Any currency enthusiasts around?

My Poistion EUR/USD short till the 24th of December.

The fundamentals I am relying upon

ECB is aggressively pursuing QE which undisputedly devalues an economy’s currency, this can also be confirmed by the descending trajectory of the price pattern initiated in April 2014 from the 1.38920 mark, after the Federal Reserve put an end to their Quantitative Easing program and the Europeans initiated their stimulus later in the year.

The technicals I am relying upon

The pair’s long term resistance point was seen around 1.16121 level in mid august, the two instances where the market gathered upward momentum took place in Mid September and mid October where the market reached 1.14364 and 1.14781 respectively, falling much short of its mid August resistance.

Consensus

These two events as part of my technical analysis support my fundamental findings and further enhance my confidence that the downward trajectory for the pair has not ended as yet and it is set for one big move before the 24th of December, where the markets are anticipating the execution phase of the federal reserve’s contractionary policy, which will further build upon the declining momentum for the pair.

Current Situation

At the moment the pair is trading at 1.10044 mark.

Events to watch out for:

· US Retail sales Data on 11-December-2015

· FOMC Meeting on 16th – December- 2015

· Industrial Production and Capacity Utilization on 16th – December- 2015

· Consumer Price Index Euro zone 15th – December - 2015

The retail data for the pair is better than the previous month but it did not meet the consensus figure of 0.3% MOM increase, showing an improvement of 1O BPS moving to 0.2 from 0.1. Therefore the volatility today showed a mixed sentiment for the market’s mood.

Low of the day: 1.09279

High of the day: 1.10044

Any thoughts on this trade?

Currently, I am long USD. But that’s just because my wife hasn’t found my secret stash yet. Then I will be short on USD.

lol - I hope she does soon, you are running out on time, my friend!

I think the Fed rate change is fully priced in. The minutes should be dovish, and I don’t think the ECB will surprise with any more dovish announcements before Christmas. In other words, I’ll take the other side of your trade, at least through Christmas.

How does one asses that the rate increase is fully priced in?

ST

you cant access it very accurately quantitatively, but few things you can depend your judgement on would be 10- treasury bonds, price of fixed income securities will begin to drop. You cannot know if it is fully priced in, but you can judge from the period that FED annouces raise of interest rates till now, probably and most of the time the market tend to over-extend or remain more optimistic then what the fed will do, then IF ever the fed agrees to raise interest rates, there might be chance for a reverse effect due to the market’s over-speculation.

Currency speculation is a dangerous game. There is a huge amount of noise in short-term FX movements. Make sure you have good stop losses in place is probably the only advice I have to offer.

Agreed, it is a dangerous game, but the volatility in FX markets is un matched.

Will today is the big day, the day every trader has been waiting for.

I am going in to the FOMC meeting Short EUR/USD!

You state it very very confidently and then hope people believe you.

I dont seem to understand your statement.

Who would i want to believe and what is the point of copy pasting my earlier question in the context of your statement.

As per current polls there is an 81.4 % chance of rate hike tonite! If that is the case this might be the most profitable trade for me personally. Lets see, fingers crossed!

My comment was an answer to your question, not a characterization of what you said.

To be more direct, there is no way to know if “the chance of a rate hike is fully priced in” before it happens. So people state it confidently and hope they are believed.

The only way to know if “a rate hike is fully priced in” is to hear the rate hike announcement and see no reaction in markets from it. However, markets are so full of noise, that even this can be difficult.

The truth is that it’s very unlikely that a rate hike (or it’s absence) won’t make markets react in some way. So it seems very unlikely that a rate hike is fully priced in.

The best one can do is to ask whether the major players have adjusted their portfolios in such a way that a rate hike will not cause undue harm to their positions if and when it comes. I don’t have that info, but that would be the more meaningful question.

If you count gold as a currency (as you should) then, yes, yes I am.

Chad, I expected better from you. Look at the term structure of interest rates. Interest rates alter the forward swap curve between currencies. So if the term structure shows a hike, then the currency forward curve does as well. It has to. 1wk LIBOR last week was ~.16. This week it is .33. Work your math on that.

OK, if that’s what you mean by “an interest rate change is fully priced in,” then I can agree with you that there are ways to try to measure it, but I would have said it differently.

I would have said: “The forward rate curve is priced as if it expects a 17 bps bump in the Fed Funds rate.” Given that most people are imagining the result will be 0bps, 25bps, or 50bps, 17bps up (or even 33bps) hardly sounds like “fully priced in” to me.

I just think that the phrase “fully priced in” is one to be avoided unless you are a talking head on TV and the job requires you to say it with a straight face.

+25 bps. Woo hoo.

^ And USD sells off (at least against the stuff I watch for work, CAD & EUR).

Gentlemen,

Win win situation for every one.

ST

What might be the best measure of inflation apart from the CPI?

I think CPI is a number for the markets.

What might be a number the US Federal Reserve is acting upon…

ST

Any FX online trading platform you guys can recommend? London/UK based preferred. Thanks

SAXO BANK and DUKASCOPY

I would advise you conduct a thorough research on the category of your broker/platform provider.

ECN,DD, STN…etc