what's up with the euro?

Quote from Ivanovich:

Sorry, have to disagree. I'd never question you on fixed income, but FX is my bag.

The EUR has been used as of late as a funding currency to buy all sorts of carry trades. The resulting rout from those carry trades is pushing folks back into the Euro as they're closed out. This, of course, hits stops along the way and acts as a short squeeze.

It's a temporary thing. If anyone thinks the EZ is "alright" now, they're lunatics.

Great short opportunity.
More...


>>>> but FX is my bag. <<<<

:D :D

another live one, and this one's a cop. :D

try using anything you've said in the quote to time the euro. You've got a nice habit of making statements like, "eurusd is going to 1.17 (after its already dropped from 1.5 to 1.22) - you're a fckin genius. :D

Where the fck were you BEFORE the turns?

TIME THE NEXT TURN. OK?
 
To explain the past day's push up in the Euro with it being used as funding carry trades is a pretty poor explanation to say the least. I concur with Martinghoul on this one. He never claimed that everything is fine in the EZ. But the same came about US markets when stress tests were released and massive QE was injected out of thin air.

The Euro has been under tremendous pressure over the past couple months and I would not be surprised to see a move back to 1.29-1.30 before the resumption of sells on the back of the next black hole in Europe surfacing. People built massive shorts and simply take risk off the table because their 1.10 target did not materialize as early as they hoped/expected.

Simple as that.

P.S.: Fixed Income and FX is intricately related, that why every fx desk is part of the FI floor. Trading short rates makes you 80% an fx trader.



Quote from Ivanovich:

Sorry, have to disagree. I'd never question you on fixed income, but FX is my bag.

The EUR has been used as of late as a funding currency to buy all sorts of carry trades. The resulting rout from those carry trades is pushing folks back into the Euro as they're closed out. This, of course, hits stops along the way and acts as a short squeeze.

It's a temporary thing. If anyone thinks the EZ is "alright" now, they're lunatics.

Great short opportunity.
More...
 
I have to admit that today EUR is strangely strong despite price of oil and gold fell pretty hard. Soros maybe unwinding his short positions. LOL
 
By the way, its not just the Euro that was bought, but pretty much all other dollar crosses. The divergence between those and the sell off in US equities was striking. It clearly tells that investors were not shifting out of equities into US bonds but moving money out of US denominated assets. I think the reason is very clear. The US economy is again on the verge of a break down: Employment numbers have been horrible, no pickup in sight whatsoever, we are clearly in danger of entering a deflationary death spiral, housing markets is clearly softening again, dry bulk index collapsing for 30+ straight days. I am not trying to make a point that Europe looks a lot better but fact is the US consumer is STILL much more highly leveraged than its European counterpart, so is the average American business. Equity markets are oversold at this juncture but I see a lot more downside going forward. 1300 SPX this year is for dreamers. There is ZERO, absolutely zero support for such wishful thinking. I am happy that EUR/USD re-captured 1.25. I hope for it to go back to 1.29-1.30 because it would make for terrific short opportunities. I believe we will re-live 2008 to the tune of x2, larger moves but they will materialize more slowly and with a lot more bounces in between...
 
The ECB tender was better than expected, and the news-trade took out Wednesday's 1.23 high in EURUSD. Take a look at the EURCHF in today's action which occurred after yesterday's historic low.
 
The dollar is no longer attractive with bond yields being driven down so low in the US (another Sep10 contract high in Tnote prices yesterday). The expected recovery is failing to materialise so the other majors looked undervalued.

The dollar is no longer the safe haven on the stocks drop, its more oh look the US is in the doldrums as much as everywhere else, rates aren't going to rise for a very long time there, scale back the massive dollar long. The LTRO did help but it's in combination - the eurozone is slightly better than feared and US slightly worse than hoped - the strong dollar is beginning to bite sooner than expected.

Prices paid on ISM was so low too so that added another reason to dump gold. Payrolls will evidently be crucial.

Good oversight -
https://multimediafiles.kbcgroup.eu...unrise_market_commentary_0900dfde8028b215.pdf
 
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