Talk about a twist.
Ben hand’s off the bag to Yellen “with” a proposed “tapering”, and seals his legacy as one of the smoothest Central Bankers ever to have walked the Earth – or at least in the public eye.
I wonder what he’s gonna do with the next 20 years of his life? as it will likely be “more interesting to follow” than these last five.
You’d have to have rocks tumbling around in your head if you think that 85 billion is “all” the Fed’s been throwing at markets per month. I imagine it’s more like 150 billion or more as….the bond market is just too large to consider 85 billions per month having much affect.
Post announcement TLT is still sliding, and the U.S Dollar can’t even break even so……the big boys positions remain the same. MY POSITION REMAINS THE SAME.
The “effect” has merely been “the idea” (in traders / investors minds) that “they will never let the market fall”. If it took a number of 85 billion per month or 850 billion for that matter – it doesn’t really matter as the numbers manifest solely as “tiny computer entries” within a small group of friends.
A big “congrats” goes out to our beloved “Deano” for not only hitting the “tapering” right on the money….but also for “serving it up” like a true gentleman. If Deano owned a restaurant – I would eat there often.
For me? Another day of trading, and another day FULL of opportunities. Nikkei popping to 16,000 and USD certainly “not” moving higher on the news………..
USD “not” moving higher on the taper news??…..Hmm………..that’s a bit odd don’t you think?
You’ve been practicing, following along….learning the correlations etc…
Would you not have thought USD would “skyrocket” on taper news?
Hazard a guess as to why not?
Exactly my thoughts. I am at work right now and following the news and my trade. I’ve been perplexed for the last hour and a half trying to comprehend why my small short USD position actually making more profit post taper announcement (Barring Short USD/JPY)
My logic were as follows:
– $10 billion taper is already baked into the market and they are expecting it.
– $10 billion is very small compared to what they’ve been printing
– $75 billion a month is still an “expansion” despite less than the original $85 bil a month.
– Yellen may ignore Bernanke’s precedent and keep the pedal to the metal.
Hey Kong, wasn’t much of a “taper” was it? The markets are moving now but the initial reaction was quite muted – odd. Since Bernanke’s press conference the dollar has hits its stride, but I’m not sure for how long. The Fed gave no timetable for a QE conclusion which suggests they are hedging their bets. On this basis surely the longer term view is that $10b makes f&%k all difference and the money train continues, hence the Dow & S&P way up, and there must be a shitload of s&p shorts getting squeezed, hehe.
Trading wise I remain long USDJPY from 101.66 and think its on its way to 106 now its broken the Chinese barrier at 104 (as you say its all about the coming tsunami and not US QE), the AUD continues its journey to my measured objective of 0.8710 before further declines, and the AUDNZD short remains the best trade in history.
Excellent trading Deano, and ya today’s reaction was very odd.
Some follow through and things will be more clear. I still expect the US Dollar to roll over “again”.
My short yen positions are doing quite well. I have come to the conclusion that there is really nothing to do in 2014 beyond shorting the yen against the australian dollar, the euro and the US dollar with as much aggression as you can possibly stomach. No taking profits nonsense. I expect the australian dollar to be the best performing major currency in 2014, but if not, it doesn’t really matter because I’m only longing it against the yen. I’m not willing to go long the canadian dollar, the pound or the new zealand dollar or anything else. The pound could retain its strength but I doubt it. The canadian dollar as far as I’m concerned is a toxic currency. There are some opportunities out there but really, the biggest opportunity we have right now is the on-going collapse of Japan. Only three pairs will be necessary: AUD/JPY, USD/JPY, EUR/JPY. There is no need to play around with EUR/USD, or GBP/USD or really anything else. That is all meaningless. The yen is approaching 2008 levels, it’s collapse has not even begun.
Kong what happened to your USDYEN prediction, are you still expecting it go down? it seems like it want to go to 110 area in a hurry!
Seriously it’s tme you admit that you were wrong. You’ve been saying that the USD IS down for weeks because that’s what you want to see whereas the reality is that it was sideways and slightly up. Now AUDUSD and EURUSD are down big time, USDJPY is skyrocketing but you are still congratulating yourself because USD is down? Seriously?
