ECB QE? Grexit? History happening. Macro thoughts.

I’m really torn here.

Scenario A:
ECB can’t do shit. Syriza wins, scares the markets. Risk off. Long Gold and JPY, short equities is the play. But what to make of AUD strength lately?

Scenario B:
On the other hand i don’t think the ECB cares one bit about the SNB. Consider this:
In this interview (english version at the end), ECB gov Benoit Coeuré states : “The goal of QE is to provide confidence in the central bank’s ability to stabilise inflation. The way in which that works is to anchor the financing rate in the largest possible number of countries at very low levels in order to guarantee funding conditions for European businesses and households at very low rates for periods much longer than at present.“.

I believe their reasoning is this: “We (the central banks) gave free money to the banks for them to lend to main street. Instead they’ve been using this money to invest in bonds and stocks (better yield). Short term bonds rates are now negative or at record lows. Political leaders don’t make the reforms (those bastards!). As per our mandates we have no other choice than to further lend money, make it expensive NOT to invest it, and hope sooner or later it will make more sense (be more profitable) to invest in main street rather than in bonds, maybe with the help of some reforms (they did make it in Greece, Spain and Portugal. They were unpopular, hence Syriza and Podemos rises), and finally growth and inflation will start going up. By reassuring banks that rates will stay low mid/long term they’re essentially telling them “Go ahead and lend them the f-cking money!””

In this scenario what would happen first would be even lower bonds rates across developped countries, and i include Australia (hence the recent strength despite the “risk off sentiment” of last week). Depending on the scale of the ECB action Greece might just benefit as well from this.

In this scenario the recent JPY strength and equities weakness would just be yet another “false break”. It wouldn’t be the first time. USD will keep on rising as it’s still the leader of the pack, thus at first delaying the rate hike before finally giving up due to the pressure on the debt and implementing QE4.

Regarding the SNB, it sold enough gold during this period (see the massive decline) and was just done with it. They’re now using they newly found buying power to rebuild stocks. In this scenario the surge in gold would therefore not be a flight to safety.

Now, regarding if this will be efficient, i don’t believe it for a second. It’s a race to the bottom (currency war), until the political leaders get their heads out of their asses. Winter IS coming, but it’s just not there yet.

If someone with a Bloomberg access could use the data to see the correlation between AUD and their bond rates and gold and EUR since the CHF peg that would be fantastic. I’d know if this thesis is just dumb incorrect or if maybe i’m on the right path.

Advertisements
ECB QE? Grexit? History happening. Macro thoughts.

20150114 Daily Forex Analysis – NY Close

20150115 morning update:
Short USDCAD triggered, i’m clearly not over confident since oil is still very weak but considering overall USD weakness and the long overdue pullback it’s worth a shot.
Short EURAUD and long AUDUSD didn’t triggered before going in the expected direction. I have therefore deleted the orders as the move i was playing already happened without me.

I certainly don’t like the massive rejections of key levels across the JPY pairs. It smells fishy. I expected the road to get bumpy but certainly not obvious reversal candles at the same time across the board. Therefore i closed all my shorts (all in profits, just not as big as expected) as well as JPN225 as we missed my target (december lows) by only a few pips. I’ve seen this story before. Made some profit anyway.
I’m stuck with my short WTI now slightly down. I kinda knew i should have covered at $45 didn’t I ?
Closed long Gold at breakeven, i don’t like the 2nd consecutive reversal pin bar at 1240.
Last position is short FRA40 which i can’t close at the moment but plan to first moment i get a chance.

One narrative could be that BoJ is working behind the curtain, thus JPY flying to other countries, hence the reversals across the board. Meaning gold down and indexes up tomorrow. We’ve also seen that story before.

Of course i could be a complete idiot and everything written here is complete bullshit. That would also be a story seen before. x)

Cheers y’all.

2015/01/img_5107.jpg

2015/01/img_5108.jpg

20150114 Daily Forex Analysis – NY Close

20150113 Daily Forex Analysis – NY Close

20150114 morning update:
EURJPY conservative target reached yesterday. Of course it falls some more today but it was a late entry so i’m happy with my 2.5R win. Boy do i regret being so lazy in the last days of december. Pretty much ALL pairs had clear signals while i was busy doing… nothing.
Just stopped this morning out of EURAUD (BE) and GBPAUD (Small loss). Freaking spike above ATR(20,daily) took me out.
Short JPN225, FRA40, USDJPY, GBPJPY, AUDJPY, CADJPY looking fantastic so far. Short WTI even though i’m clearly torn betweeen covering at $45 which is gonna hold for a while for a small gain and holding for longer term target ($30). Long Gold looking good.
Watchlist long Silver, should be interesting near $16.65.

2015/01/img_5086.jpg

2015/01/img_5087.jpg

20150113 Daily Forex Analysis – NY Close

20150111 Weekly analysis

Shorts EUR + longs JPY and AUD opened last week are looking good.
Looking at Gold, Silver, NZDUSD, AUDUSD and USDJPY one can only have the feeling that USD is topping.

Also worth noting:
– JPN225 and FRA40 are officially in bear markets (3 consecutive lower lows). SPX500 is right there with them but is a laggard
– Talking about laggards, GBPUSD and EURUSD will get there as well but they’re just not ready yet.
– Target @ 106.00 on USDJPY is exactly what i had in mind. Right there with you.

I’m kinda pissed at myself for trading AUDUSD the wrong way. See the 3 pin bars? I traded the one in the middle. Trend continuation signal but versus obvious long term support. Add to that 2 counter trend pins bars with obviously USD weakening across the board and AUD strength i’m still wondering wtf i did there. I look at my journal and just shake my head in disbelief.

Typo, silver is in the Long watchlist obviously.

2015/01/img_5079.jpg

2015/01/img_5080.jpg

2015/01/img_5081.jpg

20150111 Weekly analysis