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Central Banks Watch

  • #61
  • Nov 18, 2005 2:09pm Nov 18, 2005 2:09pm
in this thread i bet that the ecb would raise rates, guess i was a little late on my timeline...

"im dollar bullish, have been for a while. but that may change if we get to 1.1400 on the EURUSD. US rates cant go up forever, and i am going to bet that the ECB raises rates early in 2006...."

i think its about time to get long the EURUSD boys.
Relax and be happy.
  • #62
  • Nov 18, 2005 2:26pm Nov 18, 2005 2:26pm
Quoting merlin
in this thread i bet that the ecb would raise rates, guess i was a little late on my timeline...

"im dollar bullish, have been for a while. but that may change if we get to 1.1400 on the EURUSD. US rates cant go up forever, and i am going to bet that the ECB raises rates early in 2006...."

i think its about time to get long the EURUSD boys.
Is it long-run prospect, weekly monthly?
I think EUR will test 1.14. Rate differencial is too big. besides ECB will not raise rates permanently as FED does, because of economy is not growing well and inflation fear is not as in US. I think this 0.25 bps raise will only support short-term EUR bulls, in long-run EUR is sinking to 1.1-1.2.

I am only worried on the next US GDP number. Because a record trade deficit was caused basically by export decline which is solid part of GDP and will cause GDP growth to decrease on an average by 0.3%. So if US GDP is down in next announcement and oil price will come off I will become EUR bull too.

thanks
kiss the trend
  • #63
  • Nov 18, 2005 5:21pm Nov 18, 2005 5:21pm
Quoting merlin
in this thread i bet that the ecb would raise rates, guess i was a little late on my timeline...

"im dollar bullish, have been for a while. but that may change if we get to 1.1400 on the EURUSD. US rates cant go up forever, and i am going to bet that the ECB raises rates early in 2006...."

i think its about time to get long the EURUSD boys.
Merlin I agree with you that the Euro shall see the 1.2000 mark before it sees the 1.1000...My opinion is that the ECB won't leave the currency drop like a rock like that, that's why I am expecting strong Euro support during the first quarter of 2006 and maybe today was the beginning of it...

I am dollar bullish too, but I believe that the bullish tone will turn into neutral by the second half of 2006...I believe that by that time the feds will be keeping rates steady between the 4.5-5% mark and the differential between the USD and the Euro will be holding steady and the bullish tone turns into a neutral and consequently I expect the price to consolidate...

GOD knows what will happen in the future, this is just my opinion...


Thanks,

Nader
  • #64
  • Nov 18, 2005 6:36pm Nov 18, 2005 6:36pm
Quoting narafa
My opinion is that the ECB won't leave the currency drop like a rock like that, that's why I am expecting strong Euro support during the first quarter of 2006 and maybe today was the beginning of it...
i think its more about inflation, i dont think they will let inflation get out of hand. but we agree that the ECB is going to start stepping it up here.

im not quite ready to pull the trigger on a long EURUSD position just yet, but i am no longer holding my long dollar long position, so call me neutral at this point.

i will say this....i think we already saw the bottom of EURUSD this week. we are headed back to 1.2000. and maybe back to 1.3000.
Relax and be happy.
  • #65
  • Nov 18, 2005 6:39pm Nov 18, 2005 6:39pm
Quoting fx-trader777
Is it long-run prospect, weekly monthly?
I think EUR will test 1.14. Rate differencial is too big. besides ECB will not raise rates permanently as FED does, because of economy is not growing well and inflation fear is not as in US.
...im talking about prospect for 3 month or so.

your right, the rate differential is big right now. but the fed is going to be peaking at 5% (thats my latest guess) and the ECB will be just getting to 3 or 4%, and rising. that calls for a euro rally to me.
Relax and be happy.
  • #66
  • Nov 18, 2005 6:43pm Nov 18, 2005 6:43pm
Quoting merlin
i will say this....i think we already saw the bottom of EURUSD this week. we are headed back to 1.2000. and maybe back to 1.3000.
I think 1.3000 is way too far unless the Euro rate goes to 3.5-4.0% range..I don't think the ECB will go that far with rates, after all the European economy is slowing and they don't want to put another burden on its' shoulders' by increasing rates to this level...

I think the 1.2000-1.2500 range is reasonable...

What do you think ??


