There is a great article in FT Alphaville discussing BNP Paribas’ FX Strategy Note of Nov. 30.
BNP Paribas refer to their earlier discussion of huge short positions being built in the USD in the lead up to the FOMC meeting of early November where QE2 was expected to be announced. Since the announcement the USD has been pretty much one-way traffic … up … and BNP Paribas attribute this to a market dynamics explanation. I, for one, spend a lot of time trying to figure out what is going on in the markets (and then trying to tie this back to effect on the ES, my trading vehicle of choice) and always appreciate these sorts of articles, where the importance of the market’s ‘technical position’ (for the Wyckoff fans) for figuring out future moves is emphasised.
The article does have a hint of apocalpyse about it, which I will be ignoring, just appreciating it for its educational value.
A great article and a great piece of analysis from BNP Paribas.
Link to the article:
It’s a much bigger dollar squeeze this time