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Is that “risk off” I smell?

EUR/JPY is taking a pounding in afternoon trade, down over 125 pips since making a new multi-year high after Bernanke’s initial remarks in DC this morning.

Since noontime in New York we’ve come under selling pressure and now US equities are down on the day, shedding gains of about 1% early on. The market has the faint whiff of old-fashioned risk-off, when EUR/JPY would rise and fall in synch with the S&P 500.

5-22 S&P

FOMC: “Many” said more progress needed before slowing asset purchases

No taper, based on that headline…

  • A number expressed willingness to taper as early as June (taper!)
  • A number expressed inflation was below target (no taper!)
  • A couple express concern more stimulus could be needed (anti-taper!)
  • Most emphasized importance of being prepared to adjust purchases up or down (taper/taper not)

A truly mixed bag with every point of view represented. The majority seem to be with Bernanke and Dudley, wanting the flexibility to do more or less depending on how the economy develops.

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