This morning I wake up and do the usual thing, turn on my computer, brush, having breakfast, expecting the unexpected….. and the unexpected didn’t happen. What I expect is the fed won’t announce QE3 and that is right, instead of announcing the long awaited policy, the fed announce how they will continue with their “operation twist”. Why I think they won’t announce QE3?
- They can’t afford it
- Previous QE failed considerably or if we want to said it politely, “we still yet to see the effect of QE2 taking effect”.
- Other government will interfere with their currency, look at Swiss, Japan, how many times they interfere to weaken their currency? also see what effect if ECB announcing bailout, yes they intend to devalue their currency and let other government do the buying
Now, taking closer look to the market, Europe growing impatience with Greece after Greece announce they will hold referendum to last week bailout proposal. Currently market expect the referendum hold around 5 – 6 December. For Eurozone, last year I predicted that bailout only strategy to give more time for every big investor to get out of market or taking the market down in slow manner. It is only a matter of time the country defaulting and others will follow.
I might be skeptical about this market, but I also think that there always chance and solution if we believe there is. For today I expect mild to medium drop because dollar will rise. I am looking to short gold for today, as it is the only one that staying at upper level while EUR/USD, AUD/USD, GBP/USD or commodities already breaking low.