Money Flow Trading Method along with Risk Management

Morning Thoughts - Daily

Published on Dec 20, 2016
There is a record bubble in bonds, and money manager Michael Pento warns, “Where’s the 10-year Treasury right now? It was 1.3%, and now it’s around 2.6%. We’re going to 4% on the 10-year Treasury. That, by definition, is an absolute bursting of the bond bubble. The problem is this: All assets are priced off of the ‘risk free’ rate of return, ‘risk free’ rate of return on sovereign debt. All asset prices were priced off 1.3% of the 10-year Treasury, or a negative 40 basis points on the Japanese 10-year, or negative yielding German bunds, all assets, and yes that includes real estate and stocks. So, the bond bubble is epic. It is that big in proportion, and it is now bursting.”

Pento goes on to warn, “The real estate market is starting to go off-line. If you look at new home starts, they were down 19% in November month over month. There is no more refinancing market. It’s gone off-line. The initial purchase applications have flat lined. . . . As the housing market goes, so goes the economy. While the Dow and the S&P 500 have surged after November 9th, after Trump was elected, emerging markets are down 8%. . . . The emerging market economies and their currencies are crashing, and that is where I see the epicenter of the bubble breaks.”

In closing, Pento says, “This stronger dollar and this rise in Treasury yields is not going to last very long. They are going to have to reverse course. When they do, they are going to temporarily bring that yield back down. They are going to create unprecedented inflation like you have never seen before--even worse that the 1970’s. You are going to want to have gold at that juncture.”

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Michael Pento of Pento Portfolio Strategies.

All links can be found on USAWatchdog.com: http://usawatchdog.com/early-2017-rec...

Comments from Benjaminis: When we ignore the realities and do not prepare then we pay the price. I used this as my morning thoughts since what is happening today in the financial markets has been highlighted on this thread since December 3, 2016 when I started it.

I now am going to address the remarks that I read this morning from vladimir8686 not in a personal way towards him in any way, just to make a very important point about what I am trying to teach here.

Most people have programmed themselves to think in a certain way and that is called human nature. The importance of having an open mind to new things is most important. The most important thing that all traders need to learn is to have control of your EGO. Your EGO states that it is YOU who is right and everyone else needs to be wrong. Therefore YOU whoever you are will find it most difficult to learn things in a different way.

Again my remarks concerning vladimir8686 can apply to many others. When I first read his reply this morning my first reaction was to just pass it by. Then I saw an excellent reply by piphunting and I went to take care of other matters in my life. Now I can reply to him and share my Morning Thoughts with anyone that comes to this thread to hopefully learn new things.

The reason that I had no interest in replying then was because I had no idea how to do it. Then it became very clear to me what the problem was and what the solution is. With NO DISRESPECT to vladimir8686 , what he did is what people do to make their point and only their point. THEY CHANGE THE SUBJECT TO DEBATE and that will never solve the problem since we need to learn with an open mind not debate.

Now I can give answer in a proper manner to everyone here. To do that I will just say since it has been said almost from the start of my thread on Money Flow Method and Risk Management. In order to achieve your goals of making money in the business of trading Forex then you need to learn all the elements that make up the whole package. Some people just are not capable for whatever personal reasons that they have.

The absolute proof of that is the excellent results and harmony that exists on our thread and that CREDIT goes to all of you that have got to this point with great results. The interest and the desire and the ability and the investment of time and effort is there so then the success is there.

The ADP number just came out and it was below expectations. The Dow Futures were down before this news came out. We see overnight now what happened in China and where USD/CNH is at the moment. We saw what happened to USD/JPY and what happened we were prepared for with our overall plan of action.

All your positions should be closed before the end of the day as we await a complete unknown that will move the markets.

That is Non Farm Payroll (NFP) coming out at 8:30 AM on Friday , January 6, 2016.

As always your feedback is appreciated and needed so we all are on the same page of the book of life and Forex trading that WE are writing together.


Benjamin

I used the term money flow as it's benjamins thread title. But I hope you understood my point

Job of money stream performance: trade discipline and fundamental analysis are the key to successful trade.

Quoting BenjaminIs

Disliked

{quote} Hello KeepCalmFX and raveon and anyone else that can explain what you have learned. We have two answers now , mine and wayfarer. Some of the others are not online !!! We do nothing for the moment not until at least 2:15 PM after the FOMC Minutes are released in 8 minutes. Then I will return and suggest your first trade.

Ignored

Here is what I have learned so far.

1stly by having a $50 000 demo account, you eliminate your chances to trade with Fear, when you trade with fear, you don’t think rationally and clearly, so by getting the fear out of the way, you can start to subconsciously form positive pathways in your brain that confirms every month by making a consistent profit that you can make a consistent profit each month indeed. So after 3 months to year trading on a demo account a certain strategy/way it becomes second nature, later you just see the perfect setup with the money flow, within the trading plan and you don’t think twice to enter. So I believe then you would be able to treat your live account as the Demo account you trained on. Just my opinion.
“You must have the desire, the interest and the DISCIPLINE to control your FEAR and your Greed otherwise you will lose” You must also control your EGO, if you have a few winners, then don’t think you know what the markets will do next, the next trade could be a loss, so you must have the disciple to stick to your trading plan, also don’t increase your position size now because you had a few good trades, the next loss may be just around the corner. The market is always write and the trend is your friend.
Through doing research you become aware of newsletters/blogs/sites/writers you can trust for their honest opinions, the facts, so the reality and not perception that people want you to believe or someone else’s perception because he is bias. Like Benjamin showed us a lot of times, with his experience he came across sites and bloggers/writers you can trust more than others, because it is the truth, not his/her own perception or the way he/she wants you to think. The money flow sets the trend.
Then you take the information and start with a trading plan.
After Benjamin’s research, he came to the conclusion that for the following 3 months the main trend would be as follow for the following instruments, it can change if new factors came into play (4 trade plans):

