JPY crosses

What to expect from the Fed later tonight- Citibank

  • Fed expected to announce a US$85 billion per month expansion program:
  • These outright purchases will be used to replace Operation Twist.
This is what the economists over at Citibank expect to happen when the FOMC meets later tonight. 
Remember that the market is already quite long of risk-positive pairs like AUD/JPY so we might see a bit of a buy-rumour-sell-fact scenario?
  1. Quite possible Sean. One thing I don’t understand is the since market is expecting more QE from fed, why USD/JPY doesn’t fall? Looks like it believes in more powerful “unlimited QE” from BOJ. But would BOJ deliver? AUD speculative long and JPY speculative short are both at extreme levels. The reversal will be sharp!

  2. Assuming market is currently long of E/U (an everything else), I guess the question is what is the gap between actual and expected QE…

    — IF QE expectations exceeded, traders likely more confident to hold on and even add to risk?

    — IF QE expectations just met, there’s a case for taking partial profits if you’re already in?

    — IF event does NOT meet expectations (ie. anything less than $85B), every man & dog would be selling risk.

    I haven’t really worked out a plan yet but I’m going to look for an opportunity to make a quick intraday short atm…we’ll see…

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