EurAnalysis

Should change Tom to Quick Silver. It's cool.

good night

Good night cat. I am going to sleep as well.

Cya tomorrow,

T

A perspective on one of the engines of past global growth.

China has been the agent of growth in Asia.
The following linked article broaches the impact of the yuan on world money flows.
excerpt:
" Driven by fears of a bumpy economic landing, the yuan is now clearly in a two way market, being roughly flat over the past year against the dollar and with forward delivery markets discounting a loss in the coming 12 months.

This has radicaly changed psychology about the yuan, both in China and abroad, and has greatly complicated the job of the People's Bank of China of mitigating the impact of the global softening in economic growth"

http://www.reuters.com/article/2012/...9?envprodusx=0

Article would suggest that the old growth model for China is no longer fuctioning and what is evolving is going to be weakness for Asia.

excerpt: "Also as reserve growth is de facto monetary stimulation, any fall in the PBOC balance sheet, driven by hot money flow or any other source, would come at a bad time, tightening just as China grapples with what is, for it, a very hard landing.
This makes it much tougher for China to cut interest rates in order to stimulate its economy. Lower rates may only make the yuan less attractive to currency holders and could speed capital flight starting a vicious cycle. this marks a big change for Chinese authorities, limiting their scope of action just when they may be most in need of tools."

Restarting the global economy will not be easy using only Central Banks going foward.

It was a tricky market today
Funny, as I was BEARISH and ended the day with green pips

Here's something before going to bed...
Nice quick 5min summary of today's price action on EURUSD.

Hey guys.... with the major news coming into play this next 24 hours I think its prudent to write up a bit about the current market conditions and the situation in Europe

Taken from my trading journal:

DOW – up 11.54 points to close at 13,047.48
Oil – up $.06 to close at $95.36 – next level of support is $95.04
Gold – down $2.00 to close at $1,691.50 – Next level of support at $1,677
Dollar index 81.225 – 52 week range is Low: 74.675 – High: 84.100




Super Marios Plan in Focus

The ECB is working on program called “Monetary Outright Transactions” to buy sovereign bonds. The size of purchase would be unlimited. Government bonds will be the sole focus with target of short-dated bonds of up to three years maturities.
One may ask; How can the ECB sterilize its bond purchases?
By issuing one-week bills. The banks buy the bill, and that offsets the amount injected into the bond market. A bit of a shell game, but that’s how it works. Merkel stated she is certainly opposed to this.

Draghi’s comment from Monday that bond purchases will be in maturities up to three years was confirmed by Bloomy. It was also suggested that the ECB would consider selling the purchased bonds if the country does not meet the conditions.


I Expect Draghi to send a clear signal that the ECB is ready to act once its conditions have been fulfilled. The conditions are Spain will have to ask for EFSF intervention first. Then Spain will have to agree with the European Commission on a Memorandum of Understanding (MoU) and the EFSF will have to be ready to intervene in the primary market.


From a market perspective, the important part is that the ECB continues to signal that it stands ready to act once the MoU is signed. Draghi will not be able to send any signals on when the purchases might commence, as this decision requires action from Spain and Brussels.
As stated before, be careful, expect elevated volatility, as the market will need more time to digest the leak and tomorrow’s press conference and Q&A session.


On the US front:


Today was a banner day for ineptness of American Government. The U.S. passed 16 Trillion Dollars in debt as the masses go about their business.
Just under $5 trillion of the national debt is owed to the Social Security Trust Fund and federal pension systems. A little more than $11 trillion is owed to foreign and domestic investors and the Federal Reserve, which buys up treasuries in order to drag down interest rates through quantitative easing.


Currently Im flat till next week. I want to see the market digest Draghis moves and frankly Im just not a skilled enough PA trader to make much off of current market conditions and am continually being stopped out on my plays.



The major players are coming back next week and these oscillating markets will son break into substantial moves. Be careful everyone because trsut me, some MAJOR moves are coming. Its gonna be a roller derby for the rest of 2012 into 2013.





Wulf

Good Morning to everyone following the Asain session.

Well, the price action out of New York has moved directly sideways in a very tight range.

As yesderday closed near the highs of the day and PA hasnt backed off at all, it seems the market is still in bullish mode.

The daily pivot now sits at 1.2575, so the current PA range is comfortably above that for now. Should the PA dirft down or challenge that level during the asain session, this could be a good Long opportunity for the adventure minded.

Looks like there may be an attempt later in the day to challenge the 1.2625 level, which thus far has been a tight cap on the action.

Unless some enterprising bankers in Tokyo or Aussiland decide to take a leg down from here, looks like things will stay quiet until Frankfurt.

Hopefully Europe wont stay too quiet in anticipation of ADP NFP, etc.

Good Morning fellow traders.

Are you ready for the ultimate roller coaster ride? I hope so because that's what I believe we are going to see today and tomorrow.

There really aren't any more surprises due out of the ECB since it was all leaked yesterday. For those of you who are not up to speed on the ECB plan, according to the leaks which have been verified by Bloomberg, FT and WSJ, the ECB may engage in the sterilized purchase of short dated (3 years and less) bonds in the secondary market. The recipient nation of such bond market intervention will first have to apply to the EFSF/ESM for a sovereign bailout package and sign a MOU (Memorandum of Understanding) which will most likely include strict austerity conditions of such aid. So the only surprises left to come from the ECB would be whether or not there will be a further rate cut. According to other leaks, rate cuts are not on the agenda. However, as with all media leaks, you can never be 100% sure until you here it from the horse's mouth (Draghi)

So, other than any announcement of Spain or Italy officially asking for a sovereign bailout, I feel the European situation is pretty much a non-event. Instead, the focus will most likely be on the US econ data numbers being released today and their impact on the QE3 sentiment. Today we get the ADP Non-Farm payroll, the US Jobless claims number and the US ISM Non-Manufacturing PMI.

