Citi Sells All USD Positions – No Really?

Again….you generally need to be “ahead of these moves” in order to take advantage ( note yesterdays post- please scroll down ).

Gold, & Silver Jump As Citi Sells All USD Positions Fearing “Squeeze”

I envision a time ( in the not so distant future ) when “all things American” ( USD, Stocks and most certainly the bonds ) are sold.

I’m sure you’ve noticed the correlation of USD strength = U.S Equities strength so…..one would have to imagine the complete and total “inverse relationship” as well right?

Or they just all keep going up forever. RIght.

Little chance of that.

Other than the few short USD positions already in play I’m more or less “cash ready” for the large positions “long JPY” ( against most every other currency on the planet ) kicking in here soon.

No shorts in SP 500 as of yet.

More at the Members Site: Forex Trading With Kong

 

 

 

4 More Days – USD Toast Or Treasure?

If you can believe it – the U.S Dollar has spent the entire last week “still hovering” near a well-known area of support, showing absolutely no interest in “getting off its ass” and making a move higher.

As forex markets have a tendency to move sideways for extended periods of time, this should come as no real surprise but in having held a number of small positions ( almost averaged out now ) “long USD” for some time now, I’m only giving it a couple more days before just “going with my gut” and likely pulling a “stop n reverse” – getting back on the short side of this dud.

The overall weakness and lack of any real “life” suggests ( as I’ve now suggested for some days ) that regardless of any “near term pop” – USD looks pretty much set on breaking support and continuing on its merry way – into the basement.

Considering the lack of movement ( in either direction ) scratching a trade that has consumed nearly two full weeks of trading doesn’t put a smile on my face. Not at all. If you consider the time and effort, and in turn the “lack of reward” you can easily see why we call this “work”.

I’ll give this dud a couple more days to “prove itself” but as it stands…..I’m a hair away from flat-out “stop and reverse”, wherein the probability of an actual “waterfall” exists.

It’s make it or break it time for USD. 4 days Max.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

 

Deflation Vs Inflation – The Great Debate

It’s pretty rare that I get excited about something like this as I don’t really spend a lot of timing thinking about – but in this instance, I’m really looking forward to learning more.

We’ve had some discussion in the comments section over the weekend, with a couple of very  knowledgable participants really putting out some great info.

Deflation vs inflation…..the great debate.

I for one have thrown this around on occasion, only to find myself back where I started in the first place – time and time again. I hope I don’t create a “dead-end ” here (as I generally stick to spaceships, quiet time with ants, and the search for evidence of alien life on Earth ) and am certainly “not” an economist, but I hope we can wrangle these guys ( and whom ever else ) to shed a little light, on a an area of economics – often misunderstood.

The basics:

Deflation is a “decrease” in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Deflation increases the real value of money ie…..the currency of a nation or regional economy.

Deflation allows one to buy more goods with the same amount of money over time.

*Thank you Wikipedia!” ( what you think I rattled that off the top of my head?)

Inflation is a persistent “increase” in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.

So…..in a nut shell – looking at the value of a dollar in a given economy, and the reflection of “how much of what” that dollar is able to purchase at a given time  – no?

The questions:

Given the current monetary policy – Is the United States “currently” in an inflationary environment or a deflationary environment? And more importantly ( as we are all much more interested in the future )…..

Where do you see the United States headed next? And….(bumbuddabum bumbumbbumbbumb!!!)

Why?

Woohooo! I’ll do my best to chime in but in all honesty I’ve likely got little to add…other than my own “backward / flipped over / nutty way” of looking at it, which ultimately may not have to do much with economics as it does making money trading forex.

All opinions / views more than welcome!

Let’s get this thing licked! And thank you in advance to JSkogs in particular. A valued reader and contributor here at Kong, and from what I gather – a pretty all around great guy.

Forex_Kong_Google

Forex_Kong_Google

Trading Nightmare – I'm Awake And In Profit

One of my computers called me about an hour and a half ago.

