global economy. The Federal Reserve has been buying USD 85 billion per month on Treasury and mortgage-backed bonds. The program has attempted to lower interest rates and increase the monetary base thus letting the banks to lend more.

The US Dollar, as considered as the risk-averse money, finds its value by the Fed’s money supply decision and the US economic conditions. The Federal Open Market Committee (FOMC) is the branch of the Federal Reserve Board which comprises of the board of governors consisting of seven members and five reserve bank presidents. They are continuously involved in determining the direction of monetary policy and take decisions regarding the interest rates and the growth of the money supply in the US. They are involved in the open market operations i.e. buying and selling of the US Treasury securities.

The September 19th decision of the Fed to continue the quantitative easing due to less supportive data on the improvement of the economic conditions in the US created a stir amid the investors’ sentiment. The investors had expected a tiny tapering. The next meeting is about to held on 29th and 30th of October this month. Though the FOMC is expected not to amend the US monetary policy as the week end economic data of the US do not show significant improvements after the government reopened after 16 days of shutdown. The shutdown had made a direct impact on the GDP and the dropped confidence among private investors in spending as uncertainty rises.

The investors and traders are curious about the benchmark interest rates at near 0-0.25%.  They are interested to look forward for the tapering date and its hints on the FOMC meetings. The investors are speculating on the Fed’s tapering to occur no sooner than the second quarter of 2014. The delayed tapering expectations support the commodity market to run on bullish trend mostly in the precious metals basket.

Amid the low progressive data on the US economy and labor market, the Fed is not likely to taper the assets purchasing program but the Fed can signal some important future policy actions to be taken off.