Initial reaction to the Fed's statement "a blow to the dollar, yield up came to naught last night and this morning has turned into something more" subtle ". The weakness of kiwifruit after disappointing Q2 GDP data should have done their job (in particular, to drag the Australian a), as well as the muted reaction of stock markets. This will provide a reasonable support for the Swiss franc, with the view that we are not going to enter into a strong, sustainable rally on risky currencies.
Of course, all this takes place in anticipation of further quantitative easing, rather than relying on actual events. In addition, as we said in our daily forex briefing, other asset classes think the situation is too different from that in March 2009. All this adds to the view that during the QE2, if it happens, there will be an excess of 'apparent Rally', which prevailed during the QE1.
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