On Wednesday, following Ben Bernanke's final meeting as chairman, the Federal Reserve announced that it will taper its bond-buying program to $65 billion in February, down from $75 billion in January.
Addressing the decision to taper and the disappointing December employment report, the Fed stated; "Labor market indicators were mixed but on balance showed further improvement."
The central bank also noted "growing underlying strength in the broader economy."
Current Vice Chair Janet Yellen is set to take over as chairperson, and will preside over the next Fed policy committee meeting scheduled for March 18th.
The reduction of stimulus was widely expected by analysts and the U.S. dollar's initial reaction to the news was muted. However, the greenback rallied in early trading on Thursday ahead of the Initial Jobless Claims and GDP figures released at 8:30am eastern time.
The Department of Labor announced that Initial Jobless Claims missed expectations of 330K, coming in at 348K. Meanwhile, Continuing Jobless Claims beat expectations of 3,020K coming in at 2,991K.
The Commerce Department reported U.S. GDP quarter over quarter came out in line with expectations at 3.2 percent. Fourth quarter GDP slowed from the third-quarter's 4.1 percent rise. However, growth over the second half of the 2013 posted a pace of 3.7 percent, higher than the 1.8 percent growth rate recorded in the first half of the year.
The dollar index rallied to new daily highs on the heels of the mixed but broadly positive data.
U.S. Dollar Index Daily Chart
Looking at the U.S. dollar index daily chart we can see that price is nearing a key area of resistance at around 81.42, where there is a confluence of prior highs and the 200 day simple moving average.
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