Plucked from the grasp of yet another “unsettling dream” ( for what ever reason I am continually plagued by dreams of having my teeth pulled / ripped / removed / taken in ever increasingly “bizarre fashion” ) I welcomed the alert, and eagerly leapt from the bed to silence the soft repeating tone.

Several trades had been picked up, and to my surprise – the U.S Dollar taking a relatively huge hit as the London sessions moved into their first couple hours trading. My surprise? Of course not – you know that. Everything moving accordingly to plan with the added bonus of still having every single tooth intact! How wonderful!

And with so many caught in nightmares of their own, gobbling up useless news stories of tapering and the assumed effect of a “much stronger dollar”.

EUR and GBP are obviously the biggest winners here as per trades in the comment section some hours ago as well a quick tweet.

The “tooth removal” dreams are extremely unpleasant, and it’s really no wonder I don’t sleep a whole lot. Thankfully I was “saved by the bell” here this evening, and rewarded with some fantastic trade entries.

In celebration I plan to eat 3 lbs of chocolate, a full tub of ice cream and as many stale candy canes as I can wrestle from the kids across the street.

UPDATE:

I can fully understand that this must be moving way to fast for some of you as…..only hours later (in fact less ) I’ve already banked just under 400 pips across the board in 6 pairs total, and will now be looking for pull back on smaller time frames – and of course re entry.

When some of this goes down in the “dead of night” I don’t imagine there is much some of you can do about it , not having the alerts / computers chiming, the lifestyle ( never sleeping, no kids , no other job, likely insanity ) let alone the interest / dedication / commitment.

We’ll have to find a solution moving forward.

U.S GDP Data – Totally Bogus

You can get in here and argue your case til the cows come home! – and I honestly hope that you do, as perhaps you’ve some insight / information that can better help me understand.

The U.S data released this morning is absolutely hilarious. Not just “kind of funny” but so absolutely outside the realm of believable that I’m literally “on the floor laughing”.

Let’s see what the markets make of both this “ridiculous GDP number” and the “magical drop” in unemployment.

I’ve only added to USD shorts as well watching Japan continue to slide with long JPY’s starting to take shape.

Short and sweet this morning, as I want to get “back to the circus” as soon as possible.

I’ve not had this much fun in a while!

USD will continue to be sold here.

 

USD Bullish Or Bearish? – You Tell Me?

I think it’s fantastic that I’ve “managed to wrangle” a number of intelligent readers here at Forex Kong, and that these guys also offer their opinions / beliefs / suggestions and projections.

You can surf around the net for a “looooooong time” searching for some of the “nuggets” that turn up in the comments section here at the site, with a large portion of these insights coming from a “small handful” of some mighty intelligent people.

Yesterday’s post on “the proposed downward slide of the U.S Dollar” brought about a couple of fantastic “alternate views” which I appreciate in that – we enter the world of “speculation” when we start looking out over longer periods of time – where in theory “it’s impossible” for anyone to “actually know” how things will play out.

Throwing the ball around with others allows for a better perspective, an acceptance of alternate views and an “opening of the mind” should you be so closed as to only consider your own ideas, as correct.

The future path for the U.S Dollar (having such impact on all else) seems like as good a place to start as any so…..I welcome “any and all” to weigh in on this post ( as I will leave the comments section open for eternity ) as to provide a lasting resource for readers in the future.

USD bullish or bearish? You tell me?

USD Headed Lower – And Then Lower

This won’t come as a surprise…coming from me but – USD is headed much lower.

I think it’s about time – we’ve had enough of this “mucking around” at these levels, having more or less “danced around” the past few months. It’s time for the next leg down.

I don’t have time here this morning but if you want to pull up a general chart of the $dxy or in some platform (like stockcharts) $USD, I’d get your sights set on a serious of long red candles taking us down into that area around 75 – 72 in coming months.

If this “doesn’t” correspond to an “inverse move” in the price of gold and silver ( looking at is as such a dramatic decrease in USD value ) I will be forced to take on “the Habanero challenge” as I have offered several times in the past.

