Fed Pulls USD Strings – Puppet Show Goes On

How long have I been going on about “tapering impossible”, U.S recovery a sham, QE to continue, Fed to destroy the Dollar, blah, blah, blah, you’ve heard it all before, a thousand times again, over n’ over n’ over, yes Kong we get it , by all means why not tell us how you “really feel” – right?


So we’ve seen Bernanke make his exit, and now we’ve got Yellen at the helm.

Keep in mind, the position of “Chairman of the U.S Federal Reserve” is likely one of the most, if not “the most” economically and financially influential positions on planet Earth, akin to “god” – or at least to you humans so……changes in U.S Monetary Policy effect each and every country on this planet – in some way or another.

With two straight months of “-10 billion dollars” in supposed “tapering” – why aren’t stocks falling? Why aren´t bond yields ripping higher? Why hasn’t the US Dollar shot to the moon on safe haven flows?

Because it’s never gonna happen that’s why! And to my absolute shock and surprise…the market already knows it!

Taking the bait, and again “trading what’s in front of me” sure…I’ve spent a good 3 or 4 days looking at “long dollar strategies” ( as much as it’s pained me ) then BAM!

We pretty much saw the USD fall out of bed over the past two days, crossing significant areas of support and signalling / suggesting “considerable downside” ahead. Can you believe it? Already?

It looks pretty plain to me that markets have absolutely “no faith or belief” that the Fed will stick to its guns and continue with tapering, and that if anything “yes indeed” more QE and money printing await – just around the bend.

That being said, it’s quite likely the U.S Dollar will take a bounce here sure, but – I will now “reframe” this as a “bounce” and NOT a fundamental change – reflecting “any change” in my long-term views being that the U.S Dollar is toast, and that the Federal Reserve will continue to print / devalue until the absolute end.

I’ll likely use any strength in USD next week to “gracefully exit” a couple of positions, so if it gets another “zig before the zag” I see the good ol 200 Day Moving Average up around 80.80 as good a place as any.

We’ll need to take another day or two to see what it means for stocks and “risk in general” but as it stands…and as hard as it is to believe well…..ya you know.

4 Responses

  1. Careydina February 15, 2014 / 8:04 pm

    Yes i agreed! Well didn’t expect much from the US now. As you said long-term USD is toast. Unless there’s big news from them otherwise unlikely will have any changes…

    • Farhan Nasir (@FaniNasir) February 15, 2014 / 11:53 pm

      That’s the fate of USD ,, What about AUD ? i mean USD is destined to fall so is AUD .. so in between them ,, what is the fate of AUD/USD ?

  2. JSkogs February 16, 2014 / 12:49 am

    Yup. I’m thinking a quick rip. You have to think that central bankers know that acute inflation would be the worst thing for a recovery….and stimulus efforts have a lag….so Yellen and company might be aware that inflation is coming which would often mark the bull end as input costs get too high. So maybe we see some quick taper during inflation as a reaction or effort to contain it. So dollar falls during taper….Inflation gets high….earnings hurt…contraction…another dollar rip…then back to easing

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