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April 3, 2015

Dionne Warwick sings the Good Friday Payroll Blues

Filed under: Forex Strategies — Tags: , , , , , , — admin @ 4:43 pm

May 9, 2014

Friday bullet points

Filed under: Forex Strategies — Tags: , , — admin @ 4:43 pm

*  “The governing council is comfortable with acting next time” – Mario Draghi.  Now there is some forward guidance.   Although Super Mario qualified it with the “staff forecast” caveat, the June meeting should prove to be the denouement of the last size months’ cycle of serial disappointment followed by just enough heavy hints to keep markets from coming unhinged.    Either the ECB delivers and markets show a pretense of doing what Draghi and co. would like, or their bluff gets called.  Ultimately, however, a more interesting question is what they ECB could or will do should a modest refi/depo rate cut fail to lower either the euro or front end money market yields, an outcome that has a distinct possibility of occurring.

* Although it scuffled a bit early in the year, the buyback outperformance theme has recently regained traction.  Some of this will no doubt be a function of Apple’s recent announcement and subsequent jump, but the theme has been entrenched for some time.  Anyhow, the total return of the strategy, which has been profitable every year since 2008 inclusive, is now at its highs.

* Don’t look now, but this week’s solid Aussie employment number has sent the AUD vs NZD 1y1y rate spread to the verge of breaking out.    Can the FX cross, still within a stone’s throw of all time lows, be far behind?

*  The flip side to the issue of persistently low wages is, of course, record corporate profits.  On both a pre- and post-tax basis, these are at record highs as a percentage of GDP thanks to a number of supportive factors- among which is the capacity to impose quasi-frozen wages on domestic labor.  The implied corporate tax rate between those two figures, incidentally, is near record lows at 12.38%.

* Finally, a reader posted this in the comments section a couple of days ago, and Macro Man thought it was worth sharing.  This 20-year old interview with Jimmy Goldsmith absolutely nailed the argument that globalization would eviscerate domestic wages and inflate corporate profits, and anticipated Piketty by two decades.  Readers can form their own judgements as to the desirability of this outcome.

August 3, 2013

Friday Charts

Filed under: Technical Analysis — Tags: , — admin @ 3:05 am

Good morning. I made a few changes to the site and it should load faster now. Here are some charts worth a look today. Don’t forget it’s the NFP day (consensus: 184K) EURUSD Uptrend is losing steam after a good run started at $1.28. Intraday studies are currently bearish and it’s time to keep an […]

© 2013 FX Trading Blog

May 10, 2013

Friday Ramblings

Filed under: Forex Strategies — Tags: , — admin @ 4:42 pm

Continued good jobless data has reset USD and US mood in general and there has been a proliferation of US Jobs analysis resulting in line-drawing that extends to 6% unemployment levels after further +200k NFPs. The USD/JPY break was perhaps the sound of the market cracking as this weight was added to that of Abe and EU policy moves and clues.  Whilst everything US is indeed looking better than a lot of everything else, it may be getting a bit short term extended. 

AUD appears to be on the receiving end of Soros / CB de-diversification / pick your bogeyman. Either way we are pleased, but note the sensitivity of Aussie inflation to imported goods prices. You can only make money on bills and AUD up to a point. We will add that the USD/JPY break has pulled many USD crosses through short term targets and though we expect AUD to underperform we are lightening our AUD/USD shorts at this level looking for a bounce to resell on.

Schauble’s talk of loosening his garrotte of austerity around the throats of periphery pre-G7 (why are they holding at a public hotel rather than at “Chequers”?) may just be pre-talk camaraderie, but there is a theme.  Despite weak Italian data we see the Eur/Usd down move abating as growth prospects balance the -ve rate fears and instant USD effect.  It’s still actually in a range.  

Equities in general – Towel chucking from perma-bears, yield calcs on zero cost funding and much much more continue to fuel the boom. We have a piece prepared on background “why buy equities long-term” but its such a common call we are caught behind the curve. We are dip buyers like the rest of the planet. Meanwhile, make us a price on how long it will be before regular daytime TV features stock trading programs again. 

TMM note the mad rush into “safe” assets like XLP, XLU, and the like. TMM have more to say on this at a later point but suffice to say all low volatility dividend payers are not created equal – we will revisit this soon. 

Tesla has proven that there’s bad investment advice, then there’s the advice you get from Sarah Palin. TMM think ultimately better battery technology is a great leveller in EVs much like cheap polysilicon was for solar. TMM think the Suntech chart from 2007 may be instructive here. Some of us were long but are no longer. Tesla worth more than Fiat? Short term that price action has got “dotcom” written all over it. 

On general asset price rises – QE is fuelling asset price rises but doing little  for income. In fact income ratios are falling as asset prices rise. Great for holders of capital but until they withdraw it to spend, the gap of wealth between poor and rich continues. QE has to reach income before it works. TMM have been wondering if just bypassing all the links and handing £5000 to every head of population would be quicker and benefit the poor over the rich.

