Woody Yellen tells it like its: QE Forever

We finally heard from Yellen yesterday and let’s be honest folks, it was less than impressive or vastly different from what you’d expect any dove to really say. Let alone a dove that hasn’t been formally confirmed in the role yet. Of interest though, was at least her honest appraisal of where she thinks real US unemployment is at, which is a number closer to the 10.2/5% level. Combine this juicy little titbit with recent calls for the lowering of the related hurdle before the raising of long term rates, and there you have the makings of free money forever. Basically.

The market maintained a muted reaction overall to the more than 2 hours of listening to a woman that sounded like Woody Allen (if you had closed your eyes) and has had little if any follow through today. EURUSD bears are getting frustrated (nothing new here) and USD bulls aren’t as convinced as they were perhaps even a week ago. With an effective 4 or so weeks of trading left in the year, I get the sense that price action will be of a more “smash and grab” nature than genuine trend related flow.

Data on the day will be light this afternoon, with only CAD manufacturing sales and Empire manufacturing prints along with industrial production in the US. None of which is likely to give the market any sort of real impetus, especially on a Friday.

With regard levels to keep an eye on;

EURUSD: 1.3510/00 for stops and offers and more of the same into 1.3530/50 (not likely we’ll see it up there though). On the downside stops at 1.3440 have been taken out this morning without any real follow through, but rather the harvesting of low hanging fruit.

GBPUSD: 1.6105/10 has rather large stop orders and sellers (from what I’m told) will only really join the party north of 1.6135/50. On the downside buyers have been noted into 1.6050 and have thus far done the job and done it well.

AUDUSD: Strikes at 0.9350 and 0.9400 of serious size have been noted to be rolling off today and could help underpin the price action. Miners and real money were the buyers this morning on the foray into 0.9300/10.

USDJPY: Having busted through the 100.00 level, the follow through has been rather muted and perhaps not what most had expected. Interestingly, well informed sources are telling me of selling interest rather than inherent buyers in the pair. A massive (2bn) expiry at the 100.00 level rolling off this afternoon also could add to the downward pressure in the pair as New York comes in.

As always on a Friday, I suggest not ruining your weekend with a cheap punt.
Helmets on and good luck out there.

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