US Dollar has lost its gloss against most of the major currencies losing almost 300 pips against EURO on belief that FED may opt for QE3 and Spain may able to take a breather. So how much is left for the currencies to gain against USD ? I think not much, but we have to give some more space until the bubble burst after both the announcement.
I think market will remain choppy due to conditions that will be dominated by statements by various officials, rumors and economic data’s. But I would like to stick to my earlier view that FED will go for another round of Operation Twist and may not opt for QE3.
Yesterday, ECB left its interest rate unchanged preferring to have an option available in its hands and so will FED do. FED is well aware that its economy is passing through worst phase, which will be over shortly and the US economy will start reaping the benefit of lower oil prices that will also help to tame down the worrisome inflation factor.
Yellen’s howling should not make much of a difference, as she is one of the FED’s Dovish voters. There are Hawks too having different ideas. Why are we forgetting that prior to Yellen’s appearance another Fed official also a voter Lockhart has said “Extending Operation Twist is on Table”? I think this statement by Lockhart in response to audience questions say’s all about FED’s next move and therefore, YELLING in frustration!