1. US30 – Short (100 units)
2. JPY- Short (100 units)
3. Silver- long (100 OZ)
4. Gold- Long (5000 OZ)

For the next 3 months the market will not go short/long every hour of the day, because the market ebb and flow.
So even though the main trend is short for the US30 for the next 3 months, the market will go long/retrace at times. (We must also keep up to date with news, because if there is a drastic change our trading plans might also change.)
So each day, we start trading, we must confirm if it is risk on – market going long or if it is risk off – market going short on the US30. (We don’t look at other charts to trade, except our trade plans.)
This you can see on a 1 hour, 4 hour chart.
If it is risk on, we stay out of the markets, if we have positions open that is fine, because we have a very good Risk Management in place.
As he also explained many times, “When the markets head down and we have Risk Off the money flows into US Dollars first and then the money is parked usually into US Bonds so the bonds go up and the yield goes down. Money also flows to USD/JPY”
We should preferably trade between 2 AM EST and 5 PM EST. Benjamin start at 2 AM EST because that is when Frankfurt opens one hour before Europe fully comes on line and the Money starts to Flow again since Japan has gone home. The real action is between 8:30 AM EST and 4:30 PM EST.
The duration of a trade can be as quickly as 15 minutes to one hour or in cases where we have a DRAWDOWN longer. He take +/- 25 trades a day if I can remember corectly.
We wait for big news like NFP to see what the markets does before entering a trade. Again patience is key. When we are in profit, +/- $250 we will move our stop loss to breakeven, there after move his SL every 25 pips in profit. If the market hits our positive SL then it is fine and we move to the next opportunity.
Our risk/reward is 1:3, we add our stop loss and take profit immediately after we place an order.
We can take the profit if we have a good profit, my personal opinion, $850 - $1000 is a good profit. Like Benjamin says : “"A Bird In Hand Is Worth Two In The Bush" and ”You Can Never Lose Money By Taking A Profit” So we are not greedy in letting our profits get eaten up as the market ebb and flow, we take our cut and wait patiently for a price signal to re- enter the market.
Sometimes, especially if you have not time to watch your chart every hour/4hours and can only view it daily, then by placing a 1:3 R/R ($1000 risk, $3000 reward), you can leave the markets to do its thing, because we now have an edge, because we know the direction of the main trend.
At no time can there be more than $10,000 US Dollars of the $50,000 US Dollars in the market. This formula is 20% of the trading capital.
There is no set rule that we need three positions on each Trade Plan. What we do is to make sure that the loss on any Trade Plan since we can be wrong is 6%.
So as Benjamin said, if we are trading US30 and we enter the first position and it does go up for a while against us of say - $ 500 then we enter our second position with same 1:3 R/R, usually if not always when it turns around the last position put on whether the second or third if need be is the most profitable one. This is where the charts are very helpful as we can see Support and Resistance and also here the SAR, FRACTAL and Awesome Indicator helps very much. More on these indicators on Post 705, 706, 708.

If you have your first position on and it moves into profit and it build momentum, this is when you can enter your 2nd position. And if you are in a drawdown of say $ 500 with your 1st position then you add the 2nd one and as the 2nd and 1st one is in profit you can add your final position with moving your SL to breakeven ect.
No one knows what the market will do, all we do is enter the market with our edge (Money flow) and Technical tools, and then we have the best probability of a successful trade and watch what happen. If you take a loss, then it is fine, not all of our trades will be winners, you will never have a system with 100% success rate.
I still have a lot to learn on the fundamental side/money flow and I also must still work on my fear of missing out, not to enter when I see a setup but wait for confirmation before I enter.

KeepCalmfx < I still have a lot to learn on the fundamental side/money flow and I also must still work on my fear of missing out, not to enter when I see a setup but wait for confirmation before I enter.> Excellent comment, I too study, difficult to get used to discipline, trade plan, but it is necessary.

Agree with you Dttsomh!

Great post

I also tried to modify Marketscope 2.0 as Davit's template, after some time, decided to keep my FXCM Demo MT4 Platform for visual, will trade from MT4 and amend accordingly to trading station.

https://www.sovereignman.com/trends/...a5c346038436cf US national debt soars by $100 billion. . . in just 8 hours

http://seekingalpha.com/article/4034...-s-jobs-report

Snippet:

Summary
ADP and Non-Manufacturing ISM lend credence to our fear of a disappointing national jobs report.
Economists estimate only a small part of the manufacturing jobs loss can be traced to trade policy.
19 states increased min wage at the start of the year, but the impact on the nation's average weekly earnings will likely be too small to detect.
https://staticseekingalpha.a.ssl.fas...pload_work.jpg
We have suggested the risk of disappointment with the US December jobs data. There is not a tight fit on a monthly basis between the ADP estimate and the first estimate of the BLS; the disappointment with the ADP estimate (153k vs. median estimate of 175k and an upwardly revised 215k in November) lends a modicum of support to our warning. Similarly, the weakness in the employment component of the ISM non-manufacturing survey (53.8 vs. 58.2) is also consistent with our warning.

Recall that in December 2015, ADP estimated the US private sector added 303.5k jobs (vs. the official estimate of 271k). Separately, the Challenger US jobs cut announcements spiked to 42.4% (year-over-year). This is the first increase since April and the largest since September 2015.

We suspect there may be a seasonal problem with the December non-farm payroll estimate. The last three Decembers have seen weaker job growth than November. This has been the pattern in seven of the past 10 years. If one flips a coin three times in a row, and it lands on tails each time, you would not conclude the coin is flawed. If flipped the coin ten times and it was heads each time, you would not conclude the coin is flawed. Back of the envelope calculations suggest there is an 11% probability that there is a genuine pattern here.

Separate from the net jobs created, there are a few other elements of the report that are important for investors and economists. The unemployment rate, which may tick up to 4.7% from 4.6%, is well covered in the media, but as many have learned, it can be misleading if not taken in conjunction with the participation rate (62.7% in November). The underemployment rate fell to 9.3% from 9.5% in October. This is one area that the ongoing slack in the labor market is still evident.

We argue that from the Fed's vantage point, hourly earnings may be more important than the net job creation, barring a shock. Headline inflation converges to core inflation and core inflation has traditionally converged to wage growth. The median estimate has average hourly earnings up 0.3% in December, which would bring the year-over-year rate back to its cyclical high of 2.8%.

ADP estimates that the US lost about 16k manufacturing jobs. On average, the US has lost 5k manufacturing jobs a month this year after gaining an average of two thousand a month in 2015 and 17k in 2014. The incoming administration has talked a great deal about manufacturing jobs, which currently account for about 8.5% of non-farm payrolls. This is down from about 25% in 1970 and nearly 33% in 1940.


What is happening to manufacturing workers happened to agriculture workers more than 100 years ago. It is also happening to many service sector employees and, perhaps in the coming years, drivers of all kinds. The farm jobs were not outsourced or exported. Mechanization was the real culprit. A widely cited academic paper concluded that due to trade policy, the US lost nearly one million manufacturing jobs between 1999 and 2011. This is less than one-fifth of the manufacturing jobs lost over that period. Another factor that few consider is the changing definitions. A custodial engineer who looks after an auto plant, for example, is in manufacturing. However, if the function is outsourced to a maintenance company, the job is now in the service sector. Lastly, we note that some countries, including China, who have been accused of "stealing" American manufacturing jobs, are also losing manufacturing jobs.


