More horrible data out of the U.S this morning as orders for U.S “durable goods” fell further than expected.
Of particular note Aircraft orders were off 52.3%, for example after rising 33.8% in June. How ridiculous can you get? Orders for new aircraft “up” 33.8% in June then “down” 52.3% in July. I guess when you’re only selling 3 planes one month then 1 the next your numbers might vary so wildly. No…..I guess it would be 2 planes sold in June and only 1 in July for a 50% reduction. Who cares – the numbers mean nothing as the entire thing is still just sitting there……stuck in the mud.
I need to make light of a prior post, and a graphic illustrating the “complete and total disconnect” of actual macro data , and the current levels in U.S stock markets. Again – ridiculous.
These kinds of situations are always tough on a fundamental trader as you “just can’t step on the gas” when you don’t have these fundamentals lined up as straight as you’d like. This summer’s trading has been at considerably lower levels of exposure, and with modest expectations so – I’m most certainly looking forward to the fall.
U.S debt ceiling talks are up next as “once again” (short of an extension) the U.S is officially broke.
I remain short USD here as of this morning – looking for another solid leg down.
The value of the U.S dollar (USD) is currently at the exact same exchange rate with the Japanese Yen (JPY) as it was back in April.
So, in case you hadn’t been back n fourth to Japan several times over the past 5 months – you wouldn’t have a clue as to the fluctuation in these two currencies value ( in relation to one another ) in that, absolutely nothing has changed.
Broad stroke….a person holding USD “hit’s the currency exchange window” at the airport, lands in Tokyo and buys a chocolate bar for the exact same price as last time – 5 months earlier.
Now if your business partner was Australian, he wouldn’t have had it quite so easy. Back in April the “Aussie” could be exchanged for 1.05 Yen ( JPY) and those chocolate bars at the airport appeared “cheap” – where as today ( only a short 5 months later ) that Australian dollar only yields .89 Yen (JPY). That is a pretty massive change in such a short time don’t you think??
Let’s stop and think about this for a moment.
Japan has embarked on the largest “Quantitative Easing Program” known to mankind in efforts to “devalue” Yen (JPY) and lower the prices of its export goods ( if Yen goes down in value then “you” with your Canadian or U.S dollars would be “incentivized” to buy Japanese goods as they appear more affordable) yet EVEN AT THAT – THE AUSTRALIAN DOLLAR HAS LOST CONSIDERABLY MORE VALUE!?!
That is some serious , SERIOUS , business in the land of currencies where at “one time” the Aussie dollar was considered the “go to currency in times of risk appetite”.
Some “major players” have been sneaking out the back door here over the past 6 months selling AUD aggressively, and this stuff just doesn’t exist in a vacuum.
This morning’s unemployment data out of the U.S is always a real show stopper. Traders from around the globe sit patiently huddled around their stations waiting……..waiting.
Waiting to hear how many 100’s of thousands of Americans have filed for unemployment insurance for the first time during the past week. Will it be more than the 329,000 projected new unemployment claims? How much more? Ooooooooh! Will it be less than the 329,000 American citizens projected to have filed for unemployment insurance just last week? Last week? In just a single week? Are you kidding me?
What possible difference could it make if the number was even 20k more than projected? or 20k less in a single week, when we are talking about 100’s of thousands of NEW CLAIMS!
No question that the endless printing on money has equated to “spurred job growth” eh?
I’ll wait for the numbers to consider adding to my current ´positions “short USD” or take a decent one on the chin “if” USD takes off higher here. It’s getting closer and closer to the time ( Sept) I had originally considered looking “Long USD” so I’m careful here.
I feel it’s still too early for Ben to just let this thing get out of control and see USD skyrocket so I’m going to sit tight another round here and see how this plays out.
Getting away from your computer and the markets for a day or two, can provide much-needed perspective and a fresh outlook on return. It’s easy to get caught up in every little squiggle the market makes, not to mention the never-ending stream of “massive headlines” – threatening to take you out at a moments notice.
