How to trade the Fed: buy the dollar if no
QE3
With Federal Reserve Chairman Ben
Bernanke’s speech on Friday in Jackson Hole clearly taking the spotlight this
week, here’s one opinion on how to trade the dollar
going to into the speech, expected at 10 a.m. Eastern time Friday.
“With Jackson Hole, the scope of the
Fed to announce any major quantitative easing program is pretty much off the
radar now,” said Christopher Vecchio, a currency analyst at DailyFX. “If
they’re going to announce anything, it’s probably going to be related to the
housing sector.
“If we see Bernanke on the
sidelines, we could see some bullish dollar dxyaction.”
“At the end of major Fed meetings
when there was hope for QE, the dollar gained. We think it will be a similar
situation here, so we’re looking for the dollar to outperform the euro
and Japanese yen .
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