So that’s gone “exactly” as suggested yesterday, as the U.S Dollar blast higher against the EUR , GBP and CHF. Gold gets completely wacked ( 24 dollars down as of this moment ) and U.S equities “almost” look like they are finally gonna run out of gas.
I am knee deep in profits across the board.
This move should have some legs ( as noted yesterday – the US Dollar should really take a ride here coming out of such a significant bottom ) and it “almost” looks like the old school correlation of USD up = U.S equities down / risk off and a flight to safety may be in play.
Can you believe that the largest contributing factor ( in my view ) is fallout of public sentiment on Obama and this absolute catastrophe called Obama Care?
I dug into it last night to get a better understanding of what exactly the implications are….and it could very well be Obama’s “final undoing” considering what Americans are now faced with respect to their health care planning.
I really can’t see any kind of short-term fix, as the website is one thing fine…..but the fact that thousands of Americans “current and existing health plans” are now being cancelled as per the new laws?? By law??
I thought the idea of drones flying in American skies was starting to look a little “dictatorial”, and now this??
I need to hear from Americans currently living IN AMERICA……I have to know….what do you guys think?
What can be done?
Seriously, I’d encourage anyone there in America to comment as it’s difficult for me to really get my head wrapped around this. How is this affecting you and your families?
The strength of the US Dollar has gathered steam over the past few days, with several trades “long USD” already paying well. I don’t imagine this to be your average “run of the mill” type move here – so I feel it worthy of further discussion / analysis.
The US Dollar will most certainly be moving lower in the “not so distant future”, but we trade what we’ve got in front of us so……
In looking to line up these “technicals” with some broader “intermarket analysis” we’ve got to consider that U.S equities have made some pretty huge gains since January of this year , as USD has more or less gone “up the mountain and back down the other side” – now at exactly the same level around 79.00.
With an impending correction “upward” in USD it would make sense to “finally see equities correct lower” ( if that’s at all possible considering the Fed’s POMO) and unfortunately for many – see gold and the precious metals correct lower as well.
Looking at forex markets it’s obvious the “opposite reaction” of a much stronger US Dollar will equate to a weaker EUR as well GBP and CHF. I would also expect the commodity currencies to correct lower as well, but considering that they’ve already fallen considerably – my focus would be on the Euro type pairs.
So that’s what I’m running with over the next few days – looking to “inch in” to many trades with a “risk off” vibe, and continued strength in the dreaded U.S Dollar.
Considering that I nearly always sit these kind of risk events out, on occasion I WILL deploy strategies in order to take advantage of the expected near term volatility.
In this case I’ve got a long USD bias regardless of the announcement with a few smaller orders already in play including plays short GBP/USD as well long USD/CHF, but am also “waiting in the wings” with several other pairs – locked and loaded.
What I like to do in situations like this is place several smaller orders “above or below” a given pairs current price “prior to the announcement in line with my bias so…..with GBP/USD for example, and order 20 pips under the current price , as well 30 pips , as well 50 pips!
All said and done “if” the market moves in my direction I’m in “deep” on the momentum.
If not….fine. I watch the action rocket in the opposite direction with little or no skin in the game at all.
Take it or leave it – this strategy really works well on short-term “momentum plays”.
Lets see how it plays out and envision these “traps” set in 10 additional pairs.
As I sit here sipping the finest tequilla, minding a couple of fillet mignon and working on some veggies – I contemplate what the boys in Washington are doing at this moment.
Obama most likely has his head in his hands or perhaps has “retired” to a private area – digesting the current fiasco playing out with respect to the “Obama Care” roll out, and good ol Uncle Ben can’t be too thrilled about the rise in USD.
Me? – I just cracked another cold one.
Could it be any worse for these guys?
People now realizing the incredible increase in payments, the difficulties in qualification, and the out right “lies” put forth over the past years in selling this thing to the masses.
I don’t know all the details, and likely never will – but what I do understand is “sentiment”.
When “investor sentiment” changes ie…people become enraged/ scared/fed up/rebellious etc…it always reflects in financial markets. If only a mirror of human behavior, as it pertains to both greed and fear – financial markets provide an incredible field of study.
I can’t imagine it could get much worse for poor ol Barak here, as people are pissed – really pissed.
Sentiment is on the verge of change/ rolling over – and we don’t want to be on the wrong side of that.
Well – what can be said?
It looks as though I’ll have no trouble “celebtrating in style” here today and through the “Day of the Dead” celebrations set to kick off here in Playa over the coming days – as we nailed the upside turn on USD literally to the minute. That, coupled with the incredible moves in AUD overnight ( I sent out the tweet, and even put a post together as fast as I could!) has me up an additional 3% and “holding” here as of this morning.
As well the “offical” 1 year anniversary at Forex Kong!
Day of the Dead (Spanish: Día de Muertos) is a Mexican holiday celebrated throughout Mexico and around the world in other cultures. The holiday focuses on gatherings of family and friends to pray for and remember friends and family members who have died. It is particularly celebrated in Mexico.
It’s Halloween on an entirely different level, lasting nearly 3 full days (and even gets an official bank holiday). The costumes, art work and cultural festivities are second to none. I encourage all of you to Google it / have a look online.
So, that’s about it for this morning short of keeping our eyes on reaction across other asset classes as the USD digs in here, and looks to wipe out a serious number of players “still” sitting on the other side.
The following a direct quote from Glenn Robert Stevens – an Australian economist and the current Governor of the Reserve Bank of Australia.
“The foreign exchange market is perhaps another area in which investors should take care.
While the direction of the exchange rate’s response to some recent events might be understandable, that was from levels that were already unusually high.
