June 26

Aussie Dollar Hit By Plunging A-Shares

The Australian Dollar has been caught in a four month long sideways range between 0.8000 and 0.7600 as price has bounced around on relative indecisiveness from the Federal Reserve on rate hikes. Recently price has coiled into an even tighter range between 0.7600 and 0.7800 for the last four weeks that is starting to look […]

June 12

Greek Default Could Spark Massive Euro Rally

The last week has seen EURUSD fail to make further declines after three straight very impressive US data points. Non farm payrolls, retail sales and consumer confidence have all beat expectations by a wide margin. Traders continue to scratch their heads as illiquid markets whipsaw back and forth in relatively tight ranges.  What we do […]

June 08

U.S. Dollar and Stocks on the Edge

The S&P 500 index is approaching some very key levels of support today between 2080 and 2070. The 100 Day moving average is at 2084. The middle Bollinger band on weekly charts lies at 2072, this level has only been violated five times since 2009 and a mild correction ensued each time. A bevy of […]

June 02

Greek Negotiations Set off Illiquidity Bomb

Today’s sudden jump in the Euro and large decline in the USD are not based on any factual news or developments. Ten year bund yields jumped 13bps to 0.66%, but the bulk of that move occurred before the FX rout. Rumors and headlines continue to fly about the status of Greece’s talks with it’s creditors. […]

May 05

Big Boys Sellin’ Bonds

There have been a flurry of articles over the last month about emerging market economies beginning to drawdown their FX Reserves. Foreign exchange reserves serve as a rainy day fund: assets accumulated by exporting economies that implement some form of currency peg(manipulation). China is the main user of this strategy, building up a $4 trillion […]

April 27

Money Printing Masks Illiquid Markets

The S&P 500 has risen 319% since the March 2009 lows. This bull market has been driven by a range of factors, but the easy explanation would be as follows: Liquidity in US credit markets was stabilized by the first quantitative easing program launched in 2008, which led to a broad rebound in the economy […]

April 04

US Economy in Flux

The Dollar fell late last week as two key data points showed that the US economy is losing steam. ISM manufacturing data came out at 51.5 which is the lowest level since Spring 2013. The survery missed estimates of 52.5 and is now only slightly above contraction territory. Payrolls were also very disappointing, with only […]

March 16

Can FOMC Be Patient on “Patience”?

Broad market consensus currently says that the Federal Reserve will remove the term “patience” from its statement at this Wednesday’s FOMC meeting, effectively making the June meeting live for an interest rate hike. Eurodollar futures currently show that there is a 20% chance of a June hike, up from 18% on Friday but down from […]

March 02

Much More Room to Sell Euro

Euro shorts remain close to near the all time highs seen in 2012 when Greece teetered on the edge of exiting the Eurozone.  I have noted in the past couple of weeks that unprecedented degrees of monetary policy divergence call for unprecedented amounts of short positioning in this pair, and we have probably not reached […]

February 23

Market Rangers 2

Currency markets have once again settled into impressively quiet ranges. Our last “Market Rangers” post featured eerily similar set ups: annoying ranges across most of the major pairs even the the midst of what seems like a busy period for fundamental news. Europe is somewhere close to a Greek deal, US data is positive but […]