Metals & Tuesday's FOMC Decision

All sorts of reasons given to the metals rally, including the downgrade of the US AAA rating by S&P, but not many talking about most obvious, which is tomorrows FOMC decision. With the US economy increasingly approaching a double-dip and the Bernanke widely anticipated to pave the way for further stimulus, metals remain favoured. The Fed will to continue signalling its readiness to introduce further measures, regardless of the central banks opinion about the cost-benefit analysis of further QE. There is also the possibility of further downward revisions in ....

There is also the possibility of further downward revisions in GDP growth forecasts for 2011 and 2012. As markets continue to sell-off, the objective of the next stimulus would have to address market liquidity as well as economic stability. With markets already remaining on the defensive and the macroeconomic picture deteriorating, Bernanke cannot afford to be tight-lipped about further QE. And if he does, we could well see the Fed return later in the summer with extra measures, as they have frequently done before after FOMC meetings. Meanwhile, JPY and CHF strength is here to stay and so is the robustness in metals. Mondays Premium trades in EURUSD, HIT ALL LIMITS, so have most of the LIMITS IN GBPJPY. Meanwhile, our short gold and long silver continue working. See the rest of our trades in

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Ashraf Laidi