Thanks,

Nader
  • #67
  • Nov 21, 2005 7:04pm Nov 21, 2005 7:04pm
well after Trichet's comments today, your probably right that rates wont go that high. 3% might even be too high after what we heard today.

im still not quite ready to play the EURUSD long yet, im still trying to figure out the USDJPY situation:

anway, the ECB is DEFINETLY the new hot topic. anyone care to make some solid predictions?
Relax and be happy.
  • #68
  • Nov 22, 2005 12:16am Nov 22, 2005 12:16am
Quoting merlin
well after Trichet's comments today, your probably right that rates wont go that high. 3% might even be too high after what we heard today.

im still not quite ready to play the EURUSD long yet, im still trying to figure out the USDJPY situation:

anway, the ECB is DEFINETLY the new hot topic. anyone care to make some solid predictions?
His dovish mother f%$# this Trichet
I went long at 1.1790 on the collapse. I did not pay attention to his comments

was deadly stopped at 1.1755.
kiss the trend
  • #69
  • Nov 22, 2005 12:52am Nov 22, 2005 12:52am
actually the daily pivot (LB) was at 1.1836 and that is exactly where the price bounced from, on trichet's comments.
The next fibo at 1.1854 was too far from the prev fibo 1.7773.
just my piece of understanding.
  • #70
  • Nov 22, 2005 6:53pm Nov 22, 2005 6:53pm
that was a hell of a reaction today in the treasuries huh iso? i read the minutes and i dont see what everyone is getting so excited about. global inflation is still out of control, and bernanke is NOT going to drop rates like some expect.

btw, i couldnt resist, i had to get back in, shorted a few 10yr. nothing huge, just a little sumthin.
Relax and be happy.
  • #71
  • Nov 22, 2005 8:23pm Nov 22, 2005 8:23pm
Quoting merlin
well after Trichet's comments today, your probably right that rates wont go that high. 3% might even be too high after what we heard today.

im still not quite ready to play the EURUSD long yet, im still trying to figure out the USDJPY situation:

anway, the ECB is DEFINETLY the new hot topic. anyone care to make some solid predictions?
That was just a prediction based on putting myself in his seat...If I were him, I would have never raised rates to such levels...

And ya, the USD JPY is still an unsolved mystery...It's hanging over near the highs, and seems that both big banks don't want to interfere right now...Maybe everyone is preparing a surprise for the other, who knows...Sill Yen bullish, butmore Yen bullish against Euro and GBP...


Thanks,

Nader
  • #72
  • Nov 23, 2005 12:17am Nov 23, 2005 12:17am
ok guys, here is the paragraph that caused all the disruption today...

"The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability."

does this mean the fed is done tightening and will keep us at 4%? does it mean the fed is going to scale back intrest rates? or will they continue to tighten?

believe it or not im still betting they tighten some more. two reasons...inflation and the housing bubble.

first, the fed says inflation is under control. ok, i can see that, the past two months inflation was low. in the US that is. what about the rest of the world? the eurozone is experiencing high inflation, especially german, and australia is showing big CPI numbers. so yes the US inflation seems to be under control for the moment, but i think its going to start getting out of control again.

second is the housing bubble. while the air seems to be slowly leaving the bubble, long term rates still havent budged much, the yeild curve is still very very flat, especially around the early side. unless long rates (ie 30yr bond) start moving north, the housing bubble aint gunna go away.

well this is my take at the moment. i feel we are in a transitional phase right now for both the USD and the EUR, and maybe even the JPY too. i think the key to it all right now is inflation, and if you are watching gold prices right now you will notice that the world is scared of inflation at the present.
Relax and be happy.
  • #73
  • Nov 23, 2005 12:54am Nov 23, 2005 12:54am
Quoting merlin
ok guys, here is the paragraph that caused all the disruption today...

"The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability."

does this mean the fed is done tightening and will keep us at 4%? does it mean the fed is going to scale back intrest rates? or will they continue to tighten?

believe it or not im still betting they tighten some more. two reasons...inflation and the housing bubble.

first, the fed says inflation is under control. ok, i can see that, the past two months inflation was low. in the US that is. what about the rest of the world? the eurozone is experiencing high inflation, especially german, and australia is showing big CPI numbers. so yes the US inflation seems to be under control for the moment, but i think its going to start getting out of control again.

second is the housing bubble. while the air seems to be slowly leaving the bubble, long term rates still havent budged much, the yeild curve is still very very flat, especially around the early side. unless long rates (ie 30yr bond) start moving north, the housing bubble aint gunna go away.

well this is my take at the moment. i feel we are in a transitional phase right now for both the USD and the EUR, and maybe even the JPY too. i think the key to it all right now is inflation, and if you are watching gold prices right now you will notice that the world is scared of inflation at the present.
I agree you merlin. It is better to fight inflation when it is under control rather than when it shows signs of rise. Fed will contunue tightening until GDP is cooled. They will look carefully at GDP numbers.
kiss the trend
  • #74
  • Nov 23, 2005 2:51am Nov 23, 2005 2:51am
I have heard recent comments from G.Soros advicer. He expects USDJPY to reach 150 in long-run.

