The market still breathlessly awaits QE3... but why?

Ken VekslerKen Veksler , Director, Accumen Management
United Kingdom, 15 August 2012 at 08:49 GMT+0
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Momentum and interest in the FX markets continues to wane as the market loses puff and enters the dead zone of mid August. With a good chunk of Europe out on holiday today, flows are going to be even thinner than in the last few days and with little data out today, not a great deal to guide traffic as the day unfolds.Levels to Watch August 15

Overnight weaker Australian consumer confidence and Chinese data have put a further dampener on the little battler and with the EURAUD making a firm attempt to take reported stops in the 1.1800 area, the AUDUSD line in the sand support of 1.0450 has come into play. Weighing further on it and the broader market is the continued overall market preoccupation with further QE out of the US. I for one, am utterly dumbfounded at how biased the market continues to be in expectation of more printing from Ben and his band of merry men. No greater evidence of this than slightly better retail data out of the US yesterday afternoon (and I mean barely better than flat) and all of a sudden we have more USD purchases coming back into the fray, and the common chorus of explanation amongst the sell side and others... Looks like they’ll be pushing QE3 back even further... you think? But you can’t argue with the market, whether you agree or not...

The grind I have been referencing for the month of August seems to continue, however the pace of it has become truly catatonic and has resulted in many reassessing their views. This is being reflected in order books becoming even lighter and certainly less directional. With the VIX genuinely struggling to hold the 15 handle, is it really any wonder we’re trading with this rhythm.

I’m loathed to give levels today, as I for one have nothing on the books at the moment. Chatter around the traps however looks like the following:

EURUSD: Bids/support into 1.2265/75. Offers above 1.2350 and further into 1.2380.
AUDUSD: Stops sit under 1.0450 and bids begin to appear below 1.0430. Offers cap the topside for now into the 1.0500 handle.
GBPUSD: Stuck in a range and awaiting Merv and unemployment today, 1.5600 bids hold the downside while offers appear into previous highs of 1.5720/30.
USDCAD: Offers begin appearing into 0.9945/50 with a really solid wall of sellers in the 0.9970 area.

Not a great deal more to add today folks. Good luck and as always, helmets on.

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