These levels of the exchange rate are not supported by Australia’s relative levels of costs and productivity. Moreover, the terms of trade are likely to fall, not rise, from here. So it seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today. “
You’ve got to love it when a central banker:
- Tells the absolute truth.
- Tells the absolute truth.
- Tells the absolute truth.
Short AUD has been ” and will continue to be” an absolutely fantastic trade moving forward, as perhaps “finally” we get the correlation to “global appetite for risk” back in vouge.
Forex Trade Strategies – October 29,2013
It would appear that the U.S Dollar is making its “swing low” here this morning, suggesting that a bottom is close at hand. This one isn’t likely going to be your “usual” bottom in the dollar as it’s now reached extreme oversold levels as well as an area of sizeable support.
As we’ve discussed here many times – when the elastic band gets stretched “too far” the corresponding “snap back” is usually quite fierce, as many inexperienced traders are caught leaning to heavily in the wrong direction.
Wednesday’s Fed meeting/ announcement “should” likely provide the catalyst, and it will be very interesting to see which way a number of asset classes move with respect to whatever is said.
When looking “long USD” here its fair to say that the currency pairs EUR/USD as well GBP/USD should turn downward, as well USD/CHF to the upside – these are pretty much a given, but the commodity currencies will remain “on hold” until we get more clarity.
Both AUD as well NZD have taken “reasonable” turns to the downside as of late “along with” a continually falling US Dollar so……it remains to be see if these will also “continue lower” as the USD carves out this turn.
I plan to trade this quite aggressively as I expect the USD move to be a whopper. Off the top it usually doesn’t bode well for the gold and the metals when we see the Dollar rise….but if this time we see a “rise on flight to safety” it’s not at all hard to imagine both gold and the USD moving higher together.
I will be watching / posting via twitter for real-time moves , as well looking to celebrate my 1st Year Anniversary here at Forex Kong tomorrow!
What “is” wrong with me?
Have I become so crotchy and skeptical as to actually consider next weeks FOMC meeting as yet another “wonderful opportunity” for the Fed to “yet again” pull a fast one the unsuspecting and “all too trusting” American investor?
They said they where going to taper “last time” ( as the Fed “should” be trusted to give guidance on its plans moving forward ) with every analyst and talking muppet on T.V talking it up as if it was an absolute “given”. Then “blasted” anyone and everyone who may have been “preparing” by “not tapering”. The Fed lost what little credibility it still had, and many lost “mucho”.
Am I insane? Have I lost my mind?
Would I be completely out to lunch considering that there is just as likely a chance “this time” that the Fed ( in the current scenario with the massive blow over the debt ceiling, government shut down and still terrible employment data) has everyone assuming “it’s impossible to taper” ( which in theory it is) and “once again” finds opportunity to screw the lot of you?
“Fed announces small 10 billion tapering of bond purchasing program” and the markets go crazy….(Only to then INCREASE QE a month later and catch everyone again)
Or even better……”Fed announces INCREASED QE” Straight Up! Boom! Bet you didn’t see that one coming!
You can see where I’m going with this. It’s long past ridiculous, and “non of the above” would surprise me “any more” than the other.
The Fed’s involvement ( or lack of ) in today’s markets is unpresedented, and weilds such influence that getting it wrong could prove disasterous.
I KNOW what the Fed is going to do , but week to week, minute to minute – NO ONE KNOWS what these weasels are going to “say” they are going to “do”.
My gut has me thinking that “no matter what the outcome” to the FOMC meeting here wrapping up Tuesday, the market is gonna “pop” on news….and sell like hotcakes. I’d have every confidence that we are “lower” looking a week out. I’ll get these trades lined up as they come.
I don’t care what anyone else says ( obviously no? ) as we’ve all got our own opinions.
You can listen to the constant stream of bull%&it coming across CNBC justifying company after company’s earnings misses – then the ridiculous “short-term reasons” they suggest.
Fact of the matter is, the majority of companies that indeed “have met earnings expectations” have largely done so via cost-cutting and margin expansion. Don’t be fooled – this is not revenue growth. Your company might “appear” to be doing better as well – with 60 fewer employees etc…
As “the “global supplier to construction and mining industries, Caterpillar (NYSE: CAT ) sees the very foundation of economic expansion, and is often considered an economic bellwether, particularly in emerging economies like China. More machines sold means more holes dug, more roads built etc.
If in the absolutely “simplest sense” one can’t see / comprehend CAT’s massive earnings miss as indication of global growth “slowing” and forward guidance as “further slowing” – I’d be extremely concerned that you may need to have your head examined.
CAT is no “one hit wonder” or some “.com fly by night”.
As CAT goes………global growth goes.
I’ve booked ( and I do mean booked….ie sold positions and placed the money on the “plus” side of the account ) an additional 4% here this a.m – as per the trades outlined just yesterday.
If there is one thing I really can’t stand – it’s watching these “real profits” disappear during the NY session as the usual “POMO ( permanent open market operations ) pump job” continues to mask the true fundamentals….lurking underneath.
More often than not, an entire “weeks” worth of planning/strategy and profits can be completely “wiped clean” during the NY session as “counter trend rallies in reality” ( as I like to call them ) play out daily.
You’ll note that Asia and the commodity currencies got absolutely hammered last night with the Japanese Nikkei down a whopping 445 points, yet today “during the con job” I don’t imagine you’ll hear a thing about it.
Do think it just might be possible that our dear friends in Asia woke up to see the NFP / employment numbers out of the U.S and said: “Holy shit – that’s crazy!! What the hell is going on over there? Are these guys seriously talking about “recovery”? Bleeep! – sell.
Left to their “own devices” U.S markets should be crumbling like a moldy ol tortilla – left to sit out on the counter too long.
I’ll tuck my pennies in my pocket and continue on “after” the gong show rolls through.