I wonder US runs such rapid deficit. Yes TIC is at highest levels but do not forget that this is loan which should be payed in the future. Japan's export benefits from this. Rate differential is at record levels and BOJ is not going to tighten until inflation is positive. I will look at pullbacks in USDJPY which will appear. Watch carefully at Fib numbers.
kiss the trend
  • #75
  • Nov 27, 2005 12:11pm Nov 27, 2005 12:11pm
Just a quick heads up. BoE gvnr King speaks tomorrow at 09:30 and then Trichet at 10:30 (London time). Trichet is not speaking directly on mon.policy but on European financial integration, so I wouldn't expect fireworks. Nevertheless, in the coming weeks I think there is scope for an increase in central-bank rhetoric induced volatility. These are interesting times.
"Always bet on black"
  • #76
  • Nov 27, 2005 12:55pm Nov 27, 2005 12:55pm
Quoting abobtrader
Just a quick heads up. BoE gvnr King speaks tomorrow at 09:30 and then Trichet at 10:30 (London time). Trichet is not speaking directly on mon.policy but on European financial integration, so I wouldn't expect fireworks. Nevertheless, in the coming weeks I think there is scope for an increase in central-bank rhetoric induced volatility. These are interesting times.
haha! yes! we sure are in some interesting times. i get a rush just thinking about it. everything seems to be in a transitional period, the dollar, the euro, japan, inflation, oil, the US economy, the fed president etc etc.

i find myself changing my macro view on a daily basis
Relax and be happy.
  • #77
  • Nov 27, 2005 1:06pm Nov 27, 2005 1:06pm
I'm in a similar boat Merlin. I've been a USD bull for as long as I can remember (that's only about a year) but I am questioning the view now. Getting lots of mixed signals from a fundamental perspective. On my blog I am long USD against a basket of currencies but my real money trade has been adjusted to long USD vs EUR and JPY. If we can form a decent hypothesis at this critical juncture, there may scope for good profits.

Note: The euro moved and stayed lower for about an hour after last week's IFO. This fits in with the mkt trying to get a bearing on ECB policy. Given how the euro has tended to play dead during previous euro area data releases, the IFO response, while not a biggie, may be a sign that we can expect increased sensitivity to the domestic data.
"Always bet on black"
  • #78
  • Nov 27, 2005 1:26pm Nov 27, 2005 1:26pm
Quoting abobtrader
I'm in a similar boat Merlin. I've been a USD bull for as long as I can remember (that's only about a year) but I am questioning the view now. Getting lots of mixed signals from a fundamental perspective.
yeah we sure are in the same boat, have you seen my other posts? they follow this exactly. narafa is another guy on here who shares this perspective. we were long the dollar (i closed that position a few days ago), and thinking about taking a long euro position here sometime soon. im also lightly short the yen, waiting to put on a larger position when it breaks back below 117.
Relax and be happy.
  • #79
  • Nov 27, 2005 1:32pm Nov 27, 2005 1:32pm
Quoting abobtrader
If we can form a decent hypothesis at this critical juncture, there may scope for good profits.
absolutely. but that seems so hard to do at this point, there are so many moving parts. where the fed stops is now in question in my mind. where the ECB goes is another. but inflation, i think that is what needs to be figured out right now. if we can figure out what will happen to inflation, its pretty easy to form a good hypothesis.

for instance, if i know inflation will rise in the next 6 months, i want to be short dollars and long any currency that has low interest rates. why? because the fed has already fought inflation with the rate hikes, they have "lead the pack" so the dollar would have experienced it's strength already. the euro and especially the yen would find considerable strength from the inevitable rate hikes that come about to battle the inflation.

one sign that tells me inflation going to be present is the level gold is at. the CPI type data has been showing a falling inflation lately, but gold prices dont seem to agree.
Relax and be happy.
  • #80
  • Nov 27, 2005 1:57pm Nov 27, 2005 1:57pm
I haven't had a chance to look at back-posts yet but its interesting that we are sharing a similar view. The gold-USD correlation of late has broken down recently, and the divergence had me thinking that either the USD was wrong or gold was wrong, or neither were wrong and the correlation has come apart as correlations sometimes do. For now, I am taking the view the dislocation is coming from gold market specific factors. Initially I had the spike in gold and other commodities down as a sign of impending inflation but this view is tempered by the fact that break-even inflation rates have not moved sharply higher. Of course, the gold mkt may know something nobody else is picking up on and is leading the rest of the mkts but for the time being I'm happy being positioned the other way.

As a side note long-term short EUR-SEK positions may start being interesting soon. I hope to do a little investigation over the coming week. Its basically an idea that the Riksbank have been factoring in a stronger SEK but it has depreciated quite a bit. The e.rate depreciation inturn may fuel cbk concern of imported inflation. At the same time, the market hasn't latched on to the rising rates story but Sweden will surely follow in the ECB's footsteps.The Riksbank Q4 Inflation Report is due at the back end of the week. Oh, and EUR/SEK has a low correlation with EUR/USD which is nice.
"Always bet on black"
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