Commodities:- TMM note that while equities are now trading on concerns of QE, zero financing etc much as commodities did in 2009, commodities are now trading on FUNDAMENTALS. Fancy that. Note crosses like Palladium / Silver – the former will stop being produced at these prices as every South African mine goes under, the latter falling due to structurally declining demand trends ex hoarding which also happens to be going backwards. Its a pity all those commodity funds are getting redeemed just at the time having any expertise has value but that’s life with hedge fund allocators we suppose.

TMM are also wondering if speculation can hold inflation lower than it where it naturally should be. As the speculative drive into commodities, especially oil, seven years ago drove up actual inflation, perhaps the expectation of no/low inflation drives speculative positions into short commodity trades that feed through into real low inflation. If so, they are winding up a coil for a sharper snap back in inflation when the time comes.

Finally for all those long Nikkei / yen hedged – Been a good ride hasn’t it? But crowing demands beer buying for the house

March 9, 2013

NFP Day is Here: Friday Charts to Watch

Filed under: Technical Analysis — Tags: , , , — admin @ 3:06 am

Good morning. The euro had a good run yesterday after Draghi’s comments, who said that eurozone’s economy will stabilize this year. EUR holds onto gains ahead of today’s NFP data. EURUSD Yesterday I was rather expecting this former resistance range between 1.3050-1.3100 to hold, but after such strong declines – “more-than-modest” or even strong corrections Read More

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June 30, 2012

Risk-On Friday

Filed under: Technical Analysis — Tags: , — admin @ 3:05 am

Too bad that all the people who really know how to run the country are busy driving taxi cabs and cutting hair. ~ George Burns Good morning. Euro recovered big-time today, after EU officials in Brussels agreed to ease the conditions for using the bailout funds. EURUSD A correction would be welcome after such rally, so Read More

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May 11, 2012

Friday Questions

Filed under: Forex Strategies — Tags: , — admin @ 4:43 pm

“The world was darkling. The very air seemed brown, and all things about were black and grey and shadowless; there was a great stillness. No shape of cloud could be seen unless it were far away westward, where the furthest groping fingers of the great gloom still crawled onwards and a little light leaked through them. Overhead there hung a heavy roof, sombre and featureless, and light seemed rather to be failing than growing” J.R.R. Tolkien

Despite the sun finally appearing over London today (actually as we write it’s gone again) the financial scene does feel very Tolkienesque especially in Europe where, if they were to reshoot the film,  we would suggest the following cast :

The Ring – the Euro
Sauron –  Weidmann
Saruman – Scheuble
Mordor –  Germany
Mount Doom – Bundesbank
The Nazgul – Bond Vigilantes
Gollum – Greece
Gandalf – Draghi
Frodo – European Economy
Bilbo Baggins – Trichet
Gimli – Merkle
Pippin – Hollande

Elsewhere, we really couldn’t decide which picture of an exploding whale to paste in so instead  pick your favourite here.

Once again we wheel out our favourite trading aphorism “If you want a hedge, go to a garden centre”.  $2bio is really not a lot to a bank of their size and though the world’s media, Volker advocates and all of JPM’s competition are expressing a level of schadenfreude that is verging on Milibandesque, unless there is a systemic threat to the system – which we really don’t see despite the disasternista’s “but what ifs” – this is localised issue and not worthy of shellacking the whole US market and certainly not global stocks.

There is one upside to the event – the resurgence of the word “Egregious”  According to the OED,  “Egregious” is defined as “towering above the flock”, “Prominent, projecting”, and yet it can mean  “remarkable” in a good sense or “remarkable” in a bad sense. We look forward to this word rocketing up the management bullshit charts as it basically means “wow that’s big” but with no admission of failure.

TMM have to rush off now, but leave you with some questions for the weekend –

Can the catch all “unwinding inflation hedges” be used to describe recent market moves, especially in commodities and gold?

Gold. 1480 or 1680 first? We have learned not to mention this relic and have stayed clear of its debate for the last 18 months having found the subject more touchy than Great Aunt Maud’s crack habit. So lets just ask – 1480 or 1680 first?

Are Greek politics modelled on  Monty Python’s “Life of Brian”?  We’ve already had the “what did the Romans/Europeans do for us?” scene and have now moved on to the confusing list of popular people’s parties.

What yield would you have to be offered to eagerly buy Spanish 10yr basef on current information? (Expecting more than “any price lower than market bid” thank you)

Is “Sum of the Parts” analysis more relevant now as this isn’t a global crisis but a set of local issues that can be arb’ed on the global stage. Eg.TEF?

Are we mad to think the best fx trade here is to buy aud/jpy?

Will Spanish banks morph into a single EIB/EFSF backed people’s popular post office?

Should TMM walk away from the 20% deposit they paid on their Greek summer holiday? Yes, Greece again. The family like it.