As well ( and very much like fly fishing ) you need to be able to read the current conditions and evaluate where “and when” to cast your line, as we wouldn’t all rush down to the river in the middle of a rainstorm right?
Markets are no different. I don’t try to wade across rapid flowing water well up over my knees, just as I don’t go “all in” on some silly headline during the last couple weeks of summer. Years and years of experience, and countless hours of practice have it that I may not go fishing as often – but I most certainly catch more fish.
Leading into the Fed Minutes here around 2 o’clock – I see that very little has changed here in the short-term, and will likely let the dust settle then “re-enter / add” to a few existing positions – still centered on further USD weakness.
If by some absolute “bizarre shift in the universe” Bernanke actually “says taper” or actually “says” what the plan will be moving forward (as opposed to just sticking to the same ol puppet show) I will most certainly re-evaluate.
I can’t remember where I read it ( or even if I did for that matter ) but somewhere along the line I recall someone telling me – “Kong…..you’ll know when you’ve become a successful trader, when trading becomes boring”.
To tell you the truth – I’m bored stiff.
If it wasn’t for the current “Central Bank shenanigans” and the “complete disconnect of markets from their true fundamentals” I seriously fear that I’d be looking for something “completely new” to do! The short-term tech continues to work its magic while the long-term fundamental story becomes “even more” of a joke as the days go by.
Is there really any point debating the day-to-day ebb and flow of this gong show, short of just chalking it up for “what it is”??
How bout we just call this the “Kong Show” and call a spade a spade.
I’m going fishing with my dad, and may not be back for some weeks ( ya right ).
I’m sure you’ll be fine, as my continued suggestion to “stay short USD” has generally fallen on deaf ears anyway.
The symbol “EWJ” is the Ishares Japanese Index Fund tracking the movement of a handful of Japan’s most popular stocks including Toyota, Honda, Hitachi and a host of others. The ticker itself acts as a reasonable “surrogate” for trading the Japanese stock index the “Nikkei” much like the symbol “SPY” closely tracks the U.S SP 500.
I don’t trade these ETF’s but understand that for those of you who don’t trade forex directly – a list of these types of “equity products” could prove valuable, as a number of my trade ideas/concepts can be mirrored through these “surrogates”.
The Ishares “family” of these “country related” ETF’s include a wide range including:
EWA for Australia
EWZ for Brazil
EWC for Canada
EWP for Spain
EWU for United Kingdom
These ticker symbols track a handful of the “top companies” in each countries stock index – not the currency!
Often ( but certainly not always ) the correlation between a particular countries currency and its “stock values” exists as an “inverse correlation” as the value of a given countries currency moves lower for example – the “price” of its stocks inversely reflect “higher prices” and move upward.
For a real time example – you may see that I am looking to “get long” JPY , where a corresponding/inverse trade would be to “short the Nikkei” via the ETF “EWJ” ( which trades at just $11.52 )
Keeping a watchlist of these “country related” ETF’s is a great way to get in touch with some “big picture” movement, while still being able to place an affordable trade through your average day-to-day brokerage.
SHORT TERM TRADE TIP:
I am still looking at further weakness in USD and see opportunities to enter “short” via several currency pairs here again today ( if you’re not already in the trade).
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As well I see the recent “drop” in Yen as providing several low risk entries “long JPY” if indeed risk comes off here.
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Forex markets get started late afternoon on Sundays (as Australia and the Asian sessions get rolling) so I always like to get a head start on things – considering it “back to work time” Sunday around 4:00 p.m
The trade volume on Sunday leading into Monday is always very light, and many charts will often see “gaps” in price action. These “gaps” can provide for some interesting trade opportunities, as for the most part price action will almost always move to “fill the gap” before the larger volume trades kick in during London’s session as well the U.S come Monday morning.
In general I “usually” don’t initiate trades on Sunday night but will most certainly look to follow price action into the early morning on Monday – and even put on a couple “probes” if I see something that works.
