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Steady USD/JPY demand out of Switzerland
By Jamie Coleman || July 27, 2010 at 17:56 GMT
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Not sure why, but traders report steady USD/JPY buying in the 87.85/95 region out of Zurich. How do they know? They keep selling to them…
EUR/USD is holding just below Japanese exporter offers in the 88.00/058 area. now at 87.89.
I just shorted USD/JPY s/t
Hart, I think that’s a great move. Eur/Jpy is ripe for shorting as well in my opinion…
Thanks John. I think it might be, getting to be that time.
Hart are you seeing anything on the wires regarding this recent spike in equities this afternoon? I can’t find anything of substance, at least not any good news, that cause anyone to think buying right now is a good idea.
Nothing, and I’m sure Jamie would have been on it like a hobo on a ham sandwich if there was anything of substance. Re: Gold I read that it’s 15% overbought right now. Can’t remember the source. If that’s true a large long position from the 85 usd/jpy area makes good sense after this drop, for a longer term trade.
Hey Hart. Something’s gonna have to give coz EURUSD can’t just linger like this going sideways. To me the downside is the preferred route. What do you think Jamie?
hey hart, i closed the usd/cad long and am now short usd/jpy. i’ve been tempted to short eur/jpy in the 114.2 area with a tight leash but can’t quite pull the trigger. what’s your take on eur/jpy s/t? cheers,
I think fading trending markets is a good way to consistently lose money…much prefer buy dips in rallying markets…
Wait for Asia and the Aussie news later today JR. It’s short on the eur/jpy. I would like to do it from 114.5-115.
Jamie, don’t you get the sense that the market is about to tank? I just don’t have any faith in guidance when it all points to some supposed ‘consumer demand in emerging markets’. If the us, europe and japan are deflationary then the central banks can try to prop things up for a while longer but it’s just going to lead to a bigger plunge. And we are in the midst of what, the largest financial, housing and consumer credit de-leveraging in modern history? imo, we had a nice earnings run, and I’m glad the market has faith in the big corporates, who are the market, but sooner or later – given the jobs, housing, retail data – the jig is going to be up.
JR, check this article out. As El Erian puts it ‘Corporate earnings are backward looking and the key issue is the US labour market’
http://www.bloomberg.com/news/2010-07-27/-noisy-economic-data-indicate-uncertain-outlook-for-growth-el-erian-says.html
Hart, just entered a working USDJPY sell at 88.250…too high?
European data is holding up much better than anticipated…It could be months before the fiscal tightening shows up in the numbers. The stress tests are widely seen as a fraud but a successful one, so far. The US is slow but looks like it may just avoid a double dip…
We priced in a lot of bad news and now we are pricing it out…I think the risks are reflationary rather than deflationary in the coming weeks, few months…It doesn’t take a major shift in the underlying economy but a shift in perception, and that is what I think is happening…
El Eriain’s firm owns a significant portion of the world’s debt. What do you expect him to say? Its bad or badder with those guys…they talk their books relentlessly…If I had a book that big I’d talk it to death too…
Yup, no different to Biggs, Soros and co. I can’t really argue against him though on the employment issue.
Corporates with cash on the books are more likely to hire than those without cash on the books…It is the guidance, not the earnings that is pushing stocks higher. The multinationals see business growing…I trust them more than I trust the government data. Their stocks get hammered if they steer the street wrong…
Thanks for the insight/perspective. If these levels hold, S&P and Oil daily candles (and eur/usd , aud/usd and usd/cad) today suggest a s/t top to me. Maybe we chop sideways through Aug and the first half of Sept, but I expect some serious doom and gloom in late Sept/Oct. Cheers,
When you say ‘reflationary risks’ I’m assuming your talking about government attempts to expand output and curb the effects of deflation, and general risk of them cocking it up (excuse my french
)
To an extent Giles, but we’ve had bouts of reflationary activity almost exclusively driven by Chinese demand in the last year…Anything that is not deflationary, i view as reflationary (commodity gains, improved investor sentiment driving stocks higher, narrowing credit spreads…)
Yes Jamie thanks for a great breakdown of the trade as usual.
You may well be right JR…We’re a;ready several months into this cycle but the looming stress test kept many sidelined…maybe we get an upside spasm, get all the shorts out and lots of folks long, THEN collapse…my view is fairly short-term…early fall at best…
One of the posts early this morning by Gerry was from the China Central Bank ( I think) where they said China growth will slow this year. Surely then, if the reflation activity has been driven exlusively by the Chinese then the reflation trade must be in a bit of danger?
Hey Giles, thanks for the link. I like the pimco guys- it’s commendable that they can manage such a large portfolio and, for the most part, play such an “open hand”. Bill Gross (and El-Erian) reminds me a little of Jim Rogers in that common sense, straight-shooter way. The ten year bond may be towards the top of its down channel, but that is one heckuva down channel (that it is still in).
Thanks Jamie, I definitely appreciate your experience and take on the markets – I think I’m going to take the family on vacation, trade smaller positions on the side, and rest up for the real game in Sept/Oct.
Slower to what, 9-10% GDP growth?
I read a lot of financial journalism and it almost exclusively reports massive risk of impending doom, yet the sun rise daily…I think it’s important to ave panic for the appropriate moments. When I think it;s time to panic, I’ll let you know…ask those who’ve been around here a while…
Cheers Jamie. Very insightful as usual.
Hey Giles cnbc has some gold specialist on right now
Cheers Hart…I missed that one. What did they have to say?
he was talking it up today Giles. Based on foreign central bank demand due to a weak USD. And lack of cental bank stock piles, which is exactly the opposite of what I heard yesterday. You have to take that network for the marketing tool it is though. I personally would not be buying gold right now. Cheers
I saw an article on Bloomberg and they weren’t talking it up but were saying traders are keeping a close eye on the 200 SMA (around 1140 I think). If it drops below that then could be interesting. Do you see this having an impact on AUD at all?
Definitely Giles. I would be in the sell the rally camp with gold right now. It’s to close to that 200sma so I’ll just wait it out right now. Gold is a huge and growing Aussie export. They are opening new mines in Queensland.
Yup, thought that would be the case with the AUD / Gold relationship
re: gold, bis, sdr’s, and new reserve currency speculation
http://www.zerohedge.com/article/guest-post-gold-swap-signals-roadmap-ahead
Thanks JR!