March 18, 2012

US Dollar Could Find Additional Bids on Solid Friday Economic Data

Filed under: Business — Tags: , , , , , , , , — admin @ 12:27 am

By Joel Kruger, Technical Strategist for

  • Markets locked in consolidation ahead of US economic data
  • US CPI, industrial production and Michigan confidence due
  • Strong showing could ultimately weigh on US equities
  • EURCHF back below 1.2100 following SNB decision

Currencies have been mostly consolidating over the past 24 hours with the Euro finding bids ahead of 1.3000 and USDJPY stalling above 84.00. The Euro has also bounced ahead of some key support at 1.2975, and a break below will be required to open the door for an acceleration of declines and bearish resumption towards the 2012 lows from early January at 1.2620. The economic calendar in North America will be rather important today, particularly in light of the latest Fed decision, with any signs of continued recovery in the US economy to further strengthen the case for a reversal of monetary policy sooner than 2014. Fed Lacker, the lone dissenter at the previous meeting, has already expressed his hawkish view that economic data is starting to show signs of recovery and rates should start to go up in 2013.

Key releases on Friday include US inflation, industrial production and Michigan confidence. This is a nice balance and representation of US data and we would expect to see the US Dollar well bid on an impressive showing. But stronger economic data will not necessarily translate into higher US equities, with risk traders likely to grow more concerned with the prospects for a Fed reversal. Moving on, price action in EURCHF should not be ignored, with the market finally breaking out of a very tight single digit multi-day range this week to clear 1.2100 before reversing yet again back below 1.2100. In their latest policy decision, the SNB reaffirmed their strong commitment to aggressively defend the 1.2000 floor and while the market has been unable to really test the SNB’s resolve to this point, market players are also not looking to push into large EURCHF long positions. Still, it is very hard to argue against buying a cross rate that a central bank has committed to supporting, that offers a positive yield differential and trades by historically low levels. For now, we remain sidelined, but we will be on the lookout for an opportunity to establish a meaningful long position over the coming sessions.




EUR/USD: Last Friday’s aggressive pullback strengthens the prospects for the end of a corrective move in 2012 which has in fact stalled just ahead of 1.3500. From here, the risks are tilted to the downside and a break below next key support by 1.2975 will be required to officially put the pressure on the downside and open an acceleration of declines back towards the 2012 lows at 1.2620. At this point, only a break back above 1.3300 would alleviate downside pressures and delay outlook.

USD/JPY: The market is doing a good job of showing the potential for the formation of a major cyclical bottom after closing above the weekly Ichimoku cloud for the fist time since July 2007. This further solidifies basing prospects and we could be in the process of seeing a major bullish structural shift that exposes a move towards 85.00-90.00 over the coming weeks. At this point, only back under 77.00 would delay outlook and give reason for concern. However, in the interim, it is worth noting that gains beyond 84.00 over the coming sessions could prove hard to come by with shorter-term technical studies needing to unwind from their most overbought levels in over 10 years before a bullish continuation. As such, we would caution buying breaks above 84.00 for the time being and instead recommend looking for opportunities to buy on dips towards 80.00-82.00.

GBP/USD: The market has been costly confined to trade between the 100 and 200-Day SMAs since early February and the latest break back below the 100-Day SMA therefore suggests that we could be on the verge of a bearish break. The key level to watch comes in by 1.5600, and a break and close below this level will reaffirm bearish outlook and open the door for a more significant bearish decline towards the 1.5000-1.5300 area further down. Inability to establish below 1.5600 however, will suggest that more choppy directionless trade is in the cards.

USD/CHF: Setbacks have stalled for now just ahead of 0.8900 and the market could finally be looking to carve the next medium-term higher low ahead of a bullish resumption and eventual break back above 0.9660. The latest break back above 0.9300 helps to confirm bullish outlook and should now accelerate gains. Ultimately, only a drop below 0.8930 negates and gives reason for pause.

— Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email Follow me on Twitter @JoelKruger

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March 10, 2012

NFP Friday is Here: Dollar in Range, Euro and Risk Pairs Pull Back

Filed under: Technical Analysis — Tags: , , , , , , , , — admin @ 3:05 am

First say to yourself what you would be; and then do what you have to do. ~ Epictetus Good morning. It seems that the euro is getting some relief on growing optimism about the Greece’s debt restructuring. But it’s that day of the month again and everyone is waiting for the NFP. USD Index Still in range Read More

© 2012 FX Trading Blog

February 18, 2012

Quick Risk-On Friday Charts

Filed under: Technical Analysis — Tags: , , , — admin @ 3:05 am

The forceps of our minds are clumsy forceps, and crush the truth a little in taking hold of it. ~ H. G. Wells  Good morning. Last two days have been a mix of good and bad for the risk-sensitive currency pairs as the Japanese yen recovered across the board on Wednesday, but switched direction yesterday, on Read More

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