hedgeman

The End of Gold, Part Two

Gold will surpass last years highs and our view is extension towards 1200. If this rise happens orderly and not in a blow off top manner it may have further to go.

Anyone trying to go long without a gigantic stop loss looses at least part of his position before it moves higher. Weak longs are washed away therefore limiting supply higher up. Since it is hard to make money as a leveraged bet on gold usually this means it is not over yet. I also like the monthly charts.

I do not pretend I know why markets move where they move and will therefore choose not to "analyse" further. KISS (keep it simple stupid) shows it made a brake and has room to the uspide on a daily close above 935.

Artificial U.S. Dollar Rally Is Coming to an End

We are witnessing a hystorical experiment. If it works Ben & co. will go in the history books as great thinkers, if it backfires it will be blamed on the "crisis" of whatever sort. There is no risk for policy makers and that's what will bite at the end.

It is easy to see a hidden subsidy to banks when FED purchases the Tbonds and Tnotes and banks realise great profits and hence improve their capital base. FED will buy the top (quantitative easing) and there is a direct cost of abt. 150 billion which will be banks "improved capital". TARP is a smokescreen, the bigger transfers take place between the FED and its owners.

After FED buys long end from the banks then it will be time for some 10-30 steepeners as a strategic longer term view based on simple fundamental reasoning.

Three Possible Explanations for the Dollar's Strength

DX is a real surprise at this levels. We are adding to our shorts instead of stopping it since short EURJPY and USDJPY positions are performing nicely.

Time To Hedge Dollar Exposure

USDJPY target 90 by year end. Added to shorts above 107.00, the train is about to leave the station.

Dollar Shows Resilience As Safe-Haven Currency

Just buy JPY ag EUR and USD. USDJPY manipulation is key to USD correction. It is still just a correction within a bear trend with a target of 65.xx for DX...

Disclosure: Short EURJPY and USDJPY.

Whither the Dollar? Currency Trends and ETFs

Is the dollar just bouncing off its summertime lows, or is this rebound the beginning of a new upward trend?

USD is in correction mode (DX 81.xx target). Still surprisingly fast advance, no corrections, official names can be "felt" in the market action. Don't let behind the doors deals between US and Asia (China) fool you into thinking USD is now fundamentally bid. It is still fundamentally weak however since the latest carnage USD shorts will be more carefull and the rate of descent will be slower. Our target remains DX 65.xx zone, however it is hard to estimate the interval (well it is always hard, harder this time since govie USD bulls do not follow the same investing rules as other players) Best guess at moment 2q 2009....
We still remain JPY bulls (ag. EUR and USD).

Disclosure: short EURJPY and USDJPY

The Dollar Can Continue To Rally, Despite the Weak Economy

USDJPY has to rally above 113.00 and close the month of September above 113.00 for the USD rally to have more legs (not a likely scenario at present in our view). The dynamics of the upmove of DX is astonishing indeed and probably has further to go. DX has room to 81ish through EUR and GBP fire sales. There should be an interim correction to 75.50 - 76.00 levels first if 81 should be seen.

Meanwhile JPY is quietly setting the stage for a rally and JPY will be the winning currency in the 12-18 month frame.

Disclosure: short EURJPY and USDJPY.

The Euro's Long Run Is Finally Over

It is not over yet.


EURJPY 162.00, watch for daily close bellow. We should see a fast drop to 150 if that happens. In current conditions it is my belief that USDJPY will take more heat and this should stop (reverse) the rising USD. Long EURJPY positions (used as proxy long commodities) are relatively large and part of EURUSD selling was unwinding the EUR part of these position. The rise of USD happened much faster then anticapted and USDJPY is expensive longer term above 110.00. Providing defense of 162.00 is succesfull I do not exclude a rally to 115.00 but there the fun is defenitely over.

As for the EURUSD... it will take 2-3 quarters and final spike to 1.69 in 2009 (65.xx in USD index) before it will finally be over. Important levels (short term 1.4630), longer term 1.36-1.42 area will serve as accumulation area. Since momentum is extremely strong picking a bottom before we see a higher weekly close is not advisable.

Forex Wrapup: Dollar Benefits As Traders Focus on Weak Economies Elsewhere

We have to diferentiate between "focus" and forced liquidation of positions due to eroding capital. Next to move? Should be EURJPY.

EURJPY is standing on critical support levels, bellow 162.00 it will start to brake USDJPY advance and should provide a temporary relief for the USD bears. Since EURJPY was a long commodity proxy for the past few years it should revisit sub 150 in the first round. Since EURJPY is in a distribution phase for weeks now this commodity corelation seems to be broken however it will return. The move will most probably be very fast after 162 gives way on daily closing basis. This very popular carry trade is the last to brake and since capital is severely depleted by fast moves on other fronts the liquidity will be very poor and will exacerbate the move. If USDJPY brakes above 110.80 on daily closing basis the downmove of EURJPY could stall (for a short while only). Levels to watch are 165.10, 164.45 and 162.00-50 area (here defense is expected).

Long commodity, short equity, short USD and carry trades strategies unwounding on an overcrowded illiquid summer market. Fundamentals have limited impact at present.