Guest Post by Michael Ashton
The focus over the last few days has clearly been central bank follies. In just the last week:
- The Swiss National Bank (SNB) abruptly stopped trying to hold down the Swiss Franc from rising against the Euro; the currency immediately rose 20% against the continental currency (see chart, source Bloomberg). More on this below.
Continue reading Swiss Jeez
Guest Post by Tim Knight
A fellow Sloper was kind enough to send me this post for you all……
The US $ is close to a reversal and days around Jan 22, 2015 are going to be key. Long-Term the Euro is flawed but over the near term might be time to get bullish on the Euro and bearish on the US $
The Fundamentals for a strong US Dollar and a weak Euro are many:
Continue reading USD & Euro Approach Key Date
Guest Post by Tom McClellan
January 02, 2015
The slide in the value of the euro currency in 2014 was epic, and it makes me leery about wanting to catch a falling knife. But there are 3 big clues that an upturn for the value of the euro is coming. How much of an upturn is not indicated, but it should at least be a noticeable upturn in the charts.
Continue reading Euro is Ripe for an Upturn
Guest Post by Tom McCellan
September 12, 2014
Gold is still in a downtrend, if you examine a chart of gold prices measured in dollars. But gold in euros looks much stronger, and that’s actually a bullish condition, eventually.
Continue reading Gold: Watch € 1000 Level
NFTRH has been bullish the USD and bearish the Euro, Canada dollar and Aussie dollar for quite some time now, most often using this simple weekly chart of various currencies. Months ago we noted USD creeping out of its downtrend (green dotted line) and the Euro falling out of its wedge (red dotted line). Back then, sentiment toward the USD was far different than it is today. So this week the Currency segment included some thoughts (and data) on USD and Euro sentiment as well.
Also of note, while the excerpt speculates that a USD reversal could trigger bounces in commodities and precious metals, these items generally remain bearish until proven otherwise. Not the other way around.
Now everyone knows the USD is bullish and the Euro is going to hell in a hand basket. As long as faith in paper currencies in general remains intact, I think that will be the trend. But USD is over bought to a degree that we could actually see a significant – if temporary – reversal of these trends.
Continue reading NFTRH 307 Excerpt; Currencies
“First, it is committed to experimenting even more with its use of unconventional monetary policy, including by taking the deposit rate even more negative and starting a program to purchase asset-backed securities.”
What the ECB’s Moves Mean for the World by Mohamed El-Erian
He lays out Draghi’s scheme pretty well. Read a good article by a smart man. But the problem in Europe is that the Euro strength they are trying to leverage was simply a counter trend reaction out of the first ‘acute’ phase of the Euro crisis in 2011. In essence, they are leveraging a 2 year Bear Flag (or Rising Wedge) in the Euro that always was likely to fail at the big trend line. Yeh, that should work well for Europe.
Oh but then there is Fortress America. Our currency is strong and our markets booming. Nothing wrong here! Well, we’ll see how long the ISM for example, stays strong with the USD becoming persistently strong.
Wasn’t the whole premise of the US recovery its ability to compromise Uncle Buck? I’d imagine that US stocks can go well higher on the old ‘King Dollar pulls in global liquidity’ play, but there is a shelf life here if Unc gets persistently strong with two drivers at his back; the Euro trash fest and US policy that could have its hand forced toward tightening sooner than maybe the majority now thinks.
As I wrote the other day, it is hard to know exactly what will play out when, but it sure is getting interesting.
[edit, 8.1.14] SPY short covered, EWP short ongoing. [edit 2] FAZ sold. EWP still ongoing, probably for a longer hold.
How perfectly did this crap rise to test the breakdown and then drop? My stop as noted last week was a rise above 43, so I still hold Spain (Europe’s version of junk bonds) short, along with the chunk of SPY also noted. No leverage, just short. I am leveraged short against the Financials however, with FAZ, bought yesterday (conveniently noted today, so distrustful sorts feel free to discount it) on its chart pattern. This is starting to feel sooooo January 2014.
Back on EWP, it (along with Italy’s iShares EWI) was an indicator to the speculative potential (i.e. manic excess) over there in Europe since the middle of last year. The target was in the low-mid 40’s and damned if it did not get there off its lows below 20.
Continue reading Euro Junk, Perfect Backtest