I have to say it’s a disappointment for me. I like your blog and your approach of trading, and I’m not asking you to be right 100% of the time of course, but when something is moving up you can’t tell us it’s down with such chutzpah.
You’ve missed it Paul…..the USD has most certainly been moving down – but the Yen has been moving down MORE.
You can’t mistake it for “strength” when two currencies are “both moving lower in tandem”.
I’m truly sorry that you’re disapointed but I’ve always been very clear about trading USD/JPY.
Damn…..this is bothering me – Paul….
Did you not read the post yesterday about “risk event”? Or any of the other posts on “trading risk events”?
And I believe a post or so before that – suggesting that USD will take a small bounce here?D
Damn…..I did my best to give the best advice / suggestions I could.
Paul in fairness Kong is certainly capable of fighting his own battles but you obviously need to adjust your time horizon
It’s also tricky as we’re looking at USD/JPY specifically.
I’ve encouraged readers “not” to trade this pair in particular as it’s often difficult to get right.
I think some may see me “looking for long Yen” and “seeing USD weakness” as “lets get short USD/JPY – but it doesn’t work that way.
I hope Paul will hang in there, and keep on reading / learning.
Not that pair.
I’ve just entered several positions “short AUD” as of this moment.
Was on alert for a yen pop n drop tonight. So far in the yen commodity crosses and all is well.
I see this needs time / respect while things settle out.
Nikkei touches my 16,000 and tomorrow is the usual “Thursday deal” so….
I’m still more or less sitting in wait.
Ya I’ll respect the trend and just take beer money if this turns on me. Nzd has already produced good money before bed
Quite a strong negative response to a new nzdjpy high. Definitely worth noting
Wow have a look at the ring high candle on the 4hr. This looks suspicious as the JPY is all over the place but this also had decent volume, so could be the the top for now.
let the dust settle & logical thinking to resume – all we have see over the Fed meeting period is emotional trading – I am with you Dr. Kong on letting things settle out….. usually takes a day or two…. IMO
Cheers Schmed,
This one in particular yes.
I’m of the mind set it’s still just “USD to the basement”.
Why and against what?
Why? Because the taper itself is really only a short term media spin / market manipulation / type thing, and the U.S dollar printing / devaluation will just continue kicking along as always.
Against what? I’ll start with the EU currencies as we’ve seen get the biggest bang for the buck, as well continue to play weakness in AUD and NZD vs GBP in the same trade plan / idea.
JPY’s can sit waiting in the wings, as there are many, MANY other trades coming available.
The Euro is tricky but I can see the logic behind going long on it. But you think the US needs to continue to devalue the dollar but GB no longer needs to devalue the pound? Seriously?
Yes that’s what I think.
Why? This is a serious question.
I’ll leave you to ponder the “why’s” – as I’ve got about a million answers of my own.
How about another 379,000 people lining up to collect unemployement in the U.S LAST WEEK!
Just take a full minute or so to contemplate that ….PER WEEK AND GROWING!
Imagine a line up around your block, the next block then the next and so on…each and every week – 300+ thousand MORE people lining up.
What possible method is available to the Fed and U.S Government looking to stop this “massive depletion of work force”?
What can you “Andre” suggest they do? As…it’s been 5 years now of them doing the only thing they know how.
Print more money. Then print more money.
Maybe I wasn’t clear, I’m not asking why you think the US needs to continue devaluation, I’m asking why you think the UK no longer needs it. As far as a solution to the problems in the US, I do have a suggestion. Maintain QE, simplify the tax code, reduce regulations (repeal Obamacare), privatize government assets (such as the national parks), open the country more to immigration on all levels (both the gardeners and the engineers), cut spending and turn a significant budget surplus while shifting the balance of bonds to the shortest term possible. After that, start raising short term interest rates. Now, there is more that needs to be done, especially if you intend to handle the longer term risks, but that is a core short term fix. I could go on and on on things that should be done. The economic problems in the US are not insurmountable, it’s the political and social problems that keep them from being dealt with. These problems are extra bad in the UK, which is why I see zero reason to think the United Kingdom is in a stronger position than the United States.
