That changed in to the open as we almost always see a trend change in to the cash open...
However the move in EUR/USD at this moment looks like little more than a sop hunt.
On a 60 min chart since the latest bounce began, ES has run north of the correlation and there are few assets in the world that aren't heavily correlated, existing in a bubble of their own.
Thus as I have expected and continue to expect, I think the probability is Index futures come back down to EUR/USD's reality lower.
While I don't have time to do justice to broader analysis at this moment with regard to the EUR/USd and the immense $9 trillion dollar $USD carry trade, that's a lot of borrowed $USD's, in fact just about as much as what has been printed between 2009 to 2013. I do think this is an important subject and one I had written about as a sign of the end of the market rally and actually much worse. So as you can probably grasp as the carry trade extremely important as this is how Pension funds, hedge funds, private equity and just about anyone else out there who wanted to leverage up their assets did so. The unwind is the really ugly part and I believe we are already in that phase and not just the $USD, but this is what I'm looking at right now.
As for near term intraday, I don't think the EUR/USD holds up a whole lot longer and there are similar signs in S&P futures intraday.
As for the individual currency futures that make up the pair, lets look at them on 1 min charts as well.
Bottom line, the EUR/USD intraday is seeing deterioration, ES is already well above where it should be in the correlation and all of them are deteriorating in unison as correlation is high.
Although this is a different subject, it's going to be one of increasing importance.
The EUR/USD bounced after breaking some very long term support which is not unusual, we call it a dead cat bounce. It also did so at the exact same time the broader market made this recent volatile bounce as well.
Here's a look then at the mid term/bounce and beyond.
The other half of the FX pair, the $USD on the same 60 min timeframe/chart...
It's what comes next as the F_E_D doesn't want and can't afford a strong $USD. The macro economics may have some downside effect on the $USD, but more than likely the F_E_D will try to talk it down as it doesn't seem very probable that they'll go in to more easing to walk it back down just as they are paving the road for a rate hike, but that doesn't mean they won't come out and have a F_E_D member say something about QE or policy easing to talk the $USD down as it hurts US corporations, multinationals especially as there's an unfair trade advantage to the countries who are devaluing their currencies which right now is nearly every one.
The question is, who may already know this and are acting on it and what does come next, how does Draghi who won't like the $USD coming down after all he has done to devalue the Euro as well as the Bank of Japan, currency wars? I'd say we are already well in to them.
As I said, there's too much to cover right now as this gets very complicated with many other currencies, but from what I've seen, it looks like a broad carry trade unwind is in motion now and may gather a lot of steam sooner than later.
In the mean time, I expect EUR/USD to fall back lower as the dead cat bounce winds down as far as we can see right now, both intraday and over the past approx. 2 weeks.
Also be aware of F_E_D statements from 1 member or a couple, they';ll mention something like putting off rate hikes, maybe even QE4 to try to do something to talk the $USD down, however it would be ridiculous for them to just have opened the door to rate hikes and actually engage in QE4, which I'm just guessing they might mention as it would bring the $USD down, they may seem fickle, they aren't, at least not that fickle, but they do want and need to do something about the strong dollar which changes the whole game board.
No comments:
Post a Comment