A record 19 states raised the minimum wage at the start of the year (Oregon, Maryland and Washington, D.C. will do so later). The increases vary. Consider New York. In New York City, the minimum wage is now $11, but in the downstate suburbs, it is $10 and $9.70 elsewhere. The biggest jump is Arizona. The $1.95 an hour increase brings the state's minimum wage to $10. Roughly one in eight workers will be impacted in Arizona. Massachusetts' minimum wage went up $1 to $11, and roughly 290k workers are directly impacted. The minimum wage in California went up 50 cents (to $10.50) and impacts 1.7 mln workers directly.

The left-of-center Economic Policy Institute estimates that some 4.3 mln American workers will likely see a wage increase due to the minimum wage increases. However, there are more than 152 mln employees in the US. The hike in the minimum wage is unlikely to be detectable in the month's average earnings data. A couple of years ago, the non-partisan Congressional Budget Office noted that a rise in the federal minimum wage to $10.10 (from $7.25 set in 2009 and currently prevails) would "cost" 500k jobs, but boost the pay of 16.5 mln workers whose pay is tied to the minimum wage.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Comments from Benjaminis: This article gives us all the proper background before the release of Non Farm Payroll (NFP) tomorrow morning at 8:30 AM EST.

Please keep in mind that by NOON today, Eastern Standard Time, Europe will be closed for trading so watch to see the change in values caused by the closing of Short positions or profit taking in long positions. We also see what has happened with USD/JPY so the lesson there is ALWAYS Trade with The Trend even though we might be tempted to trade the range whether on a 15 minute Chart or one hour Chart or 4 Hour Chart. WE KNOW FOR SURE that US 30 will go down so then the Trend for USD/JPY is down. In this case it was the YUAN that caused the DOWN movements overnight. Please keep in mind that there is relationships between all of the parts and understanding the research shared here WE all know that the US Dollar Index (DNY) being so strong for the moment is causing serious problems for all the currencies and commodities.

Thanks you all for your postings of today and your sharing of what you have learned. Have a GREAT DAY and please Smell the Roses !!!

It has been a really good trading day, closed all 4 of my positions, some would say I have closed them to early, especially if you look at the US30 now, but I am happy with the profits I made. Maybe in the future I will move my SL to an positive one and keep on moving it each 25 pips until I am stopped out. Like Benjamin suggested.

FXCM MT4 Demo account, total profits since I opened my demo accounts on the 27th of December $ 4 888
My total FXCM Trading station account since I opened it $ 3 535

Now that I have reached my 5% monthly goal I will only trade A+ probabilities

KeepCalmfx

Great Trading and I am very proud of you. Your summary of what lessons you have learned was graded 95% out of 100%.

Furthermore your actual results prove that you have learned very well.

I also just closed my last SHORT position in US 30 and since I have opened my FXCM UK DEmo Account on December 20, 2016 , 16 days ago , I have only made 13 Forex trades of which 11 were winning ones. (84.6%) and my Net Profit is over 13%.

Here is the summary of my account.

Trading Commission-32.00

Rollover Fee-860.10

Profit/Loss of Trade - 7,416.11

Deposit 50,000.00

Ending Balance 56,524.01

Floating P/L 0.00

Equity 56,524.01

Necessary Margin 0.00

Usable Margin 56,524.01


Notes:

"THIS IS A DEMO ACCOUNT WHICH IS TRADED WITH VIRTUAL FUNDS. NO REAL MONEY IS USED IN TRADING THIS ACCOUNT. Demo accounts are used primarily for education purposes, testing of strategies, and familiarizing traders with market movement and the FX Trading Station. There are inherent risks associated with online trading that may arise due to downtime, currency fluctuation and other risks associated with currency speculation. Only risk capital should be used when trading a real account."


Benjaminis

Just for the record one more time.

(1) 20% is of course the Forex Trader.
(2) 20% is Risk Management in case the Professional or Retail Forex Trader makes the wrong trading decision.
(3) 20% is the EDGE that lets you trade with the markets and NOT AGAINST them because the MARKETS WIN EVERY TIME !!! (MONEY FLOW)
(4) 20% is the Technical Indicators that I see clearly that you are skilled in.
(5) 20% is the Fundamental News released every day for everyone to see at the same time whether they are real or FAKE NEWS !!!

Notice how the two most common ones used by all Forex traders are Technical Indicators which includes Supply and Demand and Support and Resistance and Pivot Points or whatever system that has been developed in that field is number FOUR and Fundamentals is ranked number FIVE.

I think that this is the clearest explanation so far. For myself trading Forex is a way of life and I have the desire and love for it because it keeps me involved in the world and what is happening.


Benjaminis

US Dollar Index is reversing and we need to see how the major change in the value of the YUAN will effect things.

5 Minute Chart of US Dollar Index

http://finviz.com/futures_charts.ashx?t=DX&p=m5

5 Minute Chart of USD/JPY

http://finviz.com/forex_charts.ashx?t=USDJPY&tf=m5

Comments from Benjaminis: Now we need to understand what has caused this to happen. For sure the fact that USD/CHN was trying to go over 7.0000, was causing major problems for China. At the moment, the rate which you can see on your FXCM UK platform is 6.7867 Bid. That is an incredible move over minutes of over 3%. The results as I have pointed out was most apparent in USD/JPY.

Here is the background article on other serious China issues.

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

Snippet:
As the IIF reported yesterday, in the first 9 months of 2016 global debt rose by $11 trillion, hitting an all time high of $217 trillion, ro 325% of world GDP. Of this increase, the IIF said that China accounted for the "lion's share" and while China's relentless debt-funded stimulus continues to be ignored by markets, one other organization that begins with I and ends with F has also noticed that China has a big problem.

As the IMF recently wrote in its IMFDirect blog, China urgently needs to tackle its corporate-debt problem before it
becomes a major drag on growth in the world’s No. 2 economy. Corporate
debt has reached very high levels and continues to grow.

