dollar weakness

Eyes On U.S Unemployment Data At 8:30 A.M

Forex Kong 12 Comments

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?

Ridiculous.

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.

 

USD Set For Short Term Move – Higher

Forex Kong 6 Comments

The USD is long overdue for a counter trend move higher, which is likely to start – literally this minute.

As usual ” they never make this easy” as “of course” you’ve got FOMC / Bernanke talking AGAIN here early this week.

At times I do marvel at the manipulation as even just this morning I’ve read a couple of headlines where “The IMF ( International Monetary Fund) Suggests Tapering A Bad Idea” coupled with usual market chatter leaking out (via U.S Media) that “Tapering To Start As Early As Sept”.

It’s pretty impossible for the IMF and the U.S Federal Reserve to even have opposing views – as the  IMF’s largest contributing and “influential” member country / representative IS the U.S and Ben Bernanke so……here we see it again – complete and total nonsense keeping things as confusing as possible.

Any move higher in USD will likely be fast n furious ( as to wipe out short termers ) and likely short-lived so I would advise caution here. Catching a counter trend move is always risky, and it’s clear that USD is in a well-defined downtrend.

I’m playing it across the board, as well remaining LONG JPY as these trades are well in profit now.

 

Canada Continues To Pull Ahead – Short USD/CAD

Forex Kong 2 Comments

More good numbers out of Canada today as the economy appears to be firing on all cylinders.

Firms in Canada may look to raise consumer prices amid the underlying strength in job growth along with the expansion in private sector credit, and a positive development may heighten the appeal of the Canadian dollar should the data spark bets for a rate hike.

Meanwhile south of the border:

The city of Detroit filed for Chapter 9 bankruptcy protection in federal court Thursday, laying the groundwork for a historic effort to bail out a city that is sinking under billions of dollars in debt and decades of mismanagement, population flight and loss of tax revenue.

The bankruptcy filing makes Detroit the largest city “so far” in U.S. history to do so.

Obviously I’m suggesting short USD/CAD sets up quite well at these levels. I’ve booked 2% on the trade and will look to reload on any further “pop” in USD which gets less and less likely by the day.

$USD Weakness – Here's Your Chance

Forex Kong 20 Comments

I wish things moved a lot faster at times too, as that I wouldn’t continue to sound like a broken record here….but it is what it is.

You may find yourself watching the daily levels on a given stock market index as means to gauge how things are going, or perhaps you watch bonds. Unfortunately for me, the U.S dollar with its predominant role as the world’s reserve currency is something I need to remain focused on. It does get a little boring at times – no question about that BUT! If you’ve tuned in over recent months – the accuracy of trade entries and market timing has been strong enough to keep in beers and tacos through some pretty rough patches.

Here we sit.

As suggested yesterday my eyes are keenly focused on USD, and in turn every other asset class as these days “even more than ever” – a lot hinges on where we see the dollar going. In fact – EVERYTHING hinges on it these days.

Hopefully I can find more interesting things to talk about in coming days, as USD looks to be doing exactly what I expected it to do here at these levels. USD is reversing and if today’s action is any indication – of the correlations / options I laid out yesterday – Stocks look set to reverse along with it.

I’ve held a number of short USD trades for several days now as my “round 1” entries where at least a couple of days early. I’ve traded very small and have every intention of just letting this run it’s course – and adding to existing positions as my direction confirms.

You are going to see some very, very , very strange moves in Forex markets here on this turn as a number of “cross currents” come into play – that will challenge any measure of logic. Imagine USD heading lower as well stocks in what would appear to be a risk off move…coupled with AUD and NZD moving higher? That is nuts.

Flight To Safety – Not USD

Forex Kong 18 Comments

As suggested some months ago – I had envisioned a time where “all things U.S” would likely be sold. We saw the trend appear first in bonds, then considerable US Dollar weakness and finally the inevitable spill over into U.S equities.

Trouble is that now….we need to consider that indeed rates in the U.S will be on the rise (not “tomorrow but in general), and in turn hurt corporate borrowing ( and the ability for companies to increase profits ) which in turn will create even “further” weakness in the U.S economy in general….as earnings will likely suffer as a result.

The bond market is much, much larger than Ben Bernanke – and all the printing in the world can’t change that. When fear sets in and sellers “sell” – the 20% that Ben doesn’t control can bury him in a second.

I don’t see the “flight to safety” being U.S Dollars this time around folks.

I’m leaning LONG JPY here as of this morning, as well looking to limp into SHORT USD trades over the next couple of days.

 

Decline Of The U.S Dollar

Forex Kong 7 Comments

The last two days “rocket ship” strength in the USD , and in turn further weakening of the Japanese Yen pretty much blew my trade plans out of the water – as I had been positioning for the complete opposite. The currency markets are extremely volatile right now – to the point to where I “should” likely take my own advice and step aside.

We all know I’m not gonna do that.

We will wait and see if indeed the USD has any follow through here – or turns back down and continues on its way. In light of this I wanted to show you something interesting. Not as much the USD value vs any number of other currencies – but USD with respect to its actual “purchasing power” in real world scenarios.

