Going Against The USD
- Thread starter DrawDown
- Start date
Well, the hike in rates to me means a need to slow the pace of growth (this aspect is lackingn in EUR and hence they have not had to raise rates) and rising prices (inflation). That does not necessarily translate to a bad US economy...a soft landing is not out of the question. Look at the GDP numbers for the first half of the year.....does not indicate a weak economy at all (esp. when energy costs are factored in), nor has conusmer spending been curbed to any great extent. Please provide your inflation numbers to show that the real interest rate makes the dollar one of the worst instruments (I concede that core and headline inflation measures are poor gauges, but that is what they use).
I do think that there are structural problems that could hurt the USD. However, they have not materialized as of yet. I trade what is...not what "may be". I have been long the dollar since early May, and think this will be the right side of the street vs. EUR and GBP until at least Q4. 2007 is a whole different story, and that picture will become clearer as the data comes out along the way (I think USD will take a beating, but may not start until after Q1). The only currency i have been consistently shorting the USD against has been CAD, however that may change for the next few months if Canada keeps rates flat and allows the strong loonie to do it's work for it.
Of course i did. I do not hedge as you suggest, but I do have a second account that I fund and use for Longer Term plays. For instance I am holding a couple of lots of long USD/CAD with an average of 1.10; I have already scaled some out; next targets are 1.15 and 1.18 and my stop is at 1.1230. The EUR/USD short I still have 2 left and am targeting 1.2335-50 and if/when that breaks 1.1850 area. My trailing stop right now is set at 1.2750. I enter with anywhere from 3/5 lots and then scale it out on tests of key technical areas. I will do this again the other way when the dollar strength runs its course. I limit myself to a max of 3 positions open at any time, and keep the leverage small. This account shows a nice return every year.
My guess is this (mean reversion type?) method has been discussed in details here:
"Anyone have two accounts and do regular hedging?"
http://www.elitetrader.com/vb/showthread.php?s=&threadid=48312
imo, I would think probably the variant in this thread, particularly when incorporating very good money management skills, could be potentially a profitable/ viable method better than the previous ones in the old thread.
Am I wrong by this guess/ thought?
"Anyone have two accounts and do regular hedging?"
http://www.elitetrader.com/vb/showthread.php?s=&threadid=48312
imo, I would think probably the variant in this thread, particularly when incorporating very good money management skills, could be potentially a profitable/ viable method better than the previous ones in the old thread.
Am I wrong by this guess/ thought?