Today I would say that one can safely throw all technical indicators out the window because it is going to be a news driven day and most of the action will be dominated by the speculative sentiment trade. It may be a good idea to sit on one's hands until the dust settles. Regardless, I am still standing by my previous call of a top at 1.2690 area with a possible overshoot to as high as 1.2740/50 area

Best of luck and safe trading to all.

E/U Daily

Today’s orderboard

Written by Pete Jackson
September 6, 2012 at 06:27 GMT

EUR/USD: Bids 1.2580/90, sell stops through 1.2570 ahead of tech supp at 1.2562-100 day MA. Offers 1.2630/50 from SNB/Dutch related names (barrier 1.2650), buy stops above.

GBP/USD: Bids 1.5890/00 and 1.5850/60. Offers from 1.5930/40 and 1.5990/00 (1.6000 suggested barrier).

EUR/GBP: Tech level 0.7904 (55 day MA) Bids 0.7890/00. Offers 0.7940/50 and 0.7960/70

USD/JPY: Bids 78.30/40, stronger bids 78.00/10 (Kampo, importers, life co’s) with large sell stops through 78.00 and 77.90. Offers from 78.50, tech res 78.67 (cloud base) and more offers 78.80/00 (exporters, real money and US funds 78.90- 55 day MA), buy stops just above ahead tech res 79.14 cloud top, 200/100 day MA’s at 79.30 and 79.26

EUR/JPY: Offers 99.00/10 ahead of tech res 99.55/60 (99.58 100day MA) and offers 99.90/00 (100.00 barrier). Bids 98.50/60 and 98.00/10 sell stops below ahead of tech supp 97.88(cloud top).

AUD/JPY: Offers 80.20/30 ahead of tech res 80.80/00 (80.81 100 day MA, cloud top 80.93). Bids 80.00/10 possible fresh sell stops through 80.00 ahead of bids 79.70/80, sell stops below through 79.50

EUR/CHF: Bids 1.2035/45 and 1.2000/10 (SNB), Offers 1.2050/60 (tech lvl 200 day MA 1.2063) and 1.2070/80

USD/CHF: Bids 0.9500/10 (suspected SNB related). Offers 0.9660/70 and 0.9600/15

AUD/USD: Offers 1.0240/50 and 1.0280/00, buy stops above ahead of 200 day MA at 1.0316. Bids 1.0190/00 (100 day MA 1.0200), sell stops below and through 1.0170 ahead of bids 1.0150/60 and more sell stops through 1.0150.

EUR/AUD: Offers 1.2340/50 ahead of more offers/tech res 1.2385/90. Bids 1.2300/20, tech supp 1.2240/45 and 1.2210/15

NZD/USD: Tech res/offers 0.7990/00 (0.8001- 200 day MA), offers above 0.8030/40. Tech support 0.7925/35 (100 day MA 0.7925) bids 0.7915/25sell stops below through 0.7900 ahead of tech supp 0.7850/60

Option expiries

Written by Pete Jackson
September 6, 2012 at 05:19 GMT

For the 1000NY/1400GMT cut today…..

EUR/USD: 1.2500, 1.2525, 1.2550, 1.2625, 1.2635

USD/JPY: 78.50, 78.70

EUR/JPY: 98.60

GBP/USD: 1.5865, 1.5900, 1.5925

EUR/GBP: 0.7865, 0.7935, 0.7950

AUD/USD: 1.0150, 1.0200, 1.0220, 1.0300, 1.0250

USD/CHF: 0.9600

USD/CAD: 0.9900, 0.9925

Futures Performance

El-Pais: Spain to seek a lenient state bailout today with no additional austerity conditions. Rajoy to meet with Merkel.

[quote=PipTrapper;5988792]
.....Today I would say that one can safely throw all technical indicators out the window because it is going to be a news driven day and most of the action will be dominated by the speculative sentiment trade.......

[quote]

well, if the RSI on my 4HR chart hits 100, i'm defintely gonna go short

I expect to see a lot of movement on London just like last week.

Goldman cuts China 2012 GDP growth estimate to 7.6% to 7.9%

the AUDUSD hasn't pulled back on that news...so if that china-centric pair is gonna ignore bad china news, what hope is their for the Euro today?

Looks like we are finally gearing up for the break of the 1.2625 despite any news one would think should cool it off.

I agree with you PT, the market right now seems only interested in US data...and most likely good or bad will use it as an excuse to rally.

If bad, then QE3 is likely...if good, then Europe has economic hope, etc...

Good Morning Everyone.

price of a currency is its interest rate so if draghi cuts rates today eur/usd must go down but after rate decision when draghi talks abourt bond programme we must go fast up, i think like this for today.

I seems that Draghi will have second "press conference" later in the evening after ECB press conference. Any information about this ? Will probably mean that markets will stay cautious until late evening.

Be careful when applying that kind of logic. You may be right but I don't think it is wise in this environment to make such assumptions.

In my view (and I'm not saying I am right), if the ECB cuts the rate to 0.5%, then that would give the market a signal that the ECB is doing something to boost the EZ economy... in which case it would be a bullish signal in the short term. Alternatively, a failure to cut rates, would be disappointing to the market.

Anyway, regardless of the above, I think the focus will be more on the US Dollar today as all the good news out of the ECB has already been leaked out.