The International Monetary Fund then lays out at the dimensions of the problem:
From 2009 to 2015, credit grew very rapidly by 20 percent on average per year, much more than growth in nominal gross domestic product. What’s more, the ratio of non-financial private credit to GDP rose from around 150 percent to more than 200 percent, or about 20-25 percentage points higher than the historical trend. Such a “credit gap” is comparable to those in countries that experienced painful deleveraging, such as Spain, Thailand, and Japan.
It then combines the four nations debt/GDP in one chart, and shows the one chart that keeps it up at night.
http://www.zerohedge.com/sites/defau...rt%20imf_0.jpg

The chart above make it obvious that unless something changes, and fast, the biggest growth dynamo behind global growth over the past decade - remember, as Kyle Bass so conveniently reminded us, China's banking system has over $30 trillion in financial assets, debt asied - is about to short circuit.
Why the unprecedented debt growth? Simple: this corporate credit boom reflected the government efforts to stimulate the economy in the wake of the global financial crisis, largely through lending for infrastructure and real estate. The outcome: overbuilding and a severe overhang of unsold properties, especially in lower-tier cities, along with excess capacity in related industries such as steel, cement and coal. The combination of heavy borrowing and falling profits led to excessive debt loads. The problem has been worst among state-owned enterprises that benefit from preferential access to financing and implicit government guarantees, which lower the cost of borrowing.

The IMF then proposes several solutions: First, the government should make a high-level decision to stop financing weak companies, strengthen corporate governance, mitigate social costs and accept likely slower growth in the near term. It needs buy-in at every level—state-owned enterprises, local governments, and financial supervisors. Here are the other steps China’s government can take:

1. Triage: Identify companies in financial difficulty and distinguish between those that should be restructured and those “zombie” companies that have no hope of survival and that should be allowed to exit. Because of the existing links between state-owned banks and corporations, a new agency could be created to perform this role.
2. Recognize losses: Require banks to recognize and manage impaired assets. So-called shadow banks—trust, securities and asset-management companies—should also be forced to recognize losses.
3. Share the burden: Allocate losses among banks, corporates, investors and, if necessary, the government.
4. Harden budget constraints—especially on state owned enterprises—by improving corporate governance and removing implicit guarantees to prevent further misallocation of credit and losses.

It then adds that, for now, "risks appear manageable" but only if the problem is addressed promptly. And this is where the IMF suffers from a tremendous cognitive disconnect, when it says that "indeed, it is encouraging that the government has recognized the problem and is taking action to address it."
Alas, that is not true, because while the government has indeed recognized the problem, it sternly refuses to address it, and instead just last year injected a record amount of debt in the system, even as total debt/GDP in China has now risen to 300%, according to the IIF.
http://www.zerohedge.com/sites/defau...bt%20iif_0.jpg

The same lack of willingness to address any of China's lingering structural problems can be noted in most other aspects of its financial system: from overhauling insolvent enterprises and failing to recognize the true extent of NPLs (the recent overtures in debt-for-equity are, sadly, far too modest to make any impact), to implementing broad bankruptcy reform (over fears of millions of workers losing their jobs in zombie enterprises), to the biggest elephant in the room: China's currency woes, which instead of being "internationalized" is being increasingly pressured by the PBOC to trade at a given level due to concerns of soaring capital outflows limited by China's reserve base.

It remains to be seen just when the chart that keeps the IMF up at night will lead to nightmares for others; for now, however, everyone is blissfully ignoring what may be the biggest problem in the world.

https://www.sprottmoney.com/Blog/42-...aig-hemke.html

Snippet:

January 4, 2017

It has now been 42 years since The Global Bankers successfully alchemized gold through the advent of futures trading so we begin the new year by looking back at how we got into this position in the first place.

To that end, let's start 2017 by going back to 1974.
Over the past few years, you've often heard me reference the HISTORY and FACT of gold price suppression and manipulation. Whenever it comes up in an interview or presentation, it often goes like this:

1. After Bretton Woods, the US tried to go it alone in managing the price of gold to $35/ounce. By the late 1950s, this caused a mini-crisis when US gold reserves fell by a third as countries around the world exchanged their dollars for gold. There were hearings on Capitol Hill and decisions were made to change the way that $35 gold would be managed.
2. This led to the formation of The London Gold Pool in 1961. No longer would the US go it alone in providing physical metal at the $35/ounce price. Seven other countries were recruited to the effort in order to lessen the burden and drawdown of US reserves. This effort to manage the $35 price worked for nearly seven years until global gold demand finally overwhelmed the Gold Pool and the effort collapsed in 1968.
3. The US was suddenly on its own again and demand for gold in exchange for dollars soon grew to such an extreme that President Nixon was forced to cancel the dollar's convertibility into gold on August 15, 1971. This is the "closing of the gold window" that you've heard so much about.

A new movement to allow private gold ownership in the US soon began...recall that FDR had outlawed private gold ownership in 1933...and on January 1, 1975, US citizens were finally allowed to once again own and hold physical gold.

But something very important happened the day before, on December 31, 1974. On that date, the Commodity Exchange Inc., also known as The Comex, began trading gold futures contracts and, as you'll see below, it was through these gold derivative contracts that the global bankers and governments finally perfected alchemy...a pursuit which had foiled and baffled scientists for centuries.


You may recall that a few years back, Wikileaks unveiled a whole assortment of previously-classified US government cables and transmissions. Wikileaks documented them all together and posted them to their website under the category of "Public Library of US Diplomacy". From the site, please read through this cable from December 10, 1974:

1. https://wikileaks.org/plusd/cables/1...ON16154_b.html

The entire document lays bare the intention behind the manufacture of gold derivatives to replace physical metal. However, in case you missed it, here's the key paragraph:
https://sprottmoney.com/media/magple...dc4a16da30.png
And there you have it. Laid bare for all to see. The "Dealers' expectations" of 1974 are manifest in 2017. The futures market is "of significant proportion" and physical trading is "miniscule by comparison". Price suppression, manipulation and volatility has "negated long-term hoarding" of gold by US citizens and very few even consider gold as money at all with the vast majority seeing it only as a commodity or a "hedge".

However, the fraud of the Banker's alchemy will one day come to an end as confidence in fiat currency collapses and physical demand for real money overwhelms this fractional reserve system. Will/can this occur in 2017? It's certainly possible as negative interest rates and currency devaluations lead to all sorts of unexpected consequences. But the timing hardly matters when the end result is a foregone conclusion. No system built upon a foundation of deceit and fraud can stand the test of time and the Banker's fractional reserve alchemy is no different. It will one day collapse. Of that you can be certain.

Comments from Benjaminis: The solution is now in place. That is the use of the Shanghai Exchange which now opens the door to the purchase of Gold and Gold byproducts and the inclusion of the YUAN as of October 31, 2016 in the SDR Basket. We now start to see the BIGGER picture before it unfolds and again gives us a preview of the FUTURE and why.

http://www.zerohedge.com/news/2017-0...-larry-summers

Snippet:
This post and full archives can be viewed at Trader Scott's Market Blog.

