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Moving away from using quantitative easing to support demand in an economy is a sign that the monetary authorities believe that the economy is strong enough to stand on its own two feet. The US originally signalled that it would start tapering off its QE program back in May, but backed off when the markets reacted negatively to the surprise announcement. The Americans are now expected to wean themselves off quantitative easing during 2014.

Considered by itself, the end of US quantitative easing should see the Dollar appreciate in value against other currencies. As ever the extent to which it appreciates against a given currency will depend on the fundamentals of the economy that currency serves.

For those forex trading using the Euro, the Dollar is expected to appreciate strongly against the currency when quantitative easing begins to taper off. This is due to the low growth, high employment and low inflation in the Eurozone and the European Central Bank's consequent desire to maintain a stimulus. The ECB is likely to welcome a weakening of the Euro against the Dollar as this will help them to export goods to the US.

The British Pound is expected to perform more strongly against the USD due to the fact that the UK is not expected to engage in further rounds of quantitative easing. The UK economy is predicted to grow strongly throughout next year.

The currencies that are likely to depreciate most strongly against the US Dollar (and the British Pound) are those that are backed by commodities. These include the Australian Dollar, the Canadian Dollar and the South African Rand. The US QE program has helped to stimulate high commodity prices. When it is withdrawn these commodities and the currencies whose value they support should take a hit.

Economies who conduct a lot of trade with the USA are likely to see a reduction in US sales due to the cutting back of the money supply. This will have some impact on Canada, Japan and the UK.

The main danger for the US in moving away from quantitative easing is if it does so too sharply and with insufficient advance warning. This could easily lead to the US economy contracting. As a result the US Federal Reserve are expected to give plenty of notice ahead of the start of QE tapering and for the process to be gradual.

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