A shot of jungle juice
15.09 AEST, Thursday 13 September 2012
A shot of jungle
By Ben Taylor (Sales Trader, CMC Markets)
The markets are waiting in suspense before tonight’s FOMC meeting. Expectations are running high that another round of stimulus will be provided in the form of additional quantative easing and an extension to the zero interest rate policy.
The consensus is that an open ended round of bond buying will sterilise upcoming American Fiscal cuts and reduce US unemployment closer to 7%. Despite the overwhelming majority of market participants believing we are in for a shot of jungle juice overnight, not many are willing to venture into the wild before the event.
It seems no one wants to take a big position when the markets are at the top of their recent range. There is a risk that the bond buying program falls short of expectation, if that happens we would expect to see a quick fall in risk assets which would play havoc for our miners.
The market could be playing out a case of buy the rumour, sell the fact leading into what has traditionally been a seasonally very chopping period of September trading.
Rumours of coal price discussions being reached at lower prices today have done little to affect investors readying themselves for tonight’s FOMC meeting by purchasing Aussie dollars over the index. Expect to see the Aussie dollar continue on its path higher if the FOMC meeting "brings the goods".