Intraday Market Thoughts

Bernanke Sticks to Message, BoC Mentions China

by Ashraf Laidi
Jul 17, 2013 15:13

Fed Chairman Bernanke's new message is being increasingly understood by the markets-- scaling down of asset purchases does not necessarily mean a tightening of policy as the Fed shall maintain policy accommodation. Today's testimony reiterated that as long as the economy maintains its current course, the path towards autumn tapering would eventually lead to the termination of purchases by next year. It does not matter whether this will actually happen. Instead, markets' positioning and interpretation plays the bigger role here...and so far, markets are unlikely to extend USD weakness beyond 5-7% in one week as long as the tapering is set to start this year. GBP outperforms across the board on an unexpected 9-0 MPC vote in favour of keeping QE at £375 bn, the first unanimously hawkish vote since October.  Better than expected UK jobs figures also helped. GBPUSD Premium longs hit their final target.

We opened new trades in EURUSD, USDJPY, GBPUSD, EURJPY and GBPJPY, while our USDCAD longs survived the 1.0320 stop after the BoC trimmed its 2014 outlook, removed the reference to "the modest withdrawal" of stimulus and spelled out slowing GDP in China as the reason for downgrading its global growth forecast. All of the latest Premium trades and charts are in the latest Premium Insights.
 
 

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