dollar weakness

Forex Positions Update – USD Weak

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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.

http://potstockwatch.com/2013/10/11/my-trade-ideas-october-11-14-2013/

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.

The Big Story Last Week – You Missed It

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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.

Trade Plans – Moving Faster Than Can Be

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I’ve taken profits “again” here this morning on anything and everything related to the U.S dollar as well “risk” in general. It’s been a touch frustrating spending this last week “toiling away” under the daily barrage of headlines coming out of Washington, and as the days wind down to the “ultimate stand-off” on raising the debt ceiling limit – the likelihood of resolution increases.

These buffoons can’t possibly be so stupid as to actually risk default, and yet another damaging ( if not killer ) blow to American credibility on the world stage. I’m not sure I’ve ever seen anything more embarrassing for a country’s government, as daily news “across the entire planet” has this “top of the list” of blunders – LET ALONE THAT IT’S 100% COMPLETELY SELF IMPOSED!

It won’t be war, and it won’t be terrorism oh no…no natural disaster or alien invasion will do it nope. The American government can just step right up and get the job done itself. Absolutely unreal.

Trade wise….there is no doubt the media / Wall Street will “rejoice” a resolution, and rejoice in the knowledge that the ponzi scheme is safe and sound for another couple of months.

Commodity related currencies have traded flat as pancakes, GBP has pulled back,  and for the most part its been a complete “ghost town” out there leading up to this trainwreck completing.

I’m up 3% and back on the sidelines – waiting a day or two to see how things shake out, looking to take a shot at the “pop” on resolution. Then “back with the bears” into the new year.

Safe Haven Trade – USD Or Gold?

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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.

Trade_Currencies_Global_Forex_Kong

Trade_Currencies_Global_Forex_Kong

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?

Forex Turning Point – Today Is The Day

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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.

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

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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

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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

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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

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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

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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.