Where did I say / write that the UK no longer needs QE?
You’re a real character Andre as……..I don’t recall saying a single thing about the UK’s QE program.
You can’t just throw a blanket comparison on two separate economies and expect to trade it.
The situations in both countries are quite different, and don’t forget that the U.S is the worlds “current” reserve currency, carrying with it a very specific set of variables.
Comparing UK to USA in the sense of “which is in a stronger position”?
Can I ask you……what nationality are you/ where are you from?
As far as what an “independent” Federal Reserve could do on its own, the best idea I can come up with is to pursue a policy of explicit debt monetization. Anchor QE to slightly above the deficit. Buy only treasuries, no MBS. Put the responsibility for ending QE in Washington.
First, I asked a very explicit question and you answered in a very simple and straightforward way. If you want to clarify what you meant, fine, but don’t pretend I’m putting words in your mouth. Read what I asked and what your answer was.
Second, if you are long the pound against Oceania, that implies you believe the pound is strong. Otherwise you would be long the euro against Oceania, not the pound. You have also proposed going long GBP/USD, so this goes beyond just expecting Oceania to crash. The US is not the only reserve currency. In fact, in a sense the pound is a reserve currency as it is part of the IMF’s SDR system. Now, while I think entering short term positions that contradict your long term evaluation is kind of insane, I can respect the argument for short term pound strength. I just don’t have a crystal ball to warn me when it’s time to get out and I respect that weakness in me.
You can ask, and I don’t really mind answering it, but I’m curious to know why you are interested in that piece of information. Do you have some prejudice against certain nationalities that would like to attach to me? Because that’s kind of the impression I get from the way you are asking the question.
Well Andre….its really been a hoot.
I mean really…..you are likely one of the most “colorful characters” we’ve had here at F Kong – all be it (seemingly ) one of the most confused.
Oceania??….what are you talking about now? Expecting it to crash?? Who is?? What? Please! Please make sure to get back here and tell me when???
I’ve tried my best to “keep up with you” Andre, but seriously to what end?
I asked of your nationality as we all see things differently, and if you’d have said you where American I thought it might better explain your “dollar bullishness”.
What you “fail to understand” is that this reserve currency “privilege” is WHAT HAS ALLOWED the U.S to print and export dollars – as foreign countries require them in order to settle trade ( remember things like…oh I dunno OIL being priced in dollars! ). This dynamic plays little to NO ROLE WHEN LOOKING AT THE POUND.
Comparing the pound to the dollar as “just two currencies” is ridiculous.
Brasil – gotcha man…….huh interesting.
Nothing has allowed the US to print and export dollars. The USD has been severely devalued. Look at the carry adjusted price of the USD against the brazilian real. Hell, the yen is still at a higher level than it was in 2008. The United States does not enjoy much of a privilege. It has to deal with the same dynamics as all other currencies.
Oh Andre.
I so appreciate your interest / tenacity etc…..but do encourage you to do ” a little more reading / research “.
Your passion for forex is admirable, but I fear you may be missing a couple of the fundamental building blocks / underlying concepts that put alot of this in perspective.
Devaluation is what “everyone is trying to do” Andre, as a weaker currency promotes exports.
As opposed to thinking about “which one has more value”…….you need to consider “who’s policy/ monetary actions are creating “less value”.
It’s a race for the bottom Andre. Everyone WANTS A LOWER CURRENCY.
I didn’t think using the word “Oceania” would come off as cryptic. I mean Australia + New Zealand.
Sorry for using three posts to reply; thanks for the colorful comment. Perhaps I should start my own forex blog? That might be interesting.
There you go.
Start your own forex blog Andre. This is an absolutely excellent idea.
In fact….I would encourage EVERYONE to start their own blog as….now after my first year – I can’t imagine not having Forex Kong!
The opportunity to get my ideas out, to interact with like minded people and exchange ideas?!…..Fantastic!
Go Andre Go!