The brilliant PHD economist Lawrence Henry "Larry" Summers has come out with a scathing criticism of Donald Trump's economic policy:

“The Navarro-Ross paper is well beyond voodoo economics,” Summers said of the September report on Trump’s growth plans. “The logic of it, the arguments made, are so far out of the mainstream of any kind of responsible economic thinking that they are the economic equivalent of creationism.”

Summers dismissed the idea that any tax policy introduced to encourage U.S. companies to repatriate profits would boost investment and hiring.“The vast majority of the companies who have large overseas cash also have substantial amounts of domestic cash,” he said. “The reality is that cash that is brought home will be used to pay dividends, to buy back shares, to engage in mergers and acquisitions, to rearrange the financial chessboard, not to invest in large amounts of new capital. It is a chimera to suppose that there will be large increases in capital investment as a consequence of that repatriation.”

Lawrence Henry's amazing analytical abilities regarding economic issues are beyond reproach, so we should all heed his brilliant pronouncements. And since he believes Trump's economic ideas "are so far out of the mainstream of any kind of responsible economic thinking that they are the economic equivalent of creationism", let's take a look at what a "responsible" Harvard PHD economist believes.


Larry is one of the founding members of the Committee for the Advancement of Negative Interest Rates. Larry concocted, excuse me, developed this brilliant economic policy with his three brothers, Moe, Curly, and Schemp. And it has certainly been a roaring success worldwide, as can be evidenced by the booming growth in all of the countries which have unleashed, excuse me, enacted his crack economic team's policy. Larry, Moe, Curly, and Schemp also have another foundation - The Society for the Complete Banning of Physical Cash, a.k.a., The War on Cash Society.

Henry's magnificent abilities as a hedge fund manager allowed him to have great input into Harvard's endowment fund. Professor Summer's acumen led to a mere $1.8 billion loss in the financial crisis, but who's counting.

And Lawrence loves the idea of big banks, and he trusts them to understand complex economic and market situations. In 1998 he testified before the Senate that derivatives regulation wasn't necessary because Wall Street could be trusted to regulate itself - no prob. He also pushed to repeal the Glass-Steagall Act, because, well you know, we can trust Wall Street to regulate itself.

So these are the views, theories, and actions of another "responsible" PHD economist who has never accomplished a darn thing in his life.

Comments from Benjaminis: We already know about the WAR on CASH and why it is being done. Larry Summers was the man most responsible in the Clinton administration in repealing the Glass Steagal ACT of 1933. Now we see the results. We always need to keep our eye on the ball so we are knowledgeable and know the REALITY and not the FALSE PERCEPTION.

https://wealth.goldmoney.com/researc...gmrefcode=gata

Snippet:
Since August 2014, bank reserves at the Fed have fallen by $646.6bn, while the sum of cash, checking accounts and deposits held by the public has risen by $1990bn.
https://wealth.goldmoney.com/images/...ney_supply.png
The fiat money quantityi has now breached the $15 trillion level, standing at $15,108bn on November 1st 2016, the last calculable date. This is now $6.3 trillion above the pre-Lehman crisis trend-line, exceeding it by 72%. Instead of the Lehman rescue being a temporary fix, the increase in the quantity of fiat money has continued to grow over eight years later.

After the Fed responded to the financial crisis, monetarist commentators warned that the accumulation of bank reserves at the Fed would one day be unleashed into an expansion of bank lending, because every dollar held in reserves could become more than ten dollars of bank credit. The accumulation of these reserves had had no precedent, and monetary policy was therefore in uncharted territory.

The only way bank reserves can be discouraged from leaving the Fed’s balance sheet is for the Fed to increase the Fed Funds Rate (FFR), which is the interest rate the Fed pays commercial banks on these reserves. The original concern is now becoming justified, because banks have been gradually withdrawing reserves held at the Fed over the last eighteen months. For this reason, the Fed had no alternative but to raise the FFR in December 2015 and in December 2016, to start the process of normalising rates. The Federal Open Markets Committee should be watching the withdrawal of reserves as a key indicator in formulating interest rate policy, not that it is openly admitted in the FOMC’s statements.

Since August 2014, bank reserves at the Fed have fallen by $646.6bn, while the sum of cash, checking accounts and deposits held by the public has risen by $1990bn. The sums recorded at the commercial banks are the counterparts of the expansion of bank credit, and show that for every dollar withdrawn from the Fed, roughly three dollars of circulating money has been created.

The next chart shows that the difference between M2 and M1 continues to accelerate above trend. This is a key indicator, because it reflects bank credit expansion, which in turn tells us that businesses are investing, and consumers are spending, confirming the expansion of deposits at the commercial banks.

https://wealth.goldmoney.com/images/..._M2_supply.png
The commercial banks appear to have become more confident in their lending. Since January 2016, after a fifteen-month period of below-trend growth, this indicator has clearly shown not just a pick-up in bank lending, but reflects a continuing expansion of economic activity as well. Therefore, we can say the recession has been over for about a year.

The surge in optimism reflected in this chart tells us the next phase in the cycle will be for the economy to begin to hit capacity constraints. We don’t know how long this will take, but in practice businesses try to operate efficiently close to capacity, and with as little inventory in hand as practicable. Modern inventory control, such as just-in-time management, is part of this trend, and it might not take long before economists warn us about “overheating”. If President-elect Trump implements the economic policies he has advocated, capacity constraints will be brought forward anyway, and the Fed will have no option but to raise the FFR to a level which will moderate the expansion.

Of course, management of economic activity has always been the Fed’s underlying goal in controlling interest rates, and without exception it has never been successfully achieved. It cannot be achieved, so long as the cycle of credit expansion and contraction is endemic to the banking system.

As our next chart shows, the trend level for interest rates at which the next financial crisis is likely to be triggered has been declining since the peak in late-1989, marked by the dashed line. The reason these peaks have declined is obviously due to the accumulating burden of private-sector debt.

https://wealth.goldmoney.com/images/...s_rate_FFR.png
In a normal bank credit cycle, debt is created when bankers become confident in their lending, and destroyed after they have become over-confident in their competition for lending business, when they sacrifice risk considerations for competitive advantage. The alternating emotions of fear and greed in the management of banks drives the cycle of boom and bust.

Ever since the 1930s depression, economists have argued for the business cycle to be smoothed by preventing the periodic slumps in activity, with the consequence that malinvestments are never properly unwound. The root of the problem is the licence given to the banks to issue credit out of thin air, and the result has been to store up economic distortions to be resolved only by major crises. Thus, it was the post-war period that ended with the inflation of the 1970s, and now the post-seventies period of declining price inflation is likely to be ending as well.

