For long weeks, expectations have been building up to the big FOMC decision, that supplied a big drama in financial markets when the Fed surprised and decided not to taper QE.
A lot has been written around the event. Here is a wrap of everything related: the previews before the event, the breaking news, currency specific technical analysis, forward looking fundamental analysis and a video rundown:
Here goes:
Background analysis
- QE Tapering Preview: 5 Reasons, 6 Scenarios and 7 Potential Currency Reactions – The surprising scenario won, and the reasons for tapering didn’t match the views of the Fed. The strength of GBP and NZD was foreseen, and so was the weakness of the yen, but not all were hits.
- Time for Taper – Everything seemed ready. We’ll have to wait once again.
- Fed tapering could trigger new financial crisis – Is that the main motive for the Fed to wait?
The breaking news
- NO QE tapering – dollar crashes: The FOMC Statement drill down, where the Fed states the reasons for waiting: tightening financial conditions and a lack of enough evidence for growth.
- Bernanke Live Blog – Explains the NO Taper – Note that while he sees through the unemployment rate, he doesn’t rule out a move in October nor the end of QE in mid 2014. Markets ignore it for now.
Currency specific technical analysis
- EUR/USD at 7 month high, above uptrend resistance after Fed surprise – can it continue? – The common currency now looks at the year-to-date high of 1.3710, but German elections are looming.
- GBP/USD Bursts to new highs following the Fed surprise – The pound was certainly resilient before the announcement and got back well above 1.60.
- USD/JPY post FOMC fall limited by uptrend support – 5 reasons for yen relative weakness – The yen could be singled out as a loser – gains were erased.
- Canadian dollar celebrates quietly after the Fed – USD/CAD parity still far – The Canadian dollar needs a strong US economy to ride on, and Bernanke doesn’t see it that way.
- AUD/USD surges to high resistance after the Fed surprise – The Aussie found it hard to break above resistance beforehand, and now its “risk” status pushes it higher despite domestic worries.
- NZD/USD is a big winner of the Bernanke Blowout – Where next? – Major levels have been broken.
Fundamental Analysis
- Fed’s tapering decision should support risk currencies for a while – Justin Pugsley looks at the big winners of the decision
- Markets in buying frenzy following the FOMC “No taper” announcement
- Ditching the dollar – Simon Smith examines the surprise.
Video
The event was hosted by Financial Juice and featured a talk with Lior Cohen of Trading NRG and myself. Enjoy!
That’s it! Markets continue moving.
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