18 Sep 2013
Flash: EUR/USD in wait and see until FOMC - Danske Bank
FXstreet.com (Barcelona) - Danske Bank strategists note that the FX markets will most likely be in a wait-and-see mode ahead of the FOMC meeting tonight.
Key Quotes
“Our view on FOMC tapering is probably close to consensus which, together with our view that FOMC will try to convince the market that rate hikes are not imminent,means we see risks slightly tilted to the upside for EUR/USD.”
“In other words, there is a risk of a classic ‘buy the rumour, sell the fact’ move. That said, it should be noted that the DXY dollar index is down almost 2% over the past two weeks and that EUR/USD option volatility is not trading far from 2013 lows, which suggests that an expectation of a ‘dovish’ twist to Fed’s QE announcement has already been built into the FX market.”
Key Quotes
“Our view on FOMC tapering is probably close to consensus which, together with our view that FOMC will try to convince the market that rate hikes are not imminent,means we see risks slightly tilted to the upside for EUR/USD.”
“In other words, there is a risk of a classic ‘buy the rumour, sell the fact’ move. That said, it should be noted that the DXY dollar index is down almost 2% over the past two weeks and that EUR/USD option volatility is not trading far from 2013 lows, which suggests that an expectation of a ‘dovish’ twist to Fed’s QE announcement has already been built into the FX market.”