07 March 2013

USDX : Near the Brink

  • Recent strength in USD is more than just Risk On/Off. From safe haven status, the USD is now the embodiment of the Growth trade. [This USD rally is not Risk Off because equities are firmer, interest rates higher].
  • New dynamic : QEQ(ueue) .. or where a currency is in the QE cycle. From Fedspeak, the market is now convinced the US will be the first to end QE, even if that end may be indeterminate quarters away. Japan and UK has more QE to go, Euroland has Italy's rejection of austerity to contend with, Canada just backed off a tightening bias. So US is way out at the front of the QE exit Q by itself = unequivocally strong USD.
  • Monthly : Overhead resistance at 82.80 vs current level of 82.54. Getting very close to fun and games time. 
  • Trade : Have had on the long USD trade for some time now but just reduced to about half of peak risk last night given the very profitable fine run to near resistance and event risks ahead. Waiting for a break of 82.80 to get me major bullish USD and back to max long again.
  • PS : I am about $20 away from shorting gold on above premises. A close below $1564 does it for me.

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