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Goldman Closes EURUSD Trade Two Days After Revising Target To 1.40

Tyler Durden's picture





 

Goldman FX's latest flip flop comes just two days after the firm raised its target on the EURUSD pair.

On January 13th we recommended going long  EUR/$ based on the notion that markets have been too sceptical about the Eurozone’s willingness to address its sovereign issues. Moreover we remain fundamentally USD bearish and expected monetary policy differentiation to also work in favour of EUR/$ with the Fed likely on hold through end- 2012, while the ECB may tighten much earlier.

Since then a stream of positive news on Eurozone sovereign issues has provided the EUR with sizable support and the recommendation has performed largely as expected. Expectations for monetary policy have also moved in favour of this recommendation.

We raised our target and stop recently in expectations of further potential upside. However, over the last few days a lack of additional catalysts has keept EUR/$ largely range bound and the risk reward more symmetric compared to when we initiated our recommendation. As a result we have decided to lock in the gains and look for better opportunities to express our constructive view on the Eurozone.

We close our long EUR/$ for a gain of approximately 2.7% from the opening level of 1.3280. 

Translation: we are all Cramer now. If Green, we upgrade it. If Red, GTFO.  Now pay us our soft dollars.

It also means Goldman's prop, pardon, flow traders (easy to make that mistake - you see they sit next to each other) are stuck holding a whole lot of USDs.

 


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Fri, 01/28/2011 - 12:18 | Link to Comment TruthInSunshine
TruthInSunshine's picture

I used to think Cramer was the ultimate fade.

I have changed my mind. Goldman actually has him beat.

I'd love to see any statistical studies on the inverse correlation of Goldman's horrific calls, made on such a regular basis.

Fri, 01/28/2011 - 12:35 | Link to Comment IBelieveInMagic
IBelieveInMagic's picture

OT, Gold rocketing! Is the correction in PM over already?

Fri, 01/28/2011 - 13:08 | Link to Comment Downtoolong
Downtoolong's picture

I'd love to see their trade record, how many of their recommendations they positioned against, and how many of their flip flops they front ran.

Fri, 01/28/2011 - 12:22 | Link to Comment Stoploss
Stoploss's picture

This is better than comedy central!

Fri, 01/28/2011 - 12:27 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

...we are all Cramer now. If Green, we upgrade it. If Red, GTFO. Now pay us our soft dollars.

Initially, I thought of The Daily Racing Form changing their favorite mid-race, but with The The Giant Squid doing it, it is more like the bookies changing the odds when the ponies are already heading for home.

Fri, 01/28/2011 - 12:27 | Link to Comment Ferg .
Ferg .'s picture

What , they didn't see the technical barriers between 1.3700 and 1.3800 that anyone with even the most basic charting software can observe ? They just thought that after a vertical run of over 850 points we'd just blow higher without a correction ? What a joke .

 

 

Fri, 01/28/2011 - 12:32 | Link to Comment AR
AR's picture

GOLDMAN Sachs  /  The biggest WHORES on the Street.  Bend over for all those who listen to their arrogance, analysis, salesmanship.  We have been getting calls from this firm for clearing, and banking for 3 decades.  Our opinion is, and will always be, "...the biggest whores on the street..."

Fri, 01/28/2011 - 12:34 | Link to Comment ISEEIT
ISEEIT's picture

G.S. offers the best calls if you read them right. I don't have the time to chart it but my gut 'knows'. I'm looking for 1.42 then a drop to 1.26 by end of Feb, although obviously not going to lock in the drop till certain matters in 'revolutionary world' become more clear. Pretty sure Euro goes first. As so long as the 'crisis' stays focused away from the real bomb (US), the tendency to ignore the real problem will shift short term for sheeple to have faith in the E.U.

Once that faith has been pulled out from under them.............Euro drops and faith goes U.S (the sinking ship).

After that?????

Wait for the Goldman call and go long in opposition.

Fri, 01/28/2011 - 12:43 | Link to Comment AR
AR's picture

My point above, was for investors and managers to do their OWN ANALYSIS, and not depend on such firms like Goldman for market calls. In today's environment especially (i.e. very illiquid except for a few being given Fed assistance and money), firms this size can whip and manipulate instruments quite easily, with no recourse in doing so from regulators.