Freed from the restrictions of the presidential election cycle, the Fed will almost certainly be considering its options. From the last chart above, it is clear from the trend of declining interest rate peaks that a rise in the FFR to as little as two to two and a half per cent risks setting off a new financial crisis, which due to the accumulation of debt over time threatens to be of a larger degree than the great financial crisis eight years ago.

Trump’s false dawn
President-elect Trump gained his nomination on a wave of public discontent over the establishment, with the promise of better outcomes. Trump appears to blame America’s problems on a mixture of unfair competition from China and Mexico, and US corporations that refuse to invest in domestic production. Ordinary people find it hard to get jobs as anything other than temporary waiters and bartenders. It is a popular message, which overlooks the root cause, which is the transfer of wealth and earning-power from the poorest in society to the banks and their borrowing customers. This wealth transfer is the consequence of monetary inflation, which, as we can see from the FMQ chart, has been compounding at well above the long-term average rate for the last eight years.

Trump has said he would invest in America’s decaying infrastructure, and he intends to cut taxes as well as make savings in government spending. The problem with cutting government spending is the cost of welfare is rising too rapidly for any cuts in spending to have meaningful effect, or to be long-lasting. Furthermore, we can see from our analysis of the state of the credit cycle that Trump’s fiscal and infrastructure stimulation plan is going to conflict with the credit cycle at the worst possible time, because it is already in its expansionary phase. Therefore, the effect on prices will be to drive them both higher and faster than they would otherwise go, fuelled by capacity constraints.

We have yet to see whether Trump proceeds with his economic proposals, but early indications are not encouraging in the context of monetary policy. Over trade, Trump and his team have displayed a high degree of economic illiteracy, which if anything is worse than that of the discredited outgoing establishment. Trump & Co. appear to be moving closer to Smoot-Hawley, making Obama look positively libertarian with regard to trade. Imposing trade restrictions will simply make the outlook for rising prices even worse. Trump, as a businessman, should at least understand the benefits of free trade, but he’s not acting as if he does.

The gold price
Our last chart shows the end of year gold price on two measures, adjusted for the fiat money quantity.
https://wealth.goldmoney.com/images/...Q_1934_USD.png

It seems only fair that when adjusting the gold price by the FMQ, it should also be adjusted by the increase in above-ground gold stocks. This is represented by the blue line. Since 1934, total gold mined has increased from an estimated 49,100 tonnes to 168,520 tonnes todayii. However, this does not account for the increase in the human population, from just over two billion to about seven and a half billion today. Both above-ground gold stocks and the world’s population have increased roughly three and a half times, so as universal money the quantity of gold on a per-capita basis has not increased at all.

For this reason, it makes more sense not to deflate the price of gold by above-ground stocks, so the red line in the chart, which is the 1934 gold price deflated by FMQ only, properly reflects current gold values in 1934 dollars. Based on today’s gold price of $1150, adjusted for FMQ since 1934 it stands at $3.36, less than one tenth of the $35 fixed at that time.

The all-time low was $3.13 in April 1971, so adjusted for FMQ the gold price is only 7% above its all-time low. There is, of course, no guarantee the gold price won’t go any lower in the coming months, particularly given the deteriorating interest rate outlook. However, the average of the FMQ-adjusted price since 1934 is nearly eight times the current level, so gold must be regarded as significantly undervalued relative to fiat dollars.

i The fiat money quantity is basically the sum of true money as defined by the Austrian School, plus bank reserves held at the Fed., plus reverse repos initiated by the Fed. It differs from other measures of money quantity by including fiat currency not in circulation, but available.
iiSee James Turk and Juan Castañeda’s paper on above-ground gold stocks.

https://wealth.goldmoney.com/images/...dgoldstock.pdf

FROM AGORA Financial in my Email just now and very on topic and relevant.

January 5, 2017

1. Intelligence agencies issue not-so-veiled threat to Trump
2. Brace for a Trump-Yellen battle royale… with the economy the loser
3. Trump Trade begins to reverse: Stocks slump, gold rises, dollar slammed
4. All downhill from here: Auto sales squeak out a 2016 record
5. The inside track to a $9 billion-a-year business
6. Reader makes his own “case for gold”

https://ci5.googleusercontent.com/pr...amps/z0000.jpgLooks as if it’s game on — Trump versus the Deep State.
“Deep State" is a term that originated in Turkey to describe certain actors within the structure of government who were unseen but who wielded the real power irrespective of who won elections. A few years ago, a retired congressional aide named Mike Lofgren appropriated the term to describe a similar phenomenon here in the United States. Others, including Agora founder Bill Bonner, find it a useful prism through which to view the passing scene.

As you’re likely aware, President-elect Trump has expressed skepticism about the “Intelligence Community” and its claims that Russia “interfered” in the 2016 campaign for purposes of electing Trump.

On Monday night, the Deep State struck back — using Senate Minority Leader Chuck Schumer as its messenger. “Let me tell you, you take on the Intelligence Community, they have six ways from Sunday at getting back at you,” he said on MSNBC. “So even for a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.”

This morning brings word Trump plans to reorganize both the Office of the Director of National Intelligence and the CIA. “The view from the Trump team is the intelligence world has become completely politicized,” said an anonymous person The Wall Street Journal describes as “close to the Trump transition.”
Grab the popcorn...

https://ci3.googleusercontent.com/pr...amps/z0030.jpgAnd then there’s Trump versus the Deep State’s most powerful economic cell — the Federal Reserve.
Yesterday afternoon, the Fed released the “minutes” from its meeting last month. While the name “Trump” appeared nowhere in the document, it nonetheless conveyed a veiled threat.

The key passage was this: “Many participants [in the meeting] commented that a more expansionary fiscal policy might raise aggregate demand above sustainable levels, potentially necessitating a somewhat tighter monetary policy than currently anticipated.”
Translation from Fed-speak: If Trump cuts taxes, we’re jacking interest rates even higher than we’ve already said we will.

https://ci4.googleusercontent.com/pr...amps/z0050.jpg“The new Trump administration will confront the Fed,” says Jim Rickards in his first big forecast of 2017, “and insist on accountability and rule-based decision making. The confrontation will present enormous risks and opportunities to investors.”

Recall that during the campaign, Trump declared he would fire Janet Yellen as Fed chair — although the president possesses no such power. “Trump also claimed that Yellen was keeping interest rates artificially low in order to pump up the stock market and help elect Hillary Clinton,” Jim reminds us.
Yellen began to strike back at her press conference right after the December Fed meeting. As Jim pointed out the day after, she said she might stick around on the Fed Board of Governors even after her term as chair is over in early 2018 — a lingering thorn in Trump’s side.

