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Optimism from Australia's central bank drove Chinese shares sharply higher overnight, with investors looking to the Aussie statement as a proxy for bullishness on the mainland economy.
Article / 27 April 2012 at 9:12 GMT

BoJ loosens, BIS jobs it intraday, welcome to the new Wild West

Director / Accumen Management
United Kingdom

It seems I have woken up in opposite land today.Nothing makes even the remotest sense anymore, unless of course you simply apply the "do the absolute opposite of what you think you should do" rule.

In which case (assuming you also have a direct line to the Bank of International Settlements/BIS) you’ll do nothing but make money. You’re all sitting there now thinking, that’s it, he’s finally cracked and no helmet will help him now...

Well... No I haven’t entirely cracked just yet, but if we look at even the last 24 hours of events and market reactions to these events, then perhaps you’ll understand what I’m getting at.

So we’ve had Spain downgraded, a EURUSD 50 point sell off, all of which regained so far this morning with the aid of intraday punting from the BIS, who incidentally, now own the daily range in the pair. Having sold it yesterday in size (as they do) at 1.3265/70, they were in this morning buying the lows (after giving Middle East names the heads up first for front running) at 1.3160. Nice and tidy figure in size for the shop that trades vicariously for all the central banks out there. As we say in Australia when abusing Rugby referees, “All day Ref, all bloody day”... So now they simply rinse and repeat and you can be assured they’ll be on top again at same levels as yesterday... careful of the 1.3280 stops though folks, they’re still there and as the market gets a little complacent, it could well be the same front running Middle East names that push us through.

I’ve also been asked just now (for the millionth time) why EURUSD isn’t lower in light of recent events (need I remind anyone that the entire Dutch government resigned this week), well logic would dictates that yes when Spain can’t pay less than 6% for 10yr cash, nor Italy (more or less), Holland no longer has a viable entity running the country, Portugal about to implode, again... et al then yes the cross should be lower, much lower... but again, if you refer to my opening remarks this morning, we’re stuck inside the battle of central banks and those few fortunate enough to be given the keys to the printing presses (BIS). So of course, we remain stagnant.

Then, we move onto Japan, who overnight, again added another 10trn JPY in additional QE (of their own variety), so what happens? The market buys JPY, aggressively. Of course they do, it’s the opposite of what logic dictates should happen... No sense, none whatsoever in this market currently...

Levels and news today, well in light of all of the above, does it really matter anymore?

But for good orders sake, Italian 10yr auction (good luck for the 6% threshold), US advanced GDP prints and Uni of Michigan survey. Not even on my radar to be honest folks...

On the level front, well just look at previous intraday resistance/support areas in the majors, reverse them accordingly and there you have it...

I fear that no helmet will help you today... So instead I wish you all a pleasant weekend.

7y
yburil yburil
Well Europe is the only place in the world where the printing press is shut down by Germany at the expense of growth. That's why we have all this political mess about the EU/ECB. From the a rich person's perspective (long term) like Middle Easts guys EUR is and has been a top hedge against inflation as opposed to USD. So I think the value of the currency is paramount to Germany and yes, a country could even opt out of the currency union would it endanger its value by insolvency. Now for recession, growth, equity markets, obvioulsy it's a different perspective...
7y
Ken Veksler Ken Veksler
Fundamentals simply no longer matter, the Ponzi scheme is in full swing and pontification is something now best done at the pub over a couple of cold ones...
7y
loccogr loccogr
I believe that the best explanation is that someone is buying EUR for M+A activity like DHL, otherwise it is all a big joke.
7y
Umbeluzi Umbeluzi
Great comment Ken! I agree 100%; fundamentals is something to read in the history books...
7y
Rockport Rockport
Markets simply trade the EUR as if it was only Germany's ccy. The rest of the bunch don't matter...
7y
Ken Veksler Ken Veksler
folks, can't say it simply enough, the BIS has become an intraday punter of EURUSD with middle eastern and other sovereign funds playing the frontrunning game... Optionality has EURUSD locked tighter than a Nun's nasty between 1.3000/1.3500 and there you have the most "liquid" cross on the planet... Thoughts/comments/ideas, bring it on... but it's going to have to be one hell of an argument to sway me on this.

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