Fri, 01/28/2011 - 12:35 | Link to Comment SheepDog-One
SheepDog-One's picture

GS bunch of criminals, nothing more. OH but lets divert the peoples attention and make it look like we're cracking down by busting some number runner guys in Jersey named Johnny Donuts and Jimmy the Wanker. Oh look, they caught the bad guys!

Fri, 01/28/2011 - 12:37 | Link to Comment Just_Another_User
Just_Another_User's picture

Classic GS...!

Fri, 01/28/2011 - 12:37 | Link to Comment ak_khanna
ak_khanna's picture

The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss. It is similar to rounding up maximum sheep before shutting the doors of the slaughter house.

http://www.marketoracle.co.uk/Article24581.html

Fri, 01/28/2011 - 13:14 | Link to Comment ISEEIT
ISEEIT's picture

So knowing this, why do you not use it to your advantage? Classic 'Art of warfare'. Go gorilla-insurgent. They deal in billions. Take them down by the hundreds......Covert action.

It is so clearly a game.

Fri, 01/28/2011 - 12:42 | Link to Comment Grand Supercycle
Grand Supercycle's picture

USD strength increases further - as warned about for some time now...

http://stockmarket618.wordpress.com

Fri, 01/28/2011 - 13:22 | Link to Comment Orly
Orly's picture

You're way wrong this time, Grand.  Hate to tell you.

Sell USDJPY and USDCHF.  Both headed to all-time lows.

Fri, 01/28/2011 - 13:54 | Link to Comment Ferg .
Ferg .'s picture

I'm thinking he's right with regard to a dollar rally . Especially now that equites are starting to deteriorate . EUR/USD , NZD/USD and AUD/USD are all looking vulnerable .

USD/JPY and USD/CHF are tricky . If risk aversion is mounting then it would be quite natural for these two pairs to decline . However , both these pairs have been in a distribution/accumulation phase for weeks now and with USD/JPY I'm bullish until it breaks and closes below 82.00 .

I know you're short here Orly , but were you a bit worried after that downgrade yesterday and spike above 83.00 ? Don't tell me you didn't waver just a little bit !

Fri, 01/28/2011 - 17:31 | Link to Comment Orly
Orly's picture

Actually, I wasn't short USDJPY but you had said you were long.  I was in the EURJPY, which acted the same way.

The way the EURUSD bounced of a trendline into the stratosphere the day before, then the EURJPY leapt off its trendline in the same way, with a convenently located and well-timed news release, I knew it was part and parcel to the games they have been playing.  So, I wasn't all surprised but rather greatly dismayed that our "government" would play such games.  I was more angry than worried, I guess I should say.

If the Euro tanks along with the dollar while the CHieF and the yen are also getting hammered, that would leave the DXY sky-rocketing.  They're not going to allow this to happen.

They are still rotating through currency weakness in order to prop up the Great British Pound Sterling.  It has been two years and watch the roll.  Euro, Swissie, yen, AUD, USD...see how they rotate through strength.  Now, it is time for the USD to take a hit so that they can bring the Euro down to a sustainable level (~1.11, I think...) and not allow oil prices to fly to the moon.

All of this so that the GBP can fly quietly under the radar in a hope that they can get their fiscal house in order.

Fri, 01/28/2011 - 18:59 | Link to Comment Ferg .
Ferg .'s picture

 Ah right thought you were short . I was contemplating a EUR/JPY short myself but felt I had too much Euro exposure ( I'm short EUR/USD and EUR/CAD ) , it's looking like a nice setup though .

I see your point but what I will say is that the SNB and the BOJ have been vehemently opposed to their respective currencies appreciation , and have intervened  to attempt to halt that appreciation . Merkel , Sarkozy et al have also mentioned the danger of Euro strength . When you have that kind of resistance I think it certainly slows the progress of dollar weakness and in my view goes some way to explaining the remarkable buoyancy of the USD since QE2 was announced last November ( against the Yen it's all about yields  .

