11 Jul 2013
Flash: Market reaction to G3 pivotal to short-term positions – Investec
FXstreet.com (New York) - The immediate reaction overnight was for investors to run for the exit door of their long dollar positions, which saw EUR/USD, spike to 1.3100 and GBP/USD hit 1.5100, notes Lee McDarby, Corporate Treasury at Investec.
“The market reaction in the next 24 hours will be key because if this rally runs out of steam and the market trades back below 1.5000 it tells us that investors still buy in to the story of the US changing policy tact and have enough faith this will arrive in September.” McDarby adds. However, if the EUR/USD and GBP/USD can manage to consolidate at current levels then this may tell us that the market may be tiring of the mixed messages the Fed are giving the market and will wait for firm guidance before rebuilding dollar longs.
“The market reaction in the next 24 hours will be key because if this rally runs out of steam and the market trades back below 1.5000 it tells us that investors still buy in to the story of the US changing policy tact and have enough faith this will arrive in September.” McDarby adds. However, if the EUR/USD and GBP/USD can manage to consolidate at current levels then this may tell us that the market may be tiring of the mixed messages the Fed are giving the market and will wait for firm guidance before rebuilding dollar longs.