Up 3% overnight alone with the majority “still coming” from trades entered in GBP vs Commods in the weeks past. I suspect the Nikkei will “attempt” a solid double / retest top at 16,000 ( the high from May ) as JPY futures inversely “double bottom” shortly.

Enjoy:

Done Deal – The U.S Is Now China

The plans/suggestions emerging from the weekend’s meetings in China are staggering!!

Ok ok….a little dramatic and perhaps overstated but get this…..

As part of an evolving proposal Beijing has been developing quietly since 2009 to convert more than $1 trillion of U.S debt it owns into equity, China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss!

The Obama administration, under the plan, would grant a financial guarantee as an inducement for China to convert U.S. debt into Chinese direct equity investment. China would take ownership of successful U.S. corporations, potentially profitable infrastructure projects and high-value U.S. real estate.

These points have been discussed for several years now so it’s really not anything new ( although I’m sure it’s the first you’ve heard of it ) but the message is very clear.

China will not tolerate / watch their dollar denominated assets ( treasury bonds ) go up in smoke via currency crisis and crash of the U.S dollar – BUT WILL ACCEPT HAVING THIS DEBT TURNED INTO DIRECT INVESTMENT IN OWNERSHIP OF U.S BUSINESSES AND LAND.

GOVERNMENT GUARANTEED!

Brilliant…..absolutely brilliant.

 

QE In Japan To Increase – U.S.A Next

Some tough new out of Japan here this evening for those fans of “money printing” and “easy money” policy. News flash – It’s not working.

With the current QE program in Japan currently 3X LARGER than that of the U.S Federal Reserve, the first 6 months “pump job” has most certainly stalled out ( ironically in May – as I suggested markets topped then ) then traded flat across the summer,  and now into the fall.

If you can believe it:

“The BOJ is likely to step up stimulus in the April-June quarter to support the economy after the levy rise, according to 20 of the economists surveyed.”

“The BOJ will need to fire another arrow aimed at devaluing the yen if the Abe administration is unwilling to risk a sharp economic slowdown,” Credit Suisse Group AG economists Hiromichi Shirakawa and Takashi Shiono wrote in a report.

Expect lower stock prices in Nikkei, then further easing come April.

Now do some of you have a better idea as to why I expect the Fed to also INCREASE QE moving forward?? The numbers are just too large for any of us to clearly understand. A couple more “zero’s” on the Fed’s balance sheet aren’t going to make a single bit of difference as financial markets continue “hanging by a life line/thread”.

They will print, print, print until they can’t print anymore – and continue kicking the can hoping for a miracle.

Japan’s program is 3X larger than the U.S and it’s already “a given” they will increase QE with continued attempt to prop up the economy. This, in the face of “global growth projections” now being lowered by the IMF and anyone else with half a brain in their head.

I’ll say it again – keep your eyes peeled friends…..a bumpy road ahead.

U.S Debt Downgraded By Chinese

Finally we get a solid move on the fundamentals, as last nights downgrade of U.S debt from Chinese ratings agency “Dagong” sent the U.S Dollar spiralling down.

Now Dagong is no “Moody’s or Fitch” ( currently rating on “negative watch” ) but this in itself brings about a very interesting point.

A Chinese ratings agency having such a significant impact on the dollar? Wow.

You might expect this kind of move given that a “reputable” agency in the U.S gave the “thumbs down” on the debt ceiling debacle sure…but a Chinese ratings agency?

As the largest holder of U.S Debt / Treasury Securities on the planet it is now painfully clear how much influence China truly has. The agency suggested that, while a default has been averted by a last-minute agreement in Congress, the fundamental situation of debt growth outpacing fiscal income and GDP remains unchanged. “Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future”.

Kicking the can a couple of months further down the road makes little difference when the U.S will just be back in the news then…..still unable to pay its bills.

The short USD trades obviously made big moves here overnight, but not exactly as expected. Great gains in EUR, GBP as well CHF but oddly the “commodity currencies” have shot higher. An interesting dynamic and certainly one to keep an eye on as NZD as well AUD approach overbought levels.

Gold up a wopping 34 bucks here this morning, so perhaps we’ve got the “risk off” flows on the move.