But she also hit out at Trump’s economic plan. When it comes to “stimulus,” Yellen is fond of tax credits for education, worker training and certain infrastructure. Across-the-board tax cuts that would most benefit the wealthy? Not so much.

Seen in this context, yesterday’s Fed minutes could be a way to turn up the heat on Trump: Yo, Mr. Big Talker, you wanna cut taxes for the rich? We’ll just ratchet up interest rates some more. We’ve been all about easy money these last eight years, but we’re gonna choke off “Trumpflation” at the first sign of it, bub. Remember who’s in charge here!

Or as Jim puts it, “The Fed expects to ‘lean in’ against the Trump stimulus and to avoid letting the economy run hot.”

https://ci5.googleusercontent.com/pr...amps/z0120.jpgBut what if the economy doesn’t run hot, despite the Trump stimulus?
That’s a possibility Jim’s been entertaining for weeks now. “The problem with the Fed’s assessment,” he elaborates today, “is that the Trump policies may not be nearly as stimulative as the Fed expects.”

For one thing, the Republican leadership in Congress wants the tax cuts to be “revenue neutral.”

“This means,” Jim explains, “that for every cut in tax rates, there must be an offsetting revenue increase from some other source, such as the elimination of tax deductions and credits, conversion of capital gains into ordinary income, repeal of Obamacare or reductions in entitlements. Trump has already said entitlement cuts are off the table.”

In addition, Jim says, “It will be difficult for Republicans suddenly to become the party of big spending and higher debt ceilings without extensive criticism from the Democrats, the media and parts of the Republican base. Increased spending is in the cards, but it may be far smaller than both Trump and the markets expect.

https://ci5.googleusercontent.com/pr...amps/z0145.jpg“In short, the Trump ‘stimulus’ may turn out to be far smaller and far less stimulative than markets currently anticipate,” Jim concludes.
“The reflationary Trump Trade of higher stock prices, a stronger dollar, higher interest rates and a declining dollar price of gold may soon run into a brick wall of congressional opposition and budget realities. The rally in stocks and the dollar and the head winds for bonds and gold all seem overdone. The Trump Trade may continue for a few more months, but by the spring of 2017, reality will set in and a sharp reversal of market trends will be in the cards.”
And if the Fed keeps tightening policy at a time the Trump stimulus isn’t delivering the goods? “The Fed may cause the recession it has worked so hard to avoid.”

In the meantime, other elements of the Deep State will continue their own scheming. The International Monetary Fund convenes its next big meeting on April 21 — at the very time Trump’s first-hundred-days agenda would be hitting the wall. Then what?

Jim spins out the scenario in the rest of his 2017 forecast when you click here.
https://ci5.googleusercontent.com/pr...amps/z0210.jpgTo the markets, where gold is the standout performer: It began climbing steadily in Asian trade overnight, and it continues to climb today. At last check, the bid was up to $1,183 — nearly $20 higher than at this time 24 hours ago.

“After briefly visiting 11-month lows, gold has started to quietly bottom out,” Greg Guenthner wrote his Rude Awakening readers yesterday. “Its spot price has risen five out of the last six trading sessions. Now we have a situation where gold is firming and the furious dollar rally is losing steam.”

https://ci4.googleusercontent.com/pr...laces-5min.png

Sure enough, the dollar index has backed off big-time this week — from a 14-year high of 103.8 Tuesday to 101.4 as we write.

Greg cautions gold’s final lows might not be in. “For now, we must think of precious metals as a quick trade. And nothing more.”

Even though he comes at the subject from a totally different perspective, Jim Rickards is inclined to agree: As long as the Fed keeps talking up the possibility of a rate increase in March, “this will be a head wind for gold.”

Comments from Benjaminis: Just keeping us up to date in a rapidly evolving FLUID World.

Hello everyone here now and to others that will be here later on.

I am going to take a break until at least 8 PM EST (GMT + 5) until Asia and Japan gets underway. I was just watching some commentary on CNBC as the markets get ready to close at 4 PM EST and by 5 PM EST , Rollovers are done. I was thinking about all the scenarios for tomorrow at 8:30 AM. Usually over the last 14 years of being in the Forex business, my BEST Forex trading day is on NFP day. There is a logical reason for that and I will now share it with everyone here.

We all know that the Markets would like to see the Dow get over 20,000. If the data coming out tomorrow real or misleading is negative as in a low number such as 125,000 new jobs created or less then the IMMEDIATE PERCEPTION will be that there will be a delay in the FED raising rates and the Markets might explode up if only for a few minutes or hours. If that would happen then I would GO SHORT one Position of 100 units of US 30.

That would be a good entry point. As for other parts of our three other Trade Plans , I would most likely wait until the Europe open on Monday morning before doing any other Forex Trades. I will of course be online most of the morning and if you have any questions before then please post them here on our thread. Today has been a good Forex trading day and now WE are all getting ready for tomorrow. Thanks for all the great work done by my associates here and we are all workng very well together.


Benjaminis

Comments from Benjaminis: I got a report from a major player in the Forex Industry who I follow however do not pay for lessons and since it is on my own earlier thoughts of Non Farm Payroll day , I will share the excellent research and her professional opinions.

http://www.bkassetmanagement.com/cur...-on-nfp_10334/

Snippet:
Be Careful! Dollar Could Sink on NFP

January 5th, 2017

Be Careful! Dollar Could Sink on NFP
Daily FX Market Roundup 01.05.17

The U.S. dollar may have traded lower against all of the major currencies today and experienced its greatest one-day loss in 3 months versus the Japanese Yen but tomorrow’s non-farm payrolls report could still sink the dollar. Today’s decline in the greenback was driven by weaker data and expectations for a softer jobs report. With that in mind, the dollar had been weak throughout the Asian and European trading sessions as U.S. rates began to retreat on Wednesday. At the time, investors were skeptical about Friday’s non-farm payrolls report and disappointed by the FOMC minutes. Today, they have every reason to be worried because the latest U.S. economic reports all point to slower job growth. According to Challenger Grey & Christmas, job cuts jumped 42% at the end of the year, the largest one-month increase since September 2015. ADP reported a larger than expected drop in corporate payroll growth – 153K jobs were created compared to 215K increase in November and a 175K forecast. Jobless claims fell to 235K from 263K but the 4-week moving average is up from last month. The improvement in the non-manufacturing ISM report also contained weakness with the employment component of the report falling steeply in December. There was some good news – job growth in the manufacturing sector increased and consumer confidence is up but that’s purely attributed to Trump’s Presidential victory. As indicated in the list below, the arguments in favor of weaker payrolls exceed the arguments for a stronger one.

