EurAnalysis

Here is the starting points for today. As we move through the day the numbers will change as we move to Risk Off and the Dow moves down. Of course a reversal will change the direction of the movement. This along with Correlation of EUR/USD and EUR/JPY which moves through the changes in USD/JPY.

We have EUR/USD at 1.3117 and EUR/JPY at 1.0283

USD/JPY is at 78.38

Gold at $1770.70 US and Oil at 98.83

I also watch GBP/USD at 1.6235 and EUR/CHF at 1.2162

Do we REMEMBER when it held at 1.2000 for months ? Just look at a chart.

Now for my Money Flow Indicator I turn to the US Bonds as money FLOWS between Equities and US Bonds as we go back and forth between Risk Off and Risk On.

Dow Futures down 15 and Europe is in the RED for the moment.

The Yield on the 2 Year US Bonds is .24% and the Yield on the 10 Years are 1.87% with the Spread 163 Basis Points.

You can see the Yield going up on the Long End as it is moving towards 2.00 % and the 2 Year Yield is holding near .24%.

This means that money is flowing out of the 10 Year US Bonds and more money is being parked in the short end as the .24% now shows.

Gold is holding firm at $1773.40 US (Futures) and as the values move up and down there is correlation.

The MOMENTUM leads the charts as the numbers change.

The Daily Forex Brief is written by FxPro's team in the City of London.

Visit fxpro.co.uk for more news, FX commentaries, FxPro TV, real-time feeds, calculators and tools.

Daily Forex Brief

London: Monday 17th September 2012

The charge of the euro bulls

Dormant since the first half of 2011, euro bulls have taken the forex market by the horns over recent days. Aided by the Fed's open-ended commitment to keep the printing press running until American employers show much more willing, both investors and traders have been scurrying to reduce what had become a huge structural short position in the single currency. Friday was cathartic, with the euro barely retreating all day as buyers were forced to accept whatever price they could get. Since the last week of July when Super-Mario vowed to do 'whatever it takes', the euro has soared by 11 big figures. Moreover, the single currency has registered significant gains vs other majors as well – for instance, the yen has lost 8%, while both the Aussie and the pound have dropped more than 4%. The only 'currency' that has kept pace with the surging euro has been gold, which almost reached USD 1,780. Gold bulls will want to see February's high of USD 1,790 breached relatively soon. Contributing to the dollar's latest demise on Friday was some very weak industrial production data. High-beta currencies are back in the sweet spot – the Aussie traded above 1.06 to a 6m high.
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http://www.actionforex.com/action-in...0120917174440/

Risk markets are generally firm in Asia today as supported by last week's QE3 boost. Some consolidations might be today but markets would likely stay in an overall risk-seeking mode. This week, nine Fed presidents would make public speeches and we will get a better understanding of their thinking on their monetary stance and the economic outlook. In the currency markets, European majors are trading close to last week's high for the moment but some retreats have been seen in commodity currencies. Indeed, Aussie is underperforming even Kiwi and Canadian dollar. And, we'd expect Euro and Sterling to outperform Aussie and Canadian ahead.

Regarding ECB's Outright Monetary Transaction, the Institute of International Finance warned that the conditionality could "appear as an obstacle to some countries in need, deterring them from requesting support". Also, IIF warned that "termination of bond purchases if a country is perceived to be not in compliance would likely result in a 'cliff effect' and an abrupt market correction". Separately, IIF noted that further delay in reviewing and approving Greece's bailout would be a major event risk and "add to the strains on the Greek economy."

In Spain, Economy Minister de Guindos said that the over EUR 100b austerity measures the country introduced would be "sufficient" in meeting the budget deficit target and the measures are already ""significant and ambitious enough." German Finance Minister Schaeuble acknowledged that Spain "very convincingly" laid out it's on track with its budget and Spain will fulfil its commitments. Though, he warned that if worsening economic development leads to additional problems, Spain would "take additional measures". EU Economic and Monetary Commissioner Rehn also acknowledged that “Minister De Guindos today expressed very clearly that Spain is ready to take the necessary action to meet the fiscal targets.”

In Australia, RBA's documents revealed that there are as many as 23 global central banks are holding the currency as part of reserves. The documents also noted that "the apparent preference shift and resulting portfolio shift of foreign investors towards Australian dollar government securities has increased Australian dollar demand." And, such "increase in demand associated with this shift appears large by historical standards." Also, "non-resident" purchase of bonds supported the Australian dollar in recent times, "probably associated with a reappraisal of the relative risks of such investments." Meanwhile, we'd like to point out that recent shift in risk sentiments could also trigger some reverse flows that would limit Aussie's strength comparing to other major currencies, in particular Euro and Sterling.

