Reinko

Forex: Why the Dollar Is Staying Strong

We have to take into account that dollar moves these years are often not good to explain, for example lately European inflation was reported at 1.6% instead of 1.8% (while core inflation still above 2%).

That gave an intraday swing of 2% on the €/$ pair.

Later Obama stated that trillion deficits will be there for a couple of years and almost nothing happens...

There simply is no economical theory that explains such weird behavior; one thing is clear:

Those who have the deep pockets to steer the value of the dollar neglect large parts of what the real value should be.
Don't forget: In the 600 trillion nominal value in the OTC derivative markets a tremendous amount is bounded to currencies; if we would have more insights who has what kind of derivatives you might better understand the weird weird behavior of the US dollar.

It might very well be that if the dollar gets too weak, a few trillions must be paid in the derivative markets...

That is not unreasonable.

Market Nosedive Pushes Dollar Down

Quote from the one before last link in the article above:

Top government agencies are working to supply themselves with much needed liquidity Wednesday, as they scramble to raise capital to salvage crumbling financial institutions on Wall Street. The U.S. Treasury Department is working to raise $40 billion through the sale of cash management bills, which it will then send to the Federal Reserve as they attempt to salvage the swiftly disappearing bedrock of Wall Street.

Comment: For over four years I am studying the US financial system, today I found another thing I knew nothing about:

What are cash management bills exactly? If you can sell that stuff at a 40 billion a day pace, that stuff is very interesting.

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For the rest: Good currency actions observed, gold was hammering hard and I hope the food prices like wheat, soya, rice and grain stay under control. If not:

More decoupling is needed...

Pending Fed Rate Decision, Dollar Loses Steam

Amazing; about 250 pips up in the last 24 hours on the €/US$ pair...

The rumor that the FED will do a 'surprise cut' looks not very realistic:
1) In the first place there is a long tradition of the FED sitting on her hands at this phase of the US eclection cycle.
2) All those 'providing liquidity' programs from the FED (like the money auctions or the bond auctions for the primary dealers) did nothing for the spreads. Why should a 25 basis point cut do?

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About the Juncker words: No Europe is right now not on the verge of recession but in the long run I have not observed one detail that clearly says we will prevent stagflation. There is so much commodity induced inflation in the pipeline at the producer/wholesale level that at the time recession sets in, inflation does to.
Hence for Europe the stagflation expectation is still dominant.

For the USA: Look at your own commodity stuff and price indexes on the import/producer/wholes... level. Beside this: The fundamentals are far more against the USA as against Europe.

Top 10 Currency Trading Tips From Deutsche Bank

A very good strategy is to trade against the big boyz, when they unwind their positions because they are sh*tting their pants it is time to hit the 'execute' button.

I have a golden, a silver and a bronze tip on this.

I only expose bronze:

Look for Central Bank policy setting meetings, when there is no financial news of any significance you often observe (just an example from lately) a sharp rise in the US$/Euro in the hours before the rate decisions are made public.

Hence: Big players like that Chicago sh*t are unwinding.

Of course you must use your brain: What kind of crap will this particular Central Bank come up with?

But if that Central Bank comes up with what most was expected the big players will take their old positions in again and you have a good profit when you have leverage of one thousand...

Remark: The big players can also unwind on the back of the economical news of that day (that is early unwinding in the run up to the Central Bank rate decision).

Again: Always use your brain and if you do not understand the situation; DO NOT TRADE!

Good luck trading the bronze tip...;)

Strategies for Currency Investors

Indeed a nice article, I have tried some demo programs myself and that was big fun.

But the reason I give a reaction is the next:

When you start a demo program they always contact you by phone, to my surprise one of those 'advertising people' told me it was an advantage that they had leverages of up to one thousand times...

This is of course a stupid selling proposition because when you trade leveraged one thousand, you need a big big margin in order to pay that call when it comes.

All leverages above 10 are fake because you can make only smaller trades if you use a higher leverage (when you are a bank it is different, why pay the margin call when you can also classify it as a Level 3 asset?).

But it is great fun and you better use one of those demo's first because I can remember I wanted to buy Canadian dollars, but the pair was noted in reverse so I actually sold them.
So do your thinking because selling Euro/US$ is the same a buying US$/Euro.
And I was looking at my losses and I did not grasp it...