Dean Popplewell | Oct 31, 2013 01:48PM ET
Trick or Treat – The Fed had little choice. It's Halloween and yes theses markets have been spooked. But not so that volume and volatility has picked up dramatically. Despite the dollar trading near two-week highs, there is a fear that recent ranges are contained. Investors seek extended momentum one-way or another to allow them to get more involved on any leveraged interest basis.
Spying on Germany – The US Treasury would be no good at clandestine operations. They come right out and tell us how it is. Fair is fair, they usually take a swipe at China in their semi-annual report to Congress on international economic policy. You 'gotta cut down the big boys' to size or at least give the perception you are trying to level the playing field. They did "copy and paste" the "significantly under valued currency argument" in yesterday's report. The problem is that the US Treasury cannot be too critical of China, because the Yuan continues to trade at record highs time and time again. The US Treasury requires a new focus and that’s were Markel's Germany comes to the fore. Sideswipes are far easier than phone tapping.
Much deeper EUR losses are needed to signal that this is more than a corrective move in the dollar, as there remains questions around Fed tapering – this market is required to sit through more "dirty" data over the coming weeks. It's true, the EUR does face strong resistance at 1.3835 areas – peaking at its two-year high last week and has since fallen to a one week low in the overnight session (1.3688). Again these in relative terms are an orderly contained range. However, with the lack of market volatility one has to make "hay when the sun shines."
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