Deffinitly looking like the jpy is about to slip as trizzle has anticipated
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DislikedBug, thanks for this insightful, and thought-provoking analysis. The BOJ seemed to almost announce when they were going to intervene. After reading your analysis, it really does look like a tip off.Ignored
DislikedI have a feeling this was more of a long term thing.. basically overpriced cars for the rest of the market.. but the way you put it.. I suppose they did get a chance to hedge it and can continue to offer car/products for affordable prices in foreign marketsIgnored
DislikedOn the side note.. this market is awesome in its dynamics and changing environment.. I also just had an interview for a prop firm who said there very interested in hiring me.. just loving life right nowIgnored
Aug 11 (Reuters) - The Swiss National Bank could ease monetary policy further without having to resort to currency interventions to counter a soaring franc, Vice Chairman Thomas Jordan was quoted as saying on Thursday, as investors speculated over the bank's next move. Analysts say the bank could be leaning towards the imposition of negative interest rates -- forcing banks to charge clients to hold their money -- something Switzerland last saw in the 1970s and which was used more recently by Japan.
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Swiss interest rate futures crossed the 100.0 mark which shows investors pricing in negative returns for the first time ever on Wednesday, partially thanks to the SNB's provision of extra liquidity.
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"The overall CHF pricing depends significantly on perception of fear in the Macro environment and not small interest rate differential gains or losses," said Swissquote chief currency analyst Peter Rosenstreich. "Should the US or Europe trigger another round of safe haven flow the marginal deposit fee will not deter investors from accumulating CHF."
DislikedI think that gold might unwind due to margin calls in other markets. Perhaps, if the equity market continues to fall, or if we see some of the carry trade currencies tank, it might provide the opening that you are looking for.
Actually, I wonder if the recent decline in oil prices coupled with the increased margin requirements might come into play here.Ignored
DislikedI have a feeling this was more of a long term thing.. basically overpriced cars for the rest of the market.. but the way you put it.. I suppose they did get a chance to hedge it and can continue to offer car/products for affordable prices in foreign markets
Hmm.. good insights
On the side note.. this market is awesome in its dynamics and changing environment.. I also just had an interview for a prop firm who said there very interested in hiring me.. just loving life right nowIgnored
DislikedDeffinitly looking like the jpy is about to slip as trizzle has anticipatedIgnored
DislikedHere's my take on the FOMC decision.
Instead of increasing its Large Scale Asset Purchases (LSAP) as some market commentators were expecting, the Fed has decided to keep rates at zero for at least the next two years. Initial market reactions notwithstanding, I think this was an important (not to be confused with good) move that will have big consequences for the dollar. Before I get to the dollar, here are some of the main takeaway points as I see them:
1. The Fed promised to keep rates below 0.25% for AT LEAST two more years. This...Ignored
QuoteDislikedWith all that being said, the Fed's decision isn't anything new in a sense. The markets have already priced in exceptionally low rates into the foreseeable future. The question that remains is whether the markets were expecting rates to stay that low for another two years. If so, this move doesn't provide any additional easing effect. If the markets were expecting rates to stay that low for less than two years we might see a reaction. Since the Fed did not shower the markets with promises to purchase more assets, [b]I think the Fed...
QuoteDislikedDollar
If Asian, Latin American and Middle Eastern central banks interpret the extension of ZIRP as significant easingwe might well see another rush out of the dollar. Central banks in emerging economies are deeply worried about inflation and the prospects of importing even more inflation from the US should raise a lot of concern. The winners are likely to be EUR, GBP, CAD, AUD, NZD, JPY, CHF, NOK, SEK. Central banks will most likely be seen buying on dips. Of course, everything that's priced in dollars from gold and oil to US equities and...
QuoteDislikedMarket reaction
The initial market reaction seems to be a mix of two things:
1. Carry trade unwinds. The USD has been used to fund risky bets and an unwind (forced liquidation especially) would be a good explanation to the current gains in the dollar.
2. Risk aversion 'extrapolation style'. Market participants seem to be extrapolating recent weak figures in the US and Europe.
I haven't got the slightest idea which one of those two themes is dominating right now. However, if it's the first then we should see the USD consolidate gains...
DislikedEUROPE
The EU still hasn't managed to solve its debt issues and the SMP is still to small to have an impact. The emergency buying offered some relief of Monday and Tuesday, but the interest to offload bonds looks to be greater than the ECB's willingness to buy them. S&P did offer some relief Wednesday when it said “US, France indebtedness ratios similar, but fiscal flows better in France, deficit not as high” and “French govt has more seriousness in addressing fiscal issues” than US (http://www.forexlive.com/blog/2011/0...is-no-as-high/)....Ignored
QuoteDislikedSwiss franc
From Reuters: Swiss eye more steps to quell franc rise[indent][i]Aug 11 (Reuters) - The Swiss National Bank could ease monetary policy further without having to resort to currency interventions to counter a soaring franc, Vice Chairman Thomas Jordan was quoted as saying on Thursday, as investors speculated over the bank's next move. Analysts say the bank could be leaning towards the imposition of negative interest rates --...
DislikedMy USD/CHF short was stopped out today via trailing stop due to heightened activity by the SNB...I knew they were too quiet! It would be funny if the BoJ decided to follow suit. The profits however, were quite tidy, so I'm not too muddled by the outcome of this trade, even though I wanted to hit 0.7000.
