Get started

Tapering

News Compilation ahead of Draghi's Speech (Long Bias)Draghi is due to speak tonight during the ECB Press Conference. I guess today this is all market will talk about. The morning session up to this point has not hinted much, aside from EURAUD moving up due to AUD bad data, the rest is kinda sideway. Running into this event I don't have any particular insights, given the structure of first statement, followed by Q&A, there will be a lot of choppy price action during the broadcast. What I'm trying to do in this post is to compile the news watch from various source to get a sense of market's expectation. All in all, not likely to trade this like the CAD rate hike as this is not very direct impact on the currency (yet), I'd prefer to avoid the choppy news. News Compilation: MarketWatch: citing Carsten Brzeski, chief economist at ING "The stronger euro has made the ECB’s taper tiptoeing even more complicated . While a clear hint on tapering at this week’s meeting could send the euro even higher , potentially undermining the recovery, room to postpone tapering is limited due to bond scarcity" => Weak to Neutral " A Reuters report last week said the rising euro is worrying more policy makers, leaving an announcement on QE tapering at Thursday’s meeting highly unlikely. The report said an announcement might not be ready until December ." => Weak to Neutral “As the ECB is probably not yet unanimous on the first option, we expect that Thursday’s meeting will again be about what Draghi did not say, rather than what he did ,” => Confusion expected Bloomberg: "the ECB is likely to support the consensus view in the marketplace that, as of January 2018 , it will be reducing the pace of monthly asset purchases ." => Strong "This belongs in the context of a gradual phasing out of the program, combined with rate hikes and, much further down the road , an outright contraction of a balance sheet" => Strong " markets have become very comfortable in interpreting the lack of official guidance on the policy normalization as a green light to increase financial bets on the continuation of a low volatility " => Interesting point, if Draghi don't make a clear guidance or if he does make a hawkish one, EUR will still strengthen BK Asset Management: "For this reason, we think the ECB will go ahead with reducing asset purchases on Thursday" => Strong "Most economists expect the ECB to cut asset purchases by 20B euros and if that’s all we see, EUR/USD will break 1.20 but probably struggle to extend its gains above 1.21. If they cut by 30B or more, EUR/USD should hit 1.21. However if they forgo reducing asset purchases and postpone the decision to October or December, EUR/USD will fall to 1.1800 and possibly even lower." => a very clear guidance and scenario analysis from BK The Guardian: "Time to raise eurozone interest rates , says Deutsche Bank chief" => Strong "The ECB is pumping €60bn a month into the markets in an attempt to stimulate growth, making a total of €2tn, and has operated a negative interest rate since 2014." => now BK's estimate makes sense, that's about a 30% to 50% cut to the supply of EUR in the market My interpretation so far is that general market expecting a strong EUR thus the alpha bet is on the short side. We should watch for a very specific talking point of 1) a guidance of how they gonna taper and better yet 2) an announcement of tapering itself. Paring this kind of sentiment with AUD weak data, I think the pair will drifts past resistance 1.495. We still need more meaningful price action from UK session to get a hint of what European big boys thinking but I will just go ahead and play into the news with a very wide stop and exit before the news announcement.
Long
by vietbach1990
A good opportunity to buy the EuroEURUSD has a "fair value" of around 1.36 according to OCED (data.oecd.org) It was oscillating around that area for a while until a period of divergent monetary policy - the fed stopping their money printing presses and the ECB starting theirs. This brought the Euro to almost parity. But now we are entering a period where both central banks are reducing their QE activity. I think we will start moving back towards that 1.36. Take a small position today because this is nice retracement. A small position allows you to take a much bigger loss in terms of pips. Add once we're back over 1.18/9 and then keep adding on weakness and taking some off on strength.
Long
by TraderVoe
SP500 Bearish Outlook - Close to forming Generational TopLike most of the major equities Indices are in very bullish mode since 2009 low and it seems nothing could go wrong. All the "Fundamentals" point to many profitable years ahead. In fact I have hear a presentation from notable commentator suggesting 2009 will is a generational low ie will not be revisited ever in his life time. I think he is in his fifties. He has shown many charts in his presentation boasting over 30 years of real life experience in the technical analysis of financial markets. Therefore many stock that are languishing at 50% of the retracement of the 2000 high to 2009 low are heading to retest their all times high. If he is correct about these retesting their all time high, then I think they are running short of time. From my chart you can see that we are only couple of months away fro forming truly forming a generational "TOP" that really is unlikely to be retested for more than generation. In fact we might spend another 15 years or so cascading down before forming a lasting low at a level likely below 2009 low. So the wind will change may be by Early Sept to late October with SP500 hitting 2000 zone and could spike into 2030 area. Could the end of Tapering and prospect of rising interest rate be the catalyst? I wonder. Likewise could Gold bottom by then? Check out my published chart Well for the trader this could be an opportunity of a life time. As always, this is my interpretation of the price action. Be sure to do your own analysis before planning a trade.
SP:SPXShort
by DanV
111