All change, no change... Markets left unphased post Ben

Your scribe has returned to a far less sunny London than was the case in Rome where the weather was quite simply put, outstanding - which in itself was enough to breathe new life into the lungs of this screen jockey. In my absence however it seems that little has really materially changed in markets and as most expected the key event regarding Europe and the European Stability Mechanism has now been put on the back burner as the German constitutional court has made it clear that any formal decision on the mechanism and the legitimacy of changes to it won’t be disclosed before September thus giving the market a potentially listless Summer to ponder the European situation and one’s own navels.

Elsewhere, Ben gave his semi-annual testimony yesterday and once again dashed hopes of the QE3 camp for further action. It still surprises me how desperately punters are looking for more stimulus when to this point it’s been made painfully clear that nothing more will be engaged in for the time being. You got your twist extension and that should suffice for now. Outside of this Ben gave little new away yesterday as his assessment of the US economy was perhaps a little more in line with what we’re all seeing anyway. The key points regarding employment and general GDP growth remain as important as they were before he took to the hill and equally so unchanged. So net/net nothing overly new from our man.

As is always the case though the FX market did do some interesting back flips over the duration of the testimony and both Cable and EURUSD had roughly 100 point round turns inside the 120 minute process. Washing out long and shorts on both directional moves before settling down to exactly where they started. The AUDUSD proves to be resilient, consistent and simply not overly bothered with the rest of the world... Can you say yield play? Who said the carry trade was dead?...

While I get my eye back in on this market over the next day or so, my overall gut feeling is to be bullish the AUDUSD, Cable, AUDCAD, AUDNZD and smalls undecided on the EURUSD (watch for a close above 1.2350 for any sort of confirmation). Dip buying in the GBPY last week proved successful and while the downside stop parameters may need to be smalls widened, the overall strategy remains unchanged.

Not much more to add today folks as I attempt to deal with the bitter disappointment of an English “summer” and look to get my eye back in after a few days off.

Helmets on and good luck.