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EurAnalysis Kindergarten 24 replies

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  • #60,201
  • Nov 7, 2012 4:07am Nov 7, 2012 4:07am
Quoting redteamgo
Jeffries head of FX strat is on BB saying he thinks euro is headed under 2500 in the next 3 months.

yeah, that's definitely bearish
  • #60,202
  • Nov 7, 2012 4:13am Nov 7, 2012 4:13am
Quoting lumesh
you disagree in what ? That we won't see above 2900 before another low in the 2700 ? Failure to pass would definitely be negative but when they pass wouldn't that be positive ?

I agree that the strength has been due to dollar weakness. Are you confident that you will get antihopium before you will get hopium ? And if so, then what is that antihopium ?

It's critical that you get a weekly close firmly below 2800. Otherwise, we would not only be back in the range but we would also have a weekly morning star candle which would definitely be bullish...
i disgree that passing austerity will lead to 2900 based on the idea that the market expects it to pass. seems like the market is becoming rather cynical regarding PIGS and their "this time we've got it under control" mantra. as a result, meeting this expectation is status quo in terms of price action for the pair. i could be wrong though (i'm wrong all the time, that's why I am so versatile ) -- i will simply react to price when it occurs. i couldnt even begin to make a prediction on the outcome in regards to a knee jerk spot move.
Any prices quoted are futures
  • #60,203
  • Nov 7, 2012 4:23am Nov 7, 2012 4:23am
Quoting redteamgo

what I dont understand is how adjusted inflation targets don't seem to include consumer basics (food, gas, etc) which, at an anecdotal level for me, are far beyond 2%. my largest monthly expenses are food and gas after housing and they continue to grow. for stuff I buy a lot of (such as lean beef, lean chicken, brown rice, whole wheat pasta), inflation is in excess of 20% at a retail level.
they are not included because in a classical economic thinking they do not contribute to economic activity/business expansion. Let me explain:

In theory, the core inflation should tell the FED how the businesses are reacting to economic conditions, are they expanding and thus get a better picture for the future. What is the demand level, what are the input prices, are they rising and why they are rising.

Plus, food and gas are inelastic products which mean that you need to buy them anyway, even if it comes at the expense of smth else. You never really know what is behind the food and gas price, especially in today's environment with all the middle east tensions, emerging market demand and, why not, even the gradual population increase. You can clearly see that it's not the TYPICAL economic growth driven DEMAND behind those food and gas prices ifi you look at the umemployment and growth figures. So, you should now see why it would be irrational for the FED to use the total inflation figure in their rate decision-making. If they did, then rates should be higher in today's lackluster environment which would only dampen the future growth outlook.

The critical question always remain:

WHAT is behind the price increase ? There's a reason it's a very widely overlooked question simply because often times it is hard to know the answer. Some blame the FED all the way while others point to different catalysts.
  • #60,204
  • Nov 7, 2012 4:26am Nov 7, 2012 4:26am
Quoting lumesh
they are not included because in a classical economic thinking they do not contribute to economic activity/business expansion. Let me explain:

In theory, the core inflation should tell the FED how the businesses are reacting to economic conditions, are they expanding and thus get a better picture for the future. What is the demand level, what are the input prices, are they rising and why they are rising.

Plus, food and gas are inelastic products which mean that you need to buy them anyway, even if it comes at the expense of smth else. You...
interesting, thank you for the info. in respect to inflation then, it seems like the classical measures of inflation are obsolete.
Any prices quoted are futures
  • #60,205
  • Nov 7, 2012 4:36am Nov 7, 2012 4:36am
Quoting redteamgo
interesting, thank you for the info. in respect to inflation then, it seems like the classical measures of inflation are obsolete.
Fed's Rosengren sets 6.5% jobless rate for Exit

WASHINGTON (MarketWatch) - The unemployment rate would have to drop near 6.5% before the Federal Reserve should raise short-term interest rates, as long as inflation pressures remain tame, said Eric Rosengren, the president of the Boston Federal Reserve Bank, on Thursday. The Fed should keep running its third round of bond purchases, known as QE3, until the jobless rate falls under 7.25%, he added. Even then, the Fed should just assess inflation and the labor market to see whether to continue the QE3 purchases, he said. Rosengren is the third Fed official to lay out their suggestions on possible numeric targets for future Fed policy moves. Fed watchers think the central bank discussed adopting such triggers at their policy meeting last month. At the moment, the Fed has said it expects to keep rates exceptionally low until mid-2015 even if the economy improves. Rosengren's comments came in a speech at Babson College in Wellesley, Mass.


What is Core Inflation & Why Doesn't It Include Food & Energy?


Lumesh, you did an excellent job explaining why, just posted the links for reference if anybody is interested.
  • #60,206
  • Nov 7, 2012 4:38am Nov 7, 2012 4:38am
Quoting redteamgo
i disgree that passing austerity will lead to 2900 based on the idea that the market expects it to pass. seems like the market is becoming rather cynical regarding PIGS and their "this time we've got it under control" mantra. as a result, meeting this expectation is status quo in terms of price action for the pair. i could be wrong though (i'm wrong all the time, that's why I am so versatile ) -- i will simply react to price when it occurs. i couldnt even begin to make a prediction on the outcome in regards to a knee jerk spot move.

well, the way i see it is that any positive hopium out of the eurozone will only give more reasons to fear the outcome of the FED in dec/jan. The FED is the stupid backstop ahead of which i'm reluctant to sell at those range lows. This COULD easily be a fake breakout. I just can't see a higher than 50% probability that the euro will fall at these levels UNLESS some bad sentiment hits the fan.

everything is possible.
  • #60,207
  • Nov 7, 2012 4:45am Nov 7, 2012 4:45am
Quoting lumesh
well, the way i see it is that any positive hopium out of the eurozone will only give more reasons to fear the outcome of the FED in dec/jan. The FED is the stupid backstop ahead of which i'm reluctant to sell at those range lows. This COULD easily be a fake breakout. I just can't see a higher than 50% probability that the euro will fall at these levels UNLESS some bad sentiment hits the fan.

everything is possible.
I agree (in regards to the FED) which is why I've been long on AUD for the past few weeks, particularly A/J.

