IronMeteor's  Instablog

I will post my picks here for convencience. This will let my friends/associ... know so they can avoid waiting for my emails that might never come as I am very busy with my research.

The dollar is still a little too long here and its a worry, so I will dodge that by choosing other picks. The best one being short Eur/Gbp. I have a million reasons for being short this pair, but I skip that right now becasue of time and just state the biggest one - The euros are screwed at this FX rate. Ireland and spain will have to leave the Euro zone if it stays here - so it won't.  This is a fundementals pick, which means short run volitility can be high. If you had the bankroll, this is one you can shut off the computer and be up 10X by the end of summer. Its going to .82 or even .77 by the end of summer. If we see .95, which is unlikely after so many have been burned by those spikes, I would borrow money on my house to short it. But as with any FX trade, those short term spikes can be fierce.

I also like GBP/NZ. Its sitting at a very low level and has never stayed there for long in the past. Within 6 months of every trip below 2.50, the thing is at 2.85 or 3.0. Thats up to 20X your 1K lot. It has a small roll too, maybe 3K per year. I am going for this because its a NZ thing. Right now the market is pricing in a UK disaster, but not a NZ one. That is wrong in my opinion. The Kiwis have a major account deficit on par with the worst out there. They have no real business other than Ag. Which might be fine as I am not predicting a meltdown ala Iceland, but what eve... is missing is population issues. They only have 4M people. So per capita, their deficits are gigantic, on par with anything we run here in the states.  I also worked with a lot of Kiwi nati... in the past and they all think the currency is crazy at this level. They want .45 so they can compete with US firms and still afford the travel. I don't think they can continue running 16B deficits for 4M people for eternity. Most Kiwis want a lower FX rate to compete and bring in tourist dollars (which are way down this year). I think they get their wish. This pair is VOLITILE, so any stop will be hit by tomorrow. I never use hard stops anyway, only mental ones, but you can't use a stop on this pair or its gone in a day. It can to cycle +- 4 pennies daily. By the dips, not the peaks on this one. I love anything below 2.50 for a ride to 2.80 minimum.