World markets Today: Short covering rally after the Fed

19 Sep, 2013 (8:27AM IST)

Sep 18, 2013, (10:58pm EDT )

Welcome back to “after the Fed” session in world markets today!

And welcome back to old, golden “high volatility with every data”  days in markets 🙂

(old is always gold *hehe*)

So, the Fed chairman Ben Bernanke stunned world markets a few hours ago by ignoring all taper- talk and continuing with bond-purchase or stimulus program.

Markets were expecting at least a minimum amount of tapering to start this month and big funds had built huge short positions either to hedge their long positions or to sell short after the tapering-correction took place.

(Read details in a Reuters report here)

But “Helicopter Ben”  didn’t throw the dice of tapering and ended the game before it could start.

No taper saw a huge jump in U.S. equities, Gold, bonds and a drop in the Dollar index.

Looks like it was not a party but an stampede towards the exit door for short covering 🙂

That’s why U.S. Dollar is back to trading higher against major currencies just a few hours the Fed refused to go for tapering the QE3. The USD is higher against Japanese yen, Swiss franc and Canadian and Australian dollar. Euro too had been trading negative in early session against dollar, but seems to have recovered slightly now.

U.S. stock futures are slightly positive; European futures and SGX Nifty are showing high jump as it would be their first session after the Fed’s dramatic “no taper” gesture.

Now that the Fed has made it clear that its tapering decision is tied to data, not to any time period, economic reports will again become the most important moving factor for world markets.

The very first such fire-test will be later today when U.S. markets will receive jobless claims data and other major economic reports.

Expect a gap up start and in world markets today. Markets are back to  “will it, won’t it” (taper) days of uncertainty about the Fed’s actions, so expect high volatility with each and every economic report.

Good luck, enjoy the day, have a great session in markets today.

See you later.

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