This morning in particular I see that several USD pairs have made reasonable moves “counter trend” and with the continued framework of “further USD weakness” still very much in place, I do see some excellent entry points. BUT…..
Knowing the market as I do, it’s almost ALWAYS A BETTER BET TO WAIT A FULL HOUR AFTER THE OPEN ON MONDAY asover excited “newbie traders” rush through the doors bright and early – only to be met by our dear friends on Wall Street and their usual “host of surprises”.
Trust me – you will not miss a single things as far as “timing your perfect entry” if you can just hang on an extra hour or two to let the “Monday morning fleecing” run it’s course – then take another look and see where the dust has settled.
Patience is a huge part of Forex trading, as time and time again I find myself doing a lot more “waiting” (with my money safe in hand) than I do actually “trading” with a pack of hungry wolves on a Monday morning open.
Personally I see the tiny “pop higher” in USD here this morning as a great re-entry “short” via several pairs.
Looking long AUD/USD as well NZD/USD as well (gulp) EUR/USD as well short USD/CHF and USD/CAD.
If you’re having trouble accepting the general idea that the U.S Federal Reserve will continue its assault on the U.S Dollar ( devaluing USD providing considerable relief to the current government debt obligations) then I can’t imagine you’ll be particularly thrilled with the following breakdown on gold and silver.
There is no greater enemy to the Fed than a rising price in gold or silver.
Against a backdrop of such extreme money printing and currency devaluation in the U.S, if left to reflect its true value” (as we’ve seen with respect to the price of gold priced in Yen) the price of gold would now be significantly higher – and I mean SIGNIFICANTLY HIGHER than we see reflected in the current “paper market”.
When ever Uncle Ben gets nervous about the price creeping higher, he simply calls his buddies at JP Morgan, sends them a couple suitcases of freshly printed U.S toilet paper and POOF!
JP Morgan piles in even further “short” (via naked short contracts placed at the CME / COMEX) and the “paper price” continues to flounder/move lower. Ben keeps printing useless fiat paper – and the continued “illusion of prosperity” runs across televisions country-wide.
As I understand it ( and please forgive me if I’m way off ) there is considerably more silver/gold current sold “short” than physical / actual metal currently “above ground” on the entire planet Earth, and as informed investors now look to take “actual delivery” of the physical as opposed to just “trading in the paper market” we are about to see some serious fireworks.
Many heavy hitters have already suggested that The Comex may soon be looking at default. (CME Group is the largest futures exchange in the world. Many commodities, of which gold is one, are traded on this exchange. The gold exchange – which is often still referred to as the Comex, its original name prior to being bought by the CME – is the largest gold exchange by volume in the world).
Take it for what it’s worth as JP Morgan is now under investigation by the FBI and other authorities – this all may fall into the category of “conspiracy theory” if one chooses to just bury their head in the sand.
Your head would absolutely spin if we jump up another “rung on the ladder” to discuss the London Bullion Markets, The Bank of International Settlements and The Fractional Gold System – let alone where China fits in.
If you consider the massive easing / devaluation of the Japanese Yen some months ago, and put yourself in the shoes of an average Japanese investor waking up, morning after morning – only to see the price of Gold (priced in Yen of course ) going through the roof, you’d almost think you’d entered the Twilight Zone.
This doesn’t make any sense! I thought the price of Gold was going down, down down. What gives?
When traded “against” a currency that is rapidly losing it’s value ( via rapid printing / easing such as the methods currently being used by the U.S Fed) , it only makes sense that a hard asset ( such as Gold) which cannot be duplicated/printed/ reproduced “should” rise in value substantially – as in the simplest sense – you’ll need a whole lot more of that “local currency” in order to purchase it right?
The example seen in Japan is exactly what one would expect to see – when a currency is rapidly debased in value, and then compared / traded against something that “cannot” be artificially created. Currency value down = Gold price up.
So what the hell has been going on in the U.S then? Why do I see the value of Gold taken to the cleaners AS WELL my USD / purchasing power getting smashed? How can this be?