Latest CFTC data showed that Euro net shorts decreased again to 93.7 contracts on September 11, comparing to 102.3k contracts a week ago. Sterling positions remained relatively neutral with -4.4k net shorts. Yen longs rose slightly from 24.0k to 32.8k contracts. Swiss franc shorts dropped to 9.0k contracts. Canadian dollar net longs jumped impressive from 66.6k to 101.9k contracts, making a new 2012 high. Australian longs rose slightly back from 62.4k t 68.2k.

On the data front, New Zealand westpac consumer sentiment improved to 102.5 in Q3. UK rightmove house prices dropped -0.6% mom in September. Eurozone current account, trade balance will be released in European session today. Canadian international securities transactions and US empire state manufacturing index will be featured in US session.

September 17, 2012
Where We Are and Where We're Going (Week of September 17, 2012)


On Thursday last week, the US Federal Reserve announced QE 3: a program through which it will purchase $40 billion in Mortgage Backed Securities (MBS) every month going forward.


Given the close proximity of this move to the European Central Bank's (ECB) "unlimited" bond purchasing program announced the week before, the Fed's move should be taken as a coordinated Central Bank intervention. Thus, we have both the ECB and the Fed going "all in" on their efforts to support the Global Financial System.


This decision will not be without its consequences. Inflationary pressures were already high in the US and around the world. They will be going higher as a direct consequence of the Fed's move.


Indeed, Oil is back at $100 per barrel. Gold has broken out of its wedge pattern and will likely hit new highs before year-end. And Agricultural Commodities are approaching records due to both severe droughts in the US combined with the Fed and ECB's announcements.

The Fed has never been good at anticipating the consequences of its actions (see the Arab Spring that resulted from QE 2's impact on food prices). So we have to ask ourselves, "has the Fed gone too far this time in its efforts to boost stock prices?"


Our initial view is "yes." Stocks were already at four-year highs before QE 3 sent them soaring. Our primary concern now is that by announcing QE 3 at this time, the Fed has removed the primary driver of stock prices: the anticipation of more Fed intervention.

Remember, the NY Fed has admitted publicly that without the investor anticipation of Fed action, the S&P 500 would be at 600 today. Thus, by making QE 3 an "open" or "unlimited" program, the Fed has removed this anticipatory effect as going forward investors already know what the Fed will be doing in the future.


Moreover, this open-ended intervention has dramatically raised the bar for any future potential Fed action. Barring a systemic crisis or the collapse of a major bank, the Fed's hands are now tied due to it having an ongoing intervention in place.


Which leads us to the multi-trillion Dollar question: what if this QE program proves to be a dud? What if the Fed, by announcing such a program, has not only removed the anticipation of future Fed action, but has in fact played its hand too far?


After all, stocks are now extremely overbought and due for a correction. What would a correction do to investor perception of the Fed's abilities coming so soon after a new large program such as this?


These are the issues to consider going forward. Our view is that it is quite possible the Fed has played its hand too strongly and thereby damaged its future efforts to maintain market stability via intervention. Given that stocks were already decoupled from the underlying economic realities, this has made the market highly vulnerable to a sharp correction.

And then of course, there is the coming inflationary storm to consider.


On that note, we are currently preparing a Special Portfolio of unique inflation hedges: investments that will not only maintain their purchasing power but will outperform even Gold and Silver as the Fed and ECB debase their respective fiat currencies.


Graham Summers

http://theeconomiccollapseblog.com/a...the-rest-of-us

Snippet:

The mainstream media is hailing QE3 as a great victory for the U.S. economy. On nearly every news broadcast, the "talking heads" are declaring that Ben Bernanke's decision to pump 40 billion dollars a month into our financial system is definitely going to help solve our economic problems. The money for QE3 is being created out of thin air and this round of quantitative easing is going to be "open-ended" which means that the Federal Reserve is going to keep doing it for as long as they feel like it. But is this really good for the average American on the street?


No way. Despite two previous rounds of quantitative easing, median household income has still fallen for four years in a row, the employment rate has not bounced back since the end of the last recession, and new home sales have remained near record lows. So what have the previous rounds of quantitative easing accomplished? Well, they have driven up the prices of financial assets. Those that own stocks have done very well the past couple of years. So who owns stocks? The wealthy do. In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans. Those that have invested in commodities have also done very nicely in recent years. We have seen gold, silver, oil and agricultural commodities all do very well. But that also means that average Americans are paying more for basic necessities such as food and gasoline. So the first two rounds of quantitative easing made the wealthy even wealthier while causing living standards to fall for all the rest of us. Is there any reason to believe that QE3 will be any different?

Of course not.

