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Article / 18 June 2015 at 15:11 GMT

Janet didn't disappoint — she was true to form

Director / Accumen Management
United Kingdom
  • FOMC delivered on par as it were with what we’ve been hearing for a few months 
  • Cable still looks like it heads north while the USD gets unwound
  • EURUSD still has legs higher north
By Ken Veksler

Your scribe almost had as much of a bad day yesterday as Federal reserve chair Janet Yellen is likely to have collectively for the next six months. I won’t go into the finer points, other than to say that Norwegian Airlines and their complaints/compensation department hasn’t heard the last of me.

Sadly, so too it seems, we’ve not heard the last of the much maligned mantra of Fed liftoff. Yellen failed to deliver last night as some had hoped she would and to the relief of yet others still. I wasn’t looking for a hike last night and as pointed out in my recent piece, I don’t actually expect one this year, but that’s not to say I wouldn’t welcome it.

No, in actuality all we got last night was confirmation of the fact that the Fed’s guess is as good as ours, and it's working on it, the best it can of course.

The dot plot released alongside showed modest downside revisions to previous perceptions of where rates would be in the coming near and medium terms and the accompanying statement and press conference (admittedly missed entirely by your scribe thanks to aforementioned airline) didn’t really give us anything too new to go on. 

They will keep monitoring and should the data justify it, then they remain only too happy to act... 

path
What's the future path of the US rates? Photo: iStock

But then, I suppose that’s the problem really isn’t it, I’m not sure the data *will* justify it. All in all, market perception of last night was dovish, but truly only because I don’t think the market had prepared itself adequately for what we received. 

Objectively, it wasn’t dovish, not at all. Rather it was simply on par as it were with what we’ve been hearing for a few months now. Nonetheless the USD trades softer and I think that’s more an unwind type of play rather than an outright desire to get short of the greenback.

The inflation data we’ve seen this afternoon didn’t help matters, but you know what, the follow through was hardly sustained in terms of USD selling. Which again speaks to me of position lightening rather than an outright shift of sentiment.

I am now flat, positionally speaking, having unloaded my long USDCAD into 1.2340 (given it was unable to sustain gains above 1.2360) and despite my own better judgement, I covered my long EURAUD for just a tiny bit better than scratch (naturally before it rallied 1.3%)...

Next on the agenda is cable which still looks like it heads north while the USD gets unwound, but is bound to run into data driven headwinds next week. So I want to sell Betty, but not just yet. The EURUSD still has legs higher north and I still want to own either it or the EUR against something else outright. Nothing here yet though either and I’ll keep you posted also.

Helmets on and good luck out there.

– Edited by Clemens Bomsdorf

 Ken Veksler is director of Accumen Management 

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