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16 Aug 2013
Flash: USD continues to trade nervously – BMO Capital Markets
FXstreet.com (New York) - The USD was basically stagnant in terms of price action during the earlier sessions, and while we cannot even begin to rationalize the large squeeze-related moves in various asset classes yesterday from about midday in New York in one simple explanation, there was most definitely a large tide, which receded yesterday in FX, notes Greg Anderson at BMO Capital Markets.
Key quotes
“When the tide went out and forced the USD lower on Thursday, the tight layering of stops in EUR/USD and GBP/USD and the aggressiveness of the squeeze may have revealed at least two things.
First, market participants bought the USD back from its August 8 lows (in the DXY) in a very nervous fashion and with little conviction, perhaps due to a distrust of summer markets but also an inherent distrust of the Fed’s actual intentions on QE tapering.”
“Relative to last week’s more hawkish Fed speak, James Bullard appears more like a loose cannon, but combining a loose cannon with summer illiquidity can lead to volatile conditions.”
Key quotes
“When the tide went out and forced the USD lower on Thursday, the tight layering of stops in EUR/USD and GBP/USD and the aggressiveness of the squeeze may have revealed at least two things.
First, market participants bought the USD back from its August 8 lows (in the DXY) in a very nervous fashion and with little conviction, perhaps due to a distrust of summer markets but also an inherent distrust of the Fed’s actual intentions on QE tapering.”
“Relative to last week’s more hawkish Fed speak, James Bullard appears more like a loose cannon, but combining a loose cannon with summer illiquidity can lead to volatile conditions.”