And The Euro Opens Lower

I guess it's not too surprising given there's a $550 billion dollar gap in the EU donation box and seemingly no serious contributors on the horizon.

There are a lot of dynamics in play this week from the G20 to the FOMC. There's also a large Euro short position in place.

As far as the G-20, I don't expect much to come out in the form of Europe's problems, it's just not on the Agenda.

As for the FOMC, I am starting to think that QE3 will be announced at some point if for no other reason, the fact that everyone is selling US Treasuries to recapitalize banks, so new buyers need to be found which is unlikely, which means the "FAD" will at some point likely have to step in in another POMO operation. As far as timing, I don't think they can possibly do anything this soon. There are several reasons, first they haven't given operation twist enough time to work and announcing QE 3 would be admitting OT was a failure. Secondly, Q3 GDP just came in a bit better then expected, the FAD needs political cover to launch QE3 and with GDP better then expected, it will be hard to explain.  Lastly, there's so much anti-Fad sentiment right now, they need Congress to practically beg them to launch QE3, which means they again need political cover and probably in the form of a major market sell-off. Lets not forget the last two meetings in which the "FAD" has essentially told Congress, "You need to clean up your spending mess, there's not much we can do until you do". I don't think they'll want to let Congress off the hook so soon, especially before the "Super Committee" weighs in with their cost cutting suggestions. So QE3 a possibility out of need to sell treasuries? Probably. Soon? Probably not.

As for EUR Short interest, the first thing traders think of when they hear "high short interest" is "Short Squeeze", however FX markets are totally different then stock markets, where profits are measured in pips or moves of .0001%. There is huge leverage and these are smart players, not the typical dumb money found in equities. When major institutions smell blood in the water, the short interest jumps and for good reason and it's not followed by a short squeeze, just ask Lehman and a lot of other institutions that have been brought down by the shorts because there were real fundamental problems in place. This is a different type of investor sophistication and I believe they smell blood in the waters off Europe so I wouldn't be so quick to be looking for a short squeeze.

Wednesday is the FOMC, Thursday and Friday is the G-20. There's the possibility for a volatile week, there's also the possibility for extreme disappointment.