If I short the EUR I normally short against AUD. It's a lot smoother in my opinion...
  • #60,208
  • Nov 7, 2012 5:03am Nov 7, 2012 5:03am
Quoting 100PipsADay
I agree (in regards to the FED) which is why I've been long on AUD for the past few weeks, particularly A/J.

If I short the EUR I normally short against AUD. It's a lot smoother in my opinion...
whats your long target on AUD? I am thinking their monetary policy supports parity in the short term (<6m) so I am looking for a place to sell. I am not quite sure yet where I want to get in though.
Any prices quoted are futures
  • #60,209
  • Nov 7, 2012 5:09am Nov 7, 2012 5:09am
heh, if econ data really keeps up with that shite as today showed then i guess nothing can get the Euro a boner.
  • #60,210
  • Nov 7, 2012 5:10am Nov 7, 2012 5:10am
Quoting redteamgo
whats your long target on AUD? I am thinking their monetary policy supports parity in the short term (<6m) so I am looking for a place to sell. I am not quite sure yet where I want to get in though.
There is a weekly downward TL at 1.058. After that there is major resistance "zone" from 1.08 - 1.10.

I'm not long AUD/USD, I'm long AUD/JPY with a target of 88.00. We have already broken out of the 83.50 resistance so next MAJOR resistance zone on monthly/weekly for A/J is 89. I'll take profit before that though at roughly 87.50-88.00

EUR/AUD target is 1.17
  • #60,211
  • Nov 7, 2012 5:10am Nov 7, 2012 5:10am
Quoting lumesh
heh, if econ data really keeps up with that shite as today showed then i guess nothing can get the Euro a boner.
yup.

Quoting redteamgo
nice chart. i disagree though re: 2915. the euro jump was largely due to dollar weakness more than euro strength. also the market expects greek austerity to pass. failure to pass would be a freefall.
nice little fall off. shorted at 2853, scratched then reentered and am now short from 2855 (futures). I am not inclined to let this pair move against me with so much political action on the back burner. an hourly close below the hourly SMA gives scope for a nice day trade target of 2790 followed by as low as 2750 to be adjusted by any change in PA
Any prices quoted are futures
  • #60,212
  • Nov 7, 2012 6:13am Nov 7, 2012 6:13am
PipTrapper, are you selling Aud/USD yet..?
69
  • #60,213
  • Nov 7, 2012 6:18am Nov 7, 2012 6:18am
lower highs during the EURTRY consolidation and the larger bull candle was on weak volume, therefore added some more.
TRADE FOR SWAP
  • #60,214
  • Nov 7, 2012 6:27am Nov 7, 2012 6:27am
Missed the move
  • #60,215
  • Nov 7, 2012 6:28am Nov 7, 2012 6:28am
Quoting rekon67
Missed the move
same here, let's wait for the retrace
  • #60,216
  • Nov 7, 2012 6:32am Nov 7, 2012 6:32am
1.2750 is critical level. Break and stay below should see 1.265x soon.
  • #60,217
  • Nov 7, 2012 6:38am Nov 7, 2012 6:38am
Quoting Likerty
PipTrapper, are you selling Aud/USD yet..?
I am cautiously building short positions. It may go as high at 1.06 before it drops, but ultimately I expect to see sub parity in the coming weeks.
Those who say it cannot be done should not interrupt those who are doing it
  • #60,218
  • Nov 7, 2012 6:39am Nov 7, 2012 6:39am
Fuck fuck fuckity fuck sl hit at 1.2883 come home from college and see red everywhere look at my trades and none there
  • #60,219
  • Nov 7, 2012 6:40am Nov 7, 2012 6:40am
Quoting lc_invest
same here, let's wait for the retrace
I don't see any significant retrace today and we may not even get one till we hit first target of 1.2658

Draghi just hammered the last nail in the "over 1.28" Euro by saying that the economic situation in Europe is not good and not expected to improve any time soon.

Thanks Draghi.. Please keep up the dovish tone and be sure to cut the rate on Thursday.
Those who say it cannot be done should not interrupt those who are doing it
  • #60,220
  • Nov 7, 2012 6:43am Nov 7, 2012 6:43am
Quoting RodMca
Faq faq faqity faq sl hit at 1.2883 come home from college and see red everywhere look at my trades and none there
I take it you didn't read my morning update then. Sorry for your SL buddy. That's why I don't use them.

Quote
Technically, the EUR/USD has broken the range low of 1.2802 and had a daily close below. Since yesterday we have seen a gradual climb back up to a high of 1.2874 on broad based USD weakness in a risk-on rally. Resistance from here comes in just above at 1.2880/1.2900 area and from there I expect to see weakness in this pair as it moves to complete the Head and Shoulders pattern I identified last Friday which should target 1.2658 area on a measured move basis. Above the 1.2880/1.2900 resistance is the broken neckline of the H/S pattern which should come in around 1.2920/40 and that should provide some challenging resistance. A break and close above that signals a potential failure of the pattern and returns us to the dreaded consolidation range we have been stuck in since mid September.

I remain bearish the EUR/USD and will look to sell any and all rallies against resistance for an eventual accelerated move back down to the July lows at or near 1.2041 in the coming weeks.

Those who say it cannot be done should not interrupt those who are doing it
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