But we are more concerned about wages and the unemployment rate. After last month’s -0.1% decline the current expectations for wage growth (0.3%) is high. Wages have been on a downtrend and may not recover as much as the experts predict at the end of the year. The unemployment rate is expected to tick up but that will be mostly due to an increase in the participation rate. Seasonally December job growth is also generally weaker than November. While a weaker report may not deter the Fed from raising rates this year, it could delay their plans for tightening and more importantly give investors a stronger excuse to take profits on long dollar positions after the extended the move. Furthermore U.S. yields are down sharply today and there’s a good chance that we could see 115 USD/JPY tested during the Asian or European trading session pre-NFP. Here’s how the arguments for NFPs stack up:

Arguments in Favor of Stronger Non-Farm Payrolls

1. Consumer Confidence Index Rises to Strongest Level Since 2001
2. University of Michigan Sentiment Index Rises to Highest Level in 12 Years
3. Employment Component of Manufacturing ISM Index Rises to 53.1 from 52.3

Arguments in Favor of Weaker Non-Farm Payrolls

1. Employment Component of Non-Manufacturing ISM Index Drops to 53.8 From 58.2
2. ADP Drops to 153K from 215K
3. Challenger Reports Largest Rise in Layoffs (42%) Since September 2015
4. 4 Week Average Jobless Claims Rises in December
5. Continuing Claims Increase

Meanwhile the sell-off in the dollar drove the EUR/USD to 1.06. The currency pair was actually one of the day’s best performers and if tomorrow’s jobs report is disappointing enough, we could easily see a squeeze to 1.07 given the amount of short positions in the market. Data from the Eurozone was also better than expected with Germany’s construction PMI index rising to 54.9 in December from 53.9 the prior month. The German Retail PMI index also increased to 52.0 from 49.6 while EZ Retail PMI was reported at 50.4 vs. 48.6 expected. Producer prices in the Eurozone rose with inflation accelerating by 0.3%, a small surprise over the 0.2% increase forecasted. The weaker euro is clearly having a meaningful impact on the economy. With the increasing amounts of better than expected data, a NFP miss could drive the pair sharply higher. Tomorrow’s Eurozone retail sales and consumer confidence numbers are not expected to have a significant impact on the greenback.

Sterling also shot higher but the rally stalled right at the 50-day SMA. Like the Eurozone, U.K. data continued to surprise to the upside with service sector activity growing at a faster pace in the month of December. The activity index rose to its highest level in 17 months and when combined with the rise in the manufacturing index, these reports took the Composite PMI release to its highest level since July 2015. Now that the main U.K. economic releases are behind us, we expect sterling to underperform the euro, swiss franc, and other currencies outside of the U.S. dollar. Brexit remains a serious risk that will certainly return to haunt the currency.

All 3 of the commodity currencies performed well against the U.S. dollar today. The sharp rise in Australian service sector activity and the 1.5% increase in gold prices helped to drive AUD/USD above 73 cents. The New Zealand dollar on the other hand traded primarily off of anti-dollar flows with the currency climbing above 70 cents versus the U.S. dollar. Australia’s trade balance is scheduled for this evening and given the rise in the manufacturing PMI index, the risk is to the upside for the report. Today’s moves have taken AUD/USD and NZD/USD above their 20-day SMA and we now expect another cent recovery. The Canadian dollar also ticked up versus the greenback but its gains were the most restrained of any major currency. A large part of that had to do with oil which increased 1% today on the back of a major decline in crude inventories. US crude inventories fell by 7.1m barrels, larger than the decrease of 2.2m barrels expected. Part of the drop was offset by an increase in crude inventory at Cushing, OK. In addition to the higher than expected increase in crude inventories at Cushing, gasoline and distillate inventories also saw a much larger than expected increase as well. Tomorrow, Canada releases its employment report and international merchandise trade balance. After a few months of softer reports, we are now looking for a firmer release.

http://www.bkassetmanagement.com/dai...-dumped_10330/

Snippet:

USDJPY was dumped hard in Asian and early European session today dropping nearly 2 big figures off the session highs as profit taking post FOMC minutes and strengthening in the USDCNY rates helped fuel the selloff.

Asian traders were much less impressed with the FOMC minutes which confirmed the Fed’s tightening path but left plenty of room open to interpretation as to the scope of the rate hike cycle. Although consensus view is looking for the Fed to hike 3 times in 2017, the FOMC left open the possibility that the Fed may tighten only twice.

We’ve noted yesterday that USD/JPY has lost much of its forward momentum, failing to take out the 119.00 for the past two weeks running and today’s price action confirms that the pair was ripe for profit taking. With both ADP and ISM Non-Manufacturing on the North American docket today the sell-off could extend to 115.00 figure if the data disappoints.

Meanwhile elsewhere the offshore and onshore CNY markets saw a massive liquidity squeeze ahead of the Chinese New Year that starts at the end of month. Demand for cash pushed the implied overnight offshore lending rates to 50% helping to push the yuan higher by 2.1% – a record gain – and its best showing in 2 months as the exchange rate fell to 6.8072.

For a while dollar weakness was persistent across the board with EUR/USD and commodity currencies also seeing strong gains into the Asian close. However, European trade unwound much of the decline in the greenback, with pound especially weak against the greenback as the pair slipped below the 1,2300 mark.

UK PMI Services came in at 56.2 versus 54.7 eyed which helped boost cable above the 1.2300 level in post news trade. New orders surged to 58.1 from 54.9 indicating that UK economy continues to perform well despite expectations of a Brexit driven slowdown. The PMI suggest that growth in Q4 will be 0.5% – its best pce in 17 months. It’s difficult to tell if the current buoyant rate of growth is simply the function of easy credit from BoE and massive devaluation in the currency or if it does indeed show that UK economy may be more resilient than experts thought. There is still no way to predict the extent of the exogenous shock that would result from a hard Brexit, but in the meantime the positive data from all three UK PMI’s may provide a modicum of support for the currency and could help push cable back towards 1.2400 while sending EURGBP back below the .8500 figure.

In North America however, the focus will quickly shift to US data with market anticipating that ADP will come in at 170K versus 216K and ISM projected to dip slightly to 56.6 from 57.2. Any small variance from consensus is unlikely to have much impact on trade. An upside surprise could reverse much of the overnight selloff and squeeze USD shorts once again back to the 118.00 level. But a miss in ADP or in the employment component of ISM could trigger a much sharper correction in USDJPY as US yields will likely retreat on fears that Fed’s tightening cycle will once again be postponed.

Comments from Benjaminis: See everyone later tonight with The Wrap Up after 9 PM EST (GMT + 5)