The US dollar is strong and commodities are pressured today after some Federal Reserve members expressed concerns about the Bond Buying Program.
Markets implied that monetary easing might end sooner than expected and reacted. Commodities have been the biggest loser among all asset classes, while S&P futures lost just a couple of points in the process.
However, the Fed did not officially announce a date or anything about stopping the bond purchases, so this topic will be up to debate and media speculation for the months to come.
Monetary easing has been, in my opinion, the only real factor why risky assets have been going up during the last months and years. What started as a solution to stem the financial crisis has become a permanent medicine to sick economies.
It is not a coincidence that some Fed members say that “enough is enough with the free money and QE” now that:
1. The US election is over,
2. Talks about the “fiscal cliff” are coming to an end,
3. The S&P is at 4 year highs.
Timing is everything in this business…
This is a news driven market and to anticipate such news coming out is beyond a trader’s control. What you have to do is be patient and trade your positions according to your entry and exit plan.