This time the Federal Reserve is focused on buying mortgage-backed securities. Yes, the same financial garbage that helped cause the last crisis. The Fed plans to gobble up tens of billions of dollars of that trash every month from now on.

But will the Fed pay true market value for those mortgage-backed securities? If you believe that, I have a bridge to sell you.

So this is going to be a huge windfall for some people, and that does not include us.

Not a single penny of this 40 billion dollars a month will go directly into our hands. The theory is that it will "filter down" to us eventually.

But that hasn't happened with previous rounds of quantitative easing.

So where does the money go?

A recent CNBC article discussed a very interesting report from the Bank of England about the effects of quantitative easing....

It said that the Bank of England’s policies of quantitative easing – similar to the Fed’s – had benefited mainly the wealthy.

Specifically, it said that its QE program had boosted the value of stocks and bonds by 26 percent, or about $970 billion. It said that about 40 percent of those gains went to the richest 5 percent of British households.

Many said the BOE's easing added to social anger and unrest. Dhaval Joshi, of BCA Research wrote that “QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it."

Wow.

Who benefits from quantitative easing?

According to the Bank of England, it is "mainly the wealthy" who benefit.
As I noted the other day, Donald Trump said essentially the same thing when he told CNBC the following....

"People like me will benefit from this."

As I already discussed above, a lot of quantitative easing money gets into the financial markets where it pumps up the prices of financial assets.
But not all of it goes there.

We were told that the whole idea behind quantitative easing was that it was supposed to get banks lending again, but this has not happened.

Instead, banks are sitting on unprecedented amounts of money. Just look at how the first two rounds of quantitative easing have caused excess reserves being held by banks to explode from close to zero to over 1.5 trillion dollars....
http://theeconomiccollapseblog.com/w...ks-425x255.png
Of course one of the biggest problems is that the Federal Reserve is still paying banks not to lend money.

Yes, you read that correctly.

CurrencyMan:

The Charts Do Not Lie HOWEVER the FED does. Shame Shame !!!

Let's go to the charts.

This first chart shows that the percentage of working age Americans with a job has stayed extremely flat since the end of the last recession.

Does it look like QE1 and QE2 made a difference to you? I don't see any difference....
http://theeconomiccollapseblog.com/w...21-425x255.png
Okay, but what about new home sales?
Did QE1 and QE2 help them?
Nope....
http://theeconomiccollapseblog.com/w...ld-425x255.png
But the mainstream media is still buying the baloney the Fed is pushing.

The mainstream media is promising us that home sales will soon rise and that lots of new jobs are on the way.
Sadly, the truth is that things have steadily gotten worse for average Americans over the past 4 years despite all of the money printing the Fed has been doing. If you doubt this, just read this article.

But this is all that Ben Bernanke seems to have left. When printing money doesn't work, his answer is to print even more money.
QE3 is likely to cause agricultural commodities and the price of oil to rise even further.

So unless you can convince your employer to give you a corresponding raise, this is going to mean that your paychecks are not going to go as far as they did before.

And so that means a lower standard of living.

CurrencyMan: Have a great day and FOLLOW the MONEY FLOW !!!

The Beginning of The End...

What makes all of this even more distressing is that this is the recovery.
Things are not going to be getting much better than this. We are rapidly approaching the next wave of the economic collapse and all of the numbers posted above are going to be getting a lot worse.
So even though things may be tight for your family right now, you should enjoy these times while you still have them.
Someday we will look back on these years as "the good old days".
http://theeconomiccollapseblog.com/w...ow-425x380.png

The noise in China is rising. This will affect more then just Chinese/Japanese trade.
With so many multinationals having factories in China, that the Chinese government is allowing the protests to take such a turn has to be taken note of by other foreign Nationals in China.

Financial stress must be greater then publicaly admitted for domestic tensions to spring forth so quickly.
Will add to the AUD/USD short most likely very soon.

So what stage are we at?

Not sure about you, am logging off in couple of minutes.

I am at "Skepticism". Actually I've been there since May 2011

It is very individual.. PipTrapper frozed forever in skepticism mode. I trapped in greed for a few months now..

I am in the stage of cynism.



For whole my life .

T

PipTrapper, you read my mind..

Greek Judges, Doctors Start 2-Week Protest

http://greece.greekreporter.com/2012...-week-protest/

AUD/JPY just dropped along with AUD/USD

Bear raid or real move?

precursor to risk off sentiment change, all that can be done is go with flow.

That's a signal if I ever saw one. If NY floor trading keeps up this sentiment, then maybe the Euro can break and close below daily pivot.

Thats last second save of NY H4 candle turning bullish. Next h4 will show the way.

Edit: Now when I think of it, it looks more like a descending triangle on m15.

T

sweet tp, was worth to wait for 8 hours