FX Wi(n)dow Dressing?

Tyler Durden's picture

On a day that was supposed to be as quiet as they get, the now traditional spike in FX vol that we have been observing for the past two months (even as the VIX has plunged to year lows) is back like clockwork. As the chart below shows, the EURUSD is now well over 100 pips higher on the day, and is back to early December levels. The reason, according to some, is that the various global banks, mostly French and US, who have been buying the billions in EURs sold by assorted central banking cartels in the past few months, starting with the BIS and going down, are engaged in some good old fashioned window dressing. There was a time when window dressing applied to stocks. With that now completely priced in, it is time to move on to FX, and shortly thereafter, gold. And speaking of the latter, with the yellow metal at $1,417, and just dollars away from the all time high, it would not be too surprising to see the best performing asset class tracked by Reuters to close the year at an all time high.

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101 years and counting's picture

easiest way to boost every asset class.....especially on what would be a very low volume day.

Oh regional Indian's picture

Currentseas will begin inverse relationships with PM "Value" in 2011.

Let it be so. It is time the circus ended and the curtain was pulled back. 

Let's see it all, naked, harsh, real.

Truth is not bitter, it just is.



Rodent Freikorps's picture

I thought the plan was crash them all together.

firstdivision's picture

That doesn't occur for another 6 months minimum.  This fun up is for EOY accounting and nothing more.  Have no fear, this will fall within a week.   

Rodent Freikorps's picture

I keep getting this mind picture of stampeding a herd arcross a field. And then stampeding them back. Rinse, repeat.

firstdivision's picture

That is all one needs to picture to get a sense of the markets.  What I am waiting for is the stampede of the weak out of gold/silver and into fiat.  That way I can add to my pile on the cheap. 

firstdivision's picture

I wish I was stupid enough to use 100X leverage on my EUR bet today, but then again marginal gains is better than gargantuan losses.

Cdad's picture

Wow...look at the "bang for the buck" good old B. Bernanke got when he intervened on behalf of little Miss Euro last Friday.  Impressive.

But all good things must come to an end, and it is pretty difficult to convince a bimbo to not be a bimbo, and so I am guessing this little crap sandwich is about to go into the trash can...because I don't know anyone that believes in this particular currency cross.

So make a New Year Resolution folks...and short the bimbo before she finally releases her first adult movie, for God's sake.

Note to Bernanke:  quit burning my dollars by swapping them for Euros so that you and criminal syndicate bankers everywhere can keep your jobs.  It is over already.  Let's try not to make this thing any more painful or expensive than it has to be.  DUH!  And you taught at Princeton?

Note to self:  do not send the kids to Princeton.


Ferg .'s picture

It's been insane today . USD is getting smashed across the board . Today's ATR for GBP/USD was fairly close to double the monthly ATR for December .  AUD/USD is at fresh record highs . USD/CHF is at fresh record lows . The Kiwi is soaring , the Loonie is at levels against the Dollar not seen since 2008 . I'm attributing it to year end flows , and quite frankly the fact that all these moves have occured in a week of very thin liquidity has led me into contrary positions . Basically I'm long USD in all these pairs ( except USD/CHF ) going into 2011 . In practically every case these recent surges have absolutely no fundamental backing at all .

firstdivision's picture

I am long dollar and short euro at 1.3420.  One thing I watched for a bit was the EURCHF, now that was a surprising run up as well.

Cdad's picture

Across the board...well, that makes more sense [than the EUR/USD cross] when you think about how criminal syndicate Wall Street bankers were really, really hoping for more champagne money on the whole long oil to $100 trade. 

So what do you do when you are a criminal banker and you get pants'd by the whole supply/demand thingy....ah shucks, you just go out into a thin FX market and blow up the dollar.  Then you send your buddies out onto the Blow Horn [CNBC] to pimp the message that you must own oil because of the weak dollar.

Presto...champagne money o plenty.  And after giving Average Joe $3 per gallon gas for Christmas, you give him $3.50 gallon gas to start his new year.

But have heart...for January is almost here...and with any luck, lots of pink slips will be going out through the criminal syndicate Wall Street banker mail system....soon.


And right on cue, L. Blankfein ramps oil despite supply demand information that once again, and for more than a year now, indicate that oil should cost about half of what it is priced at now...as it ramps for no other reason than L. Blankfein and company really want to try out the "trillionaire" label next year.

Good grief [and by that I mean fuck you Goldman Sachs]



AUD's picture

What is fundamental about long USD?

And why the even longer CHF? In Feb 1985 the Swiss Franc was all of 35 US cents.

gwar5's picture

Everybody is scrambling trying to position themselves for Armegeddon.

Word is leaking out from Ashton Kutcher's Twitter feeds, the end is nigh.

gwar5's picture

Hugo Chavez just devalued the Bolivar 40%.

Second devaluation this year. Highest inflation in the world.

Raided Broker offices to prevent currency exchanges.

Venezuela exporter of oil, but oil business is off 2.2% YOY. 


Rodent Freikorps's picture

Venezuela got exactly what it asked for. Wahhh.

Cult_of_Reason's picture

I though it was because the Estonian banks were forced to buy EUR

Dollar Bill Hiccup's picture

A hard rain is gonna fall ... DAX sells off over a percent, EURUSD takes that back and more into the ETFs.

On a happy New Year note, Brian Ferry does Dylan ...



Kina's picture

AUD what a joke.

GoldmanSux's picture

This is exactly what is happening and answers yesterdays question of why Dudley was meeting with GS FX desk. This boosts S&P EPS so the stock market doesn't tank just yet.

Caviar Emptor's picture

Run, Gold, Run! :)

The fear of inflation is sweeping the nation!

The hold of gold is about to get bold!

Dr. Sandi's picture

Damn, no good rhymes for silver.

DonutBoy's picture

I don't understand the purpose of the window-dressing unless there is a swap or option coming to a close today.  The amount of money required to move the FX market is extraordinary, the payoff would have to be extraordinary too.