Ci-joint, l'avis de Lehmann sur la décision de la Fed toute à l'heure.

[Realtime Forex]

Will the Fed reignite the carry trade?

Fed: The logical expectation today is for a 50 bps cut to go along with last week’s 75bps. Given the recent strong data (claims, durable goods, etc.), the SocGen factor, the four new hawkish voters, the bounce in equities and this Fed’s tendency to mislead and confuse the market – a 25 bps or 0 bps move cannot be ruled out. Here is where I think stocks, USD/JPY and EUR/JPY will go based on the three outcomes:

Pièce jointe 203

Given the data has not been all that bad and the Fed is dropping the Fed Funds rate at a pretty dramatic pace, the market may start to whisper the words “Carry Trade” again if we see 50 bps and nothing overly hawkish in the statement. Australasia continues to face sticky / rising inflation while supply constraints are keeping commodities very well bid – so if the Fed doesn’t do anything silly, the market will most likely rush to accumulate NZD/USD, NZD/JPY, AUD/JPY etc... I will attempt to do the same! The aggressiveness of the Fed and the continued buoyancy of commodities will encourage risk taking in emerging markets as well and will encourage the view that the market has gone too far in pricing in US recession and financial Armageddon. The target for any rally in the Dow is 12,900 / 13,000 – after which I would suggest sellers will regain the upper hand. As you can see in the chart below, the strong support zone around 12,900 is now major resistance.

DJIA DAILY

Support at 12,900 is now major resistance.

Month End: The S&P has fallen 7.7% this month, which should mean a great deal of USD buying at the month-end fix tomorrow. Given the magnitude of the need for dollars, it is likely that some participants will split up their fixes into two days and therefore I would expect the fix to be a USD buy today too. I will get long USD/CAD at 10AM and sell it at 11AM as I find USD/CAD has the most reliable fix direction.The bigger buy USD/CAD fix, however, will be tomorrow. Good luck.

Images attachées Lehman_table.GIF (4,7 Ko)