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18 Oct 2013
Market re-pricing Fed QE expectations
FXstreet.com (Barcelona) - Not in many occasions we get such vertical moves against the USD. However, when they happen, and markets go on such a frenzy to dump USD from open to close is because a major driver is being priced in.
A change in perception about the timing of QE is what is being priced in, with traders finally manifesting worries the Fed will remain cautiously dovish, especially in anticipation that DC may have yet more battles on government funding early next year.
Despite the extreme falls in the USD, the fact, as mentioned, that USD-denominated assets are closing near its lows, price action suggest there is more to come, thus 'selling USD strength' looks like a sensible strategy should price action agree.
A change in perception about the timing of QE is what is being priced in, with traders finally manifesting worries the Fed will remain cautiously dovish, especially in anticipation that DC may have yet more battles on government funding early next year.
Despite the extreme falls in the USD, the fact, as mentioned, that USD-denominated assets are closing near its lows, price action suggest there is more to come, thus 'selling USD strength' looks like a sensible strategy should price action agree.