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US Dollar Why isn't it tanking?
- Thread starter nealvan
- Start date
Quote from nealvan:
With steep rate cuts shouldn't the USD tank? On the most part seems to be holding it's own....
My thoughts on this are that the current unwinding of yen carry trade is forcing mass position liquidation accross the board ... this includes the massive aggregate of short dollar shorts.
Also, the rate cuts were probably baked in to a degree.
The Euro is a bubble
I wrote this on another thread but briefly.
Carry trades are very active at the moment and driving a lot of the forex activity. Note how dollar yen actually rises as the dollar weakens againstt he euro and the pound. It is all sterling and euro yen. Dollar yen actually rose the second they cut rates.
If equities continue to tank then the ECB will be forced to U turn. Rate cuts have been priced in for ages with the dollar and yet the ECB have had a tightening bias. If the ECB need to cut then this is a huge sea change.
Also if 'investors' are getting caned in some markets it is quite usual to liquidate winning positions to both lock up profit and help with margin calls etc. Short dollars has been very profitbale over the past year(s) or so.
Carry trades are very active at the moment and driving a lot of the forex activity. Note how dollar yen actually rises as the dollar weakens againstt he euro and the pound. It is all sterling and euro yen. Dollar yen actually rose the second they cut rates.
If equities continue to tank then the ECB will be forced to U turn. Rate cuts have been priced in for ages with the dollar and yet the ECB have had a tightening bias. If the ECB need to cut then this is a huge sea change.
Also if 'investors' are getting caned in some markets it is quite usual to liquidate winning positions to both lock up profit and help with margin calls etc. Short dollars has been very profitbale over the past year(s) or so.
Quote from DrEvil:
My thoughts on this are that the current unwinding of yen carry trade is forcing mass position liquidation accross the board ... this includes the massive aggregate of short dollar shorts.
Also, the rate cuts were probably baked in to a degree.
I guess that must be it. 75 basis points plus I've heard talk of a possibility of 50 more. Seems like a quick move like this would surprise the market though. I'm new to forex but my chart reading skills indicate something different than the fundamental talk that's been bouncing around it seems. I guess it's been so well for-known that it comes as no surprise to the smart money.
Give it a few days. The Australian $ will buy .89-90 quite soon....then there will be another market rout and it will drop back to .86 again.
Trading this is 'money for jam'.
Trading this is 'money for jam'.