It’s been a tough grind here as of late, with such low volume trading leaving so many asset correlations stuck in the mud. Traders looking for the usual “signals” in one asset class with hopes of “putting it all together” have been pushed around and pulled back and forth – left struggling to “find an answer” within the continued “day-to-day chop”.
A tough market to navigate with Central Bankers hiding behind every corner, and with such low volume it would appear that on many days…..the market just seems to be sitting there – doing nothing.
Oil looks to be heading lower here and USD appears tired now sitting at its near term “double top” ( as seen via $dxy ).
Gold’s pullback appears to be resolving itself – sputtering out at a pretty solid area of support around 1292.00, while U.S Equities ( as well EU equities and Japan ) look weak, tired and exhausted.
Does anyone else expect that next weeks “U.S GDP report” will disappoint? And that perhaps markets are “finally considering” things aren’t nearly as rosy as the U.S Media continues to suggest?
It would have to have been “some kind of amazing quarter” ( the past 90 days only ) for the report to make up for the incredible ” -2.9 % loss in growth” reported in the first quarter now wouldn’t it?
Stars would clearly align with USD moving lower, gold moving higher and “global equities” finally taking a break after the SP 500 has made it nearly 800 days straight without a meaningful correction.
Food for thought moving into next week. Perhaps you’ll want to take a peak at your computer / trade account a little more regularly.
Have a good weekend everyone. Enjoy the sun!
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?
Short USD Trades – October 14 – 17th?
As per my posted “trade ideas” Friday, a couple of the “short USD” ideas have taken shape. In fact nearly everything is moving in said direction short of the pesky NZD. This damn currency has been bobbing around / consolidating for nearly a month and has proven to be a real stubborn pain in the ass.
For the most part USD weakness “again” appears to be the move , although at this point nearly every single chart ( looking at nearly any time frame) could almost / just as easily go the other way.
The U.S Dollar is undoubtedly the “tough nut to crack” here, and “with it goes” the rest of it so…..
Here we sit. On the fence again.Kinda.
With risk events such as the U.S Gov Debacle only days away, it makes perfect sense that currency markets aren’t moving too much, as it also remains to be seen where equities, bonds and gold will find their direction.
I like where I’m positioned here but again, am trading with 1/2 to 2/3 smaller position size than when “out on the highway” so we keep things small while we come around the corners.
Unlikely to have been mentioned on your local T.V last week, the “real big deal” had little to do with the “circus in Washington” as, quietly behind the scenes The European Central Bank (ECB) and The Peoples Bank Of China (PBC) signed China’s second largest “currency swap agreement” for a wopping 350 billion Chinese Yuan.
In an unpresedented move The European Central Bank said: “The swap arrangement has been established in the context of rapidly growing bilateral trade and investment between the euro area and China, as well as the need to ensure the stability of financial markets.”
In doing so, the parties involved avoid swings in exchange rates. They can also be considerably less reliant on the U.S Dollar for bilateral trade and business deals.
China’s central bank has now signed currency swap deals amounting to some 2.2 trillion yuan with 22 countries and regions, with its continued efforts to internationalize the Yuan and rival the U.S Dollar as the world’s reserve currency.
What do “I” think this deal suggests with respect to the long-term future sustainability of USD, now with Janet Yellen a “shoe in” for continued money printing? Continued money printing???
What do “you think” I think?
Wow. Now EU Zone looking for options moving forward.
Something important came up in the comments area last night, and I thought it worth pointing out.
When we consider the impact of a “flight to safety” ie…….a move in markets where “true fear” pushes investors to dump risky assets ( and to literally….seek safety ) it’s impossible not to consider the U.S Dollar as being “top of the list” as the place to run and hide.
Now, this may seem “counter – intuitive” considering the recent ( and ongoing ) blunders within the Unites States but – that’s not even the point. Take a look at the chart below and note the total % of global currency trading for the top 10 most widely traded currencies in 2013.
That’s 87% of transactions to include the U.S Dollar, compared to a piddly 33.4% for Euro and only 23% in JPY rounding out the top 3.
As a simple matter of “default” when risk comes off and investors get scared – there is absolutely no question that USD will take massive in flows, as risk is unwound and risky assets and investments in emerging markets are converted “back” to USD.
Now, we’ve still not seen a “true flight to safety” as global markets have so embraced the never-ending flow of “free money” coming out of both the U.S as well Japan – with the general investment climate being one of accommodation. This can’t last forever.
You’ll recall I had envisioned a time where “all things U.S would be sold” and to a certain degree I see that this has already happened. Starting with bonds ( as suggested ) then the currency, and lastly ( alllllways lastly ) stocks now starting to show their “true value”.
I’m not concerned with much further “downside” in USD at this point, as one has to keep a couple other “macro” things in mind.
How long do you think the Chinese and Japanese holders of American debt are looking to stand around and watch their U.S denominated assets decrease in value? How far do you “really” think that Ben and the printing presses can push before somebody “really” pushes back?
Food for thought no?
Ok “mother market”…..I’m gonna give you exactly 24 hours before you’ve got a major decision to make.
I know, I know , I know…….you are the boss – and I’m just a boy trying to make a buck but seriously…you’ve gone a bit too far this time and I’m close to running out of patience.
This “pesky little thing” you call “the dollar” has just about done enough to frustrate me and my friends to the degree that we will soon be pulling out our hair – short of you making up your mind.
Are you going to let this thing get away on you? Or are you going to do “stick to the plan” and toast it like a marshmallow?
Yes , yes I understand – you can’t just make these decisions on the turn of a dime, so let’s do this……
If USD doesn’t poke its head back under 82.23 and turn red (really red) mighty quick…..then we’ll just let you have your way, and start to consider the opposing view.
I will look to get “bullish USD” should you decide to make such a mistake right here…right now.
Personally, I feel it’s a tad early – but if this is what you want…..so be it.
24 hours – and I won’t bother you again.
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?
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.
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.
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.
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
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.