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The last 24 hours is certainly a time to remember.  What a roller coaster ride!!!

The market jumped at 2am this morning when Fed’s statement took out the word, ‘patience’, the EUR and GBP jumped by more than 100bps, with the EUR peaking at 1.0926 at 4am in the morning, a 264bps move!

The story was the same with the GBP locking in 303bps at 4am.

Today’s story was different; all through Asian session and into London at now into the US session, it was the south pole for the EUR and GBP, giving up most of the gains from the massive move last night and currently, holding at levels no different from pre-FOMC.

Why?

As Janet said, taking out ‘patience’, doesn’t automatically mean we are going to be impatient!

What is the meaning or interpretation of ‘reasonably confident’? And, what does she mean by we also don’t want to end up being behind the curve?

I think Janet Yellen is carving out a neutral path for herself to either extend accommodating monetary policy or to raise interest rates, depending on the data as it comes in over the next few months.  I believe the operative word is, ‘reasonably’, to me that means, it’s neutral.

And this means that currency levels should go back to where they were pre-FOMC which is what is happening now.

The overall economic picture has not changed for Euroland and the UK, both having to fight economic battles and both extending their quantitative easing policies.

THE WORLD HAS BEEN DIVERGING!

However, I believe when the timing is right which will be in the near future, the best trades may be to buy long dated call options in the majors against the USD and be the biggest winners for 2015.  The premiums are not going to be cheap, for example a one year call option for the EUR and the GBP is currently about 550bps and for the AUD about 250bps.

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