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19 Dec 2013
DXY rips higher with huge bullish reversal day following TINO – Tapering In Name Only
FXstreet.com (Barcelona) - The DXY rallied appropriately after the FOMC finally caved in and announced a token tapering program that would begin immediately – while still soothing the markets with a spoon full of dovish sugar.
The commencement of tapering is now out of the way – and so are the bears
While most experts would agree that cutting the monthly bond purchases from $85 billion to $75 billion per month is like saving a nickel on the purchase of a Porsche, the fact remains that tapering has finally come to the markets. The announcement was received well by the global risk markets, though. How could it not be? The accompanying language might as well have been, “Don’t worry – about a thing – every little thing – is gonna be alright” (with all deference to Bob Marley). The FOMC made it clear that if things get dicey, they can always turn the spicket back up to “full blast”.
In terms of the DXY, it reacted as it intuitively should have by rising sharply off of session lows. If the upside momentum holds into Friday’s close, the DXY bears may get trampled.
Thursday’s economic data points due out that may have an impact on the DXY include:
• Aussie RBA Bulletin
• Japanese All Industry Activity
• Japanese Coincident Index and Leading Index
• British Retail Sales
• US Weekly Jobless Claims
• US Conference Board Leading Indicators
• US Existing Home Sales
• US Philly Fed Manufacturing Survey
• US 7-Year Note Auction
Technical outlook for the DXY
Technicians say the DXY may have set a short-term low at 79.75 support last Thursday. Below that level, there is additional support at 79.63 and at the ultimate “line in the sand” at 79. Resistance for DXY comes in at round number level at 81 and is backed up by more at 81.50. The ultimate target for DXY for this move higher should – according to Elliott Wave Technicians – be 86.92 in the long-term (so get ready for whatever ramifications that may bring to the other asset classes).
The commencement of tapering is now out of the way – and so are the bears
While most experts would agree that cutting the monthly bond purchases from $85 billion to $75 billion per month is like saving a nickel on the purchase of a Porsche, the fact remains that tapering has finally come to the markets. The announcement was received well by the global risk markets, though. How could it not be? The accompanying language might as well have been, “Don’t worry – about a thing – every little thing – is gonna be alright” (with all deference to Bob Marley). The FOMC made it clear that if things get dicey, they can always turn the spicket back up to “full blast”.
In terms of the DXY, it reacted as it intuitively should have by rising sharply off of session lows. If the upside momentum holds into Friday’s close, the DXY bears may get trampled.
Thursday’s economic data points due out that may have an impact on the DXY include:
• Aussie RBA Bulletin
• Japanese All Industry Activity
• Japanese Coincident Index and Leading Index
• British Retail Sales
• US Weekly Jobless Claims
• US Conference Board Leading Indicators
• US Existing Home Sales
• US Philly Fed Manufacturing Survey
• US 7-Year Note Auction
Technical outlook for the DXY
Technicians say the DXY may have set a short-term low at 79.75 support last Thursday. Below that level, there is additional support at 79.63 and at the ultimate “line in the sand” at 79. Resistance for DXY comes in at round number level at 81 and is backed up by more at 81.50. The ultimate target for DXY for this move higher should – according to Elliott Wave Technicians – be 86.92 in the long-term (so get ready for whatever ramifications that may bring to the other asset classes).