EurAnalysis

Short EUR/AUD at 1.4489
Target 1.4210
SL 1.4575
RR: 3.25:1

EURAUDCALL

2 days ago............

Bump and Grind or bump-and-grind refer to various kinds of rough movement, e.g., kayaking through rapids, aggressive car racing, a slang term for sexual intercourse.

-Wiki


im not sure anymore

Terrible ADP number with previous number also revised downward. However, only got a small knee-jerk reaction.

CPI increased by 0.1 to 0.2 as expected while core cpi remained unchanged at 0.1 although 0.2 was expected so it fell a bit short.

Looks like the market is waiting till FOMC to make any moves.

I'm all set for FOMC to go either way.

I have covered all my "in the money" E/U & G/U positions as well as a couple of U/W ones which still avg me out in the green.
I have set my numerous AUD/NZD longs at BE+50 except for the one at 1.1515 which is set to SL at 1.1385
My EUR/AUD short from 1.4489 has an SL at 1.4535
The only ones floating without SL are my SPX500 shorts which are 1766.6, 1692.4, 1660.0 & 1642.9 with an avg at 1690.3

Now if the market goes all apeshit on risk appetite and send the Dollar to hell, I'll suffer some losses but come out unscathed.
If on the other hand the market does not think that the Fed is any more dovish than last time, or if they are less dovish, then all my existing positions move clearly into profit and I laugh all the way to the bank.

Some may call this a gamble, but I assure you it is not.

Why?
Because all risk currencies and equity indices are overbought and the dollar is oversold. So, unless the FOMC makes it very clear that they will keep their pedal to the metal for a specified period of time past March 2014, upside in risk will be very limited if there is any upside at all.

The alternative possibilities (out of the most probable) are as follows...
1. Fed announces that any future taper will be tied to data on a month by month basis. In that case there is still a chance for taper to start in December. (USD Bullish)
2. Fed announces that they will make an economic assessment regarding tapering when they release new projections in December (USD neutral to slightly bullish)
3. Fed announces that they may start tapering anywhere between January and March 2014 (USD neutral)
4. Fed announces that tapering will not even be considered until the fiscal issues in DC are fully resolved. (USD Bearish)
5. Fed makes absolutely no mention of taper and basically issue the same standard statement that they will increase/decrease asset purchases as required (USD neutral to bearish)
6. If the Fed changes the goal posts, as in that they introduce new or modified data targets, then that could throw a wrench in the works as the market digests the consequences of such change. At that point it's anybody's guess.

The above is based on the following assumptions.
1. The market has already mostly priced in the expectation that the Fed will not start tapering until April 2014.
2. The market has already priced in the current underperformance of EZ and UK econ data.
3. The Fed statement does not make any extremely dovish or hawkish statements regarding the US economy as compared to previous statements.

In case the above assumptions are off, then the projected outcomes of each scenario I mentioned above has to be adjusted up or down accordingly.

I don't have a crystal ball, so anything can happen. However, this is how I see it. This analysis is not meant as a signal on how to trade the FOMC release. It is only my opinion and I am sharing it as an opinion only.

Keep in mind also that tomorrow is month end, and the way the USD has been bashed in the last 40 days may actually produce month end flows back into USD. However, come Friday, month end won't play into the equation any more and it's back to business as usual with flows according to the outcome/contents of the FOMC statement. It could also be argued that month end flows too place yesterday and today in order to get them all squared off before the FOMC statement.

So buckle up your seatbelts. This could be a rough ride, but then again it could turn out to be a non-event. Only Benny and the boys know for sure at this time.

Best of luck.

The inflation data “should increase market speculation that the ECB changes its bias on inflation risks,” BNP Paribas strategists led by Steven Saywell in London, wrote in a note to clients. “Our economists now forecast a rate cut in December. Given that the market has underpriced this, we think that there is substantial scope for euro to weaken in the next few weeks.”


http://www.bloomberg.com/news/2013-1...tory-data.html

I always liked going South. Somehow it feels like going downhill.
- Treebeard

Moved SL to BE
New RR= 1:0

EURAUDCALL

Yes it's a beautiful sight when you're looking at the landscape beneath you rather than up at clear blue sky

Well that really depends on where you are i guess. In England you wont see even the clear blue sky

I was in Somerset about 3 weeks ago and amazingly I had clear blue sky every day
Apparently the day we left, the clouds started rolling in as we got to Bristol Airport. Just as we took off, it started to rain.

Now thats what I call luck I lived for five years in London and most of the time was cloudy and raining I couldn't see proper summer there, but at least is always green there

I lived in a cottage here....some moons ago....nice pubs as well....no problem getting back home..fell out of pub...found myself in backyard or front door of cottage....depending on pub last visited...

http://www.cartmelvillage.com/

ps still short euro...although collecting on way down...

you're absolutely right about today being perhaps the shittiest fundamental day for the euro

I do think the whole "FED's gonna tighten sooner than forecast" after yesterday is a bunch of BS.

Despite what the FOMC has to say, if Eurozone and EM show signs of weakness of uncertainty they simply won't add fuel to the fire.

Why would they, as long as the dollar strenghtens (or stays flat) and bonds don't sell off they can ease the fck out of the whole universe.

As long as the Fed keeps saying that the economy is improving and we also see decent employment numbers, even if they don't mention taper, the market will continue to adjust pricing for an earlier taper... (Earlier than April '14 that is )

There is still way to go!

Yep. The tower of cards is only just starting to tumble... one card at a time.