I’ve “borrowed” this lovely graphic from friends at Zerohedge, and hope no one will mind:

Decline OF USD Purchasing Power

Decline OF USD Purchasing Power

Inflation is nothing new I know, but it does go to show how “endless money printing” really affects those living within it, as opposed to just looking at USD vs another currency. Fact is, with every Central Bank on the planet doing it’s best to keep up with the devaluation of the USD its difficult to really see it day-to-day.

In not living in the U.S and getting almost unimaginable “bang for my buck” here in Mexico, I can’t say that I know what it feels like either  – but imagine that a young struggling new family ( with likely one person out of work ) must be feeling the pinch.

And so the printing continues……. with likely larger QE 5 coming soon.

USD Expectations – Trade Ideas For Bears

Forex Kong Got something to say?

The normal correlation of  “dollar up = stocks down”  and visa versa – has been on its head for some time now. As you’ve likely seen over the past few days while stocks have staged a small rebound, the USD has also continued higher. The two have been trading in tandem.

I’m expecting the dollar to turn downward tomorrow or very early next week – with full expectation that stocks will also make another leg lower.

Something else to watch in coming days will be the currency pair USD/JPY, as the BOJ’s recent efforts to further weaken the Yen has spurred buying across markets with carry traders (as suggested month earlier) clearly taking advantage of the easy money. Weakness in USD/JPY will now correlate with weakness in risk, and markets in general.

I don’t imagine the BOJ has much more to  add ( here at their meetings over the weekend ) and in turn – expect this would be a great time for a bounce in Yen, and a further move toward “risk aversion”.

 I’m looking to get short USD and “long” JPY ( at the same time – which some months ago would have been sheer lunacy as they are both considered “safe havens” – and I would never have had opposing trades including these currencies) giving you further indication how significant the moves out of Japan have been for markets in general, and add further credence to the study of fundamentals in trading.

Stock guys…..I would look for hedges, or short-term plays in some kind of inverse or  “bearish” ETF.

QE5 Coming – Fed Will Print Even More

Forex Kong Got something to say?

When you really stop and think about it – so far the “Fed’s Quantitative Easing” has done very little for the U.S economy, short of inflate the price of stocks. Last week’s unemployment claims numbers came in considerably higher than expected with 357,000 new claims for the week ending March 23rd.

Stop for just one minute……… and seriously think about that number again.

357,000 people in the Unites States of America filed applications for unemployment benefits last week! With essentially the same number of  people filing the week before that, the week before that – and oh yes…the week before that. It’s truly mind-boggling.

With interest rates already at 0% there’s nothing else that can be done there. Stocks are now at all time highs with very little upside opportunity left there – and now with every other country on the planet devaluing their currencies to promote exports, the U.S efforts to weaken the dollar (with the printing of 85 billion per month) has barely made a dint!

As absolutely insane as it sounds there is really no other option.

QE5 is coming, as the Fed will find some way to justify printing more, and more, and more, and more……….

I’ve inserted the following video (it’s a 24 minute interview) with Jim Rickards the author of “Currency Wars” – he explains things very well. It’s the long weekend so….perhaps sneak away and find a little time for yourself, crack a cold one and have a listen.

[youtube=http://youtu.be/wa2xM9eJY4M]

AUD Pushes Higher – Risk With A Twist

Forex Kong Got something to say?

The AUD (often seen as the front running “risk related”currency) is most certainly showing strength against a number of its counterparts but? – What’s with that pesky USD? These commodity related currencies have been performing wonderfully against JPY in recent days ( a decent 5 % addition for Kong ) but across the board USD continues to exhibit relative near term strength. Stocks are “blowing off” as suggested  – but the USD is hanging on for the ride.

This is not exactly “normal market behavior” (or at least….not for any extended period of time ) so my bells start to ring, the whistle blows, lights start spinning round……………….something’s got to give.

USD testing near term relative highs here “again” today – and stocks clawing higher as well. It certainly warrants consideration.

I for one will continue to push on the long side as I still see USD as extremely overbought and due for decline.

Waiting On The Dollar Trade – USD

Forex Kong 7 Comments

I had hoped / assumed the USD strength would have subsided a little earlier in the week – but it appears that we have a daily “swing high” here as of today. I would expect that we get several days of continued USD weakness and the inverse of course – higher prices in equities.

If this goes as I imagine – this may very well be the last “blast” up ward in equities, and final “dip” in the USD before we’ve got an official top in place and an actual “change in trend” established. I also imagine this is where things are going to get tricky.

One could consider “getting long risk” here later today / possibly tomorrow morning – but with such headline risk in front of us ( ie……the ridiculous U.S Government’s fumbling of the sequestration) it is difficult to “assume” markets will just continue moving higher. News often plays a role in market dynamics and movement – and this could be considered a “wopper” as I have come to understand it. I don’t think the U.S general public and business community are going to be very happy if / when this program goes through – regardless of how ridiculous I think it is.

Unfortunately – I will be sitting on my hands for the most part, but will be more than ready to jump on a continued run up in “risk”, keeping in mind it will likely just be for a quick trade. My call on EUR/USD at 1.3170 is now in play – but I can’t say I’ll take the trade until I see more.