FOMC Disappoints The Market with No Further QE.

<p>FOMC Disappoints The Market with No Further QE. As Fed members delivered a slightly dovish assessment of the economy they have decided to extend the […]</p>

FOMC Disappoints The Market with No Further QE. As Fed members delivered a slightly dovish assessment of the economy they have decided to extend the operation twist by 267billon through to 2012, as opposed to opt for further QE.
Range: 1.2660 – 1.2687
Support: 1.2647
Resistance: 1.2752

Euro-dollar closed in NY at 1.2704 having experienced a volatile reaction to the FOMC extending Operation Twist into year end, initially dropping to session lows of 1.2638 before bouncing sharply back to highs of 1.2744 as details of the release were analysed. The rate then eased to 1.2650 before settling back above 1.2700 into the close as market reacted to headlines suggesting that the EU is poised for a Spain and Italy bailout to the tune of $943bn. The rate touched a high into early Asia of 1.2709 before turning lower, the move down driven by Asian equity markets where the market continued to show disappointment that the Fed didn’t move to QE3 (though this remains in the pipeline), with the added weight from a weaker than forecast China PMI taking the rate to session lows of 1.2660. Support now shows 1.2647 with resistance at 1.2752.

Range: 1.5673 – 1.5710
Support: 1.5660
Resistance: 1.5750

Cable closed in NY at 1.5717 having seen a volatile FOMC reaction, with moves tracking euro-dollar’s reaction. The rate initially dropped down to retest the earlier post BoE Minutes lows at 1.5651 before bouncing sharply higher to 1.5755. The rate then eased to 1.5675 before settling between 1.5710-1.5720 into the close. The rate marked overnight highs at 1.5721 into early trade before tracking euro-dollar lower as Asian equity markets showed their disappointment of no announced QE3 by the Fed, followed later by release of weaker than forecast China PMI data. The rate traded to a low of 1.5674, settling between 1.5675-1.5690 into Europe. Cable support seen at 1.5660-1.5650 resistance 1.5720 ahead of 1.5750-1.5755 and 1.5780.

Range: 1,597.74 – 1,604.38
Support: 1,617.60
Resistance: 1,593.22

Gold is trading modestly lower and consolidating a little after the wild swings observed after FOMC announcement. Gold initially reacted negatively to news that the Fed had decided to extend its operation twist program, which fell short of speculator’s expectation levels. Prices initially declined to around 1,590.00 before reversing back sharply higher to 1,621.00, before falling back again as the market digested comments from Ben Bernanke. Opening the Asian around 1,607.00 and initially came under pressure to trade to session lows of around 1,597.70 before edging their way back higher. Sentiment remains a little on the fragile side with participants on the long side not getting their desires met by the Fed after they stopped short of unleashing another round of QE to stimulate the economy, a motion that would of probably sent prices towards the 1,650-1,660 area and a possible path back to the 1,700.00 area.


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