A double-dip and more quantitative ease is being baked into the cake but traders are still trying to figure out how to play.
The last time the Fed unveiled QE we had a large rally from 1.25 to 1.47 before sliding all the way back to 1.25 within three months. Given that experience, my guess is the dollar-negative consequences of additional QE would be much less dramatic this time around. It would likely be a dollar-negative but perhaps limited to the 1.33 area that capped us last time around. (Mark that down as a HAG–a hairy-assed guess).