My only position now is on AUD/USD, a risk-free short. The sentiment on this pair feels like it has a strong sell-rally mentality, and with the unemployment rate cruising to 5.1%, above the RBA's 5% inflationary level, it would seem to me that...Ignored
DislikedSince my previous post the SNB had decided to intervene, or at least that's what they say. There is talk out there of intervention in the forwards markets, but none of it comes from trustworthy sources (twitter feed is not a trustworthy source, nor is Reuters when it comes to intervention). I would like to see the SNB's statement. So far they have declined to comment.
There is also talk out there that the Swiss would like to peg the franc to the euro. While it may seem like a credible solution to some, I can't see it happening without the help...Ignored
QE2 didn't have any immediate effect on the economy or on the money supply, because banks decided to hold on to the extra reserves the Fed dumped into the banking system, but it probably helped weaken the dollar. But now, the promise of two years or more of super-low funding costs will almost certainly galvanize the banking industry and the institutional investment community. Banks stand to make handsome profits with an outsized and semi-permanent gap between their funding costs and their loan portfolio, and they can even make hay by buying Treasury notes and bonds, since the Fed is basically guaranteeing that the yield curve will be positively sloped for at least two years. Institutional investors can borrow at rates only slightly higher than the funds rate, and use the proceeds to leverage themselves into a variety of attractive situations—anything that promises to yield more than 1% or so.
Note to would-be optimists: the recently concluded budget deal would allow for spending to rise by at least 4-5% per year going forward (contrary to press reports, nobody was ever talking about actually cutting spending).
Nobody is proposing actual spending cuts.
See this post for more details.
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Disliked[b] I found something interesting from Scott Grannis' blog. Below is an excerpt from on of his recent posts on the Fed.Ignored
DislikedBug, thanks for posting this. I have been meaning to check this blog out.Ignored
QuoteDislikedSince the FDIC insurance only covers the first $250,000 of deposited funds, big money players have essentially began using T-bills as savings accounts.
QuoteDislikedCertainly, T-bills are a safe haven choice, but it also looks like this development might keep more and more money out of the banking system.
DislikedA lot of brainpower is being spent all around to world to analyze the situation the Swiss franc is in right now. These are the only two articles I've found that are actually worth reading.
http://ftalphaville.ft.com/blog/2011...s-some-pegleg/
http://blogs.wsj.com/source/2011/08/...about-pegging/Ignored
DislikedCHF and JPY losing strength today over Fitch and the US Industrial Production data rating USD "AAA"
who the fuck did US pay off this timeIgnored
DislikedJust closed two of these positions.. just trying to protect myself right now otherwise some relief to what looked like was going to be a slow day.Ignored
DislikedSince my previous post the SNB had decided to intervene, or at least that's what they say. There is talk out there of intervention in the forwards markets, but none of it comes from trustworthy sources (twitter feed is not a trustworthy source, nor is Reuters when it comes to intervention). I would like to see the SNB's statement. So far they have declined to comment.
There is also talk out there that the Swiss would like to peg the franc to the euro. While it may seem like a credible solution to some, I can't see it happening without the help...Ignored
QuoteDislikedA lot of brainpower is being spent all around to world to analyze the situation the Swiss franc is in right now. These are the only two articles I've found that are actually worth reading.
http://ftalphaville.ft.com/blog/2011...s-some-pegleg/
http://blogs.wsj.com/source/2011/08/...about-pegging/
Quoting nasir.khanDislikedI think the "peg comment" shows that how much desperate and trapped SNB is.
How can they peg CHF at the such levels That are already hurting the economy big time. It makes no sense, does it?
BTFD. lolIgnored
Quoting Jonas.fxDislikedWith a quite Euro session and its attractive high interest rate, looks like its hard to keep the AUD and NZD down. AUD still looks bearish though with upcoming high possibility of interest rate cut next month.
Looks like we had unwinding of the shorts in the CHF, it ranged the whole 3 sessions on the 10th and Tokyo session on the 11th, even though we had the French bank drama on the 10th which saw the EURO dropped 200+ pips.
Just my thoughts guys, keep up the good work on the threadIgnored
DislikedFederal Reserve and monetary easing
I did some reading and as always, I found something interesting from Scott Grannis' blog. Below is an excerpt from on of his recent posts on the Fed. I have also added a chart from his blog below (expected inflation vs 3-10 spread).
CBP: More thoughts on the FOMC's new policy[indent][i]QE2 didn't have any immediate effect on the economy or on the money supply, because banks decided to hold on to the extra reserves...Ignored
QuoteDislikedZIRP4EVA = deflation?
In normal economic times, low borrowing rates will encourage people and businesses to go into debt. However, these are not normal times - fed funds rates have been floored and there are not enough high yielding investments (in this environment, even 2% is high). So even though the Fed would like to believe that extending the ZIRP policy into mid-2013 constitutes monetary easing, it could turn out to have a tightening effect. If rates are too low the lenders don't have any incentive to lend - the rate they...
Quoting The CheetahDisliked
Here's an interesting take from the Financial Times: 'From an investment perspective, these returns may seem crazy; but they are still attractive to cash managers because T-bills are liquid – and, most crucially, seem less risky than uninsured bank deposits.Ignored
DislikedJust closed two of these positions.. just trying to protect myself right now otherwise some relief to what looked like was going to be a slow day.Ignored