 

 

Interesting point about the rotation among currencies . It does appear to be a game at times . Remember back in November when the Euro was soaring above 1.4000 and all of a sudden a deluge of comments arrived from EU officials and the thing tanked hard and fast ? No way that was a coincidence and sort of links with what I was saying above .  

Sterling has been a difficult to trade . It's essentially been ranging for years now .

Fri, 01/28/2011 - 20:32 | Link to Comment Orly
Orly's picture

"the SNB and the BOJ have been vehemently opposed to their respective currencies appreciation..."

Or so they want you to think.  It is all to prop up the GBP.  No doubt about it.  It's the only thing that makes sense.

___________

Have a look at this chart, which shows the projection of where this particluar think-tank thinks the GBP is headed.  I can't agree more- but the question is timing.  You can churn along for months and months, then the floor will drop out of the pair while you're on holiday at the seaside.

I'm watching the GBPUSD pair very closely for the turn.

http://www.forecasts.org/pound.htm

:D

P.S. Hildebrand of the BoS stated that a certain unnamed currency was going to fi'ty-cent.  Most assumed it was the Euro.  It wasn't.

Fri, 01/28/2011 - 20:50 | Link to Comment Ferg .
Ferg .'s picture

I'm surprised though . The GBP is not a prominent reserve currency , nor is Britain the major economic power it once was . I don't see the purpose of propping up the Pound . I do think it will soon fall hard though , to around 1.4700 , consistent in the short term with the analysis in the link you posted . Markets do have a nasty habit of turning when you're on holiday , asleep or just away from your computer screen .

:)

I do think the BOJ were/are genuinely worried about Yen strength . The  Japanese corporate giants like Toyota , Sony and Panasonic et al are the backbone of the economy . The services sector in Japan is very weak by the standards of other developed nations so they need those exporters competitive and strong .

By the way , not sure if you saw this yesterday but take a look . Yields on Japanese 10yrs actually declined despite that credit rating downgrade . Insane . I'm hanging on to my USD/JPY long for now ( from 81.00 ) , but the fact that we've quickly retraced the spike above 83.00 has me wavering .

http://twitpic.com/3twqih

Fri, 01/28/2011 - 21:05 | Link to Comment Orly
Orly's picture

"The GBP is not a prominent reserve currency..."

You have to understand that it is the reserve currency because all the money in the world basically emanates from the Bank of England, aka The Rothschild Bank.  They were ruined, along with all of their evil machinations.  It is your tax dollars at work making sure the root of the ponzi tree doesn't die a violent death.

That perfectly explains the half-trillion dollars in 4X swaps given to the Brits when the crisis unfolded.

http://www.youtube.com/watch?v=n0NYBTkE1yQ

Slowly, over the next few months, I think beginning toward the end of February, the money will start to be repatriated.  I don't have any clue or insider information, I am just going on hunches because something always begins to fail at the end of February.  This time, I think it is going to be the GBP/USD.

Shockingly, my forecasts are for a little lower move than 1.47.  I see it moving to parity or very close to it.  The strengthening of the USD in that regard will have to be offset by other major players, including the JPY, CHF and, for some unknown reason, the Ozzie dollar, hence the floor falls out of USDJPY and USDCHF.  AUDUSD trades sideways for a while.

The Japanese and the Swiss are pissed about their appreciation but they realise that there is very little they can do about it.  Besides, they're in the club and they know that if they get out of line just a little bit, the whole shit-house goes up in flames.

They'll toe the line.

Fri, 01/28/2011 - 21:28 | Link to Comment Orly
Orly's picture

Also, remember that They didn't expect such unrest so quickly.  By the time the revolutionary contagion spreads to Jordan and Syria, across the Mediterranean to southern Europe in the Balkans- Albania, Bulgaria- they will be sweating bullets.

All those young Muslims working in France and all the Pakistanis in Great Britain may or may not do something crazy.  Who knows?  All the uncertainty where there used to be control will, for lack of a better word, freak them out.  They will panic and remove their money from GBP-sourced sourced assets because they know that that is where the real problems lie.

That's one scenario that could very definitely play out over the coming few months.

__________

Take it directly from the horse's ass:

http://www.infowars.com/brzezinskis-feared-global-awakening-has-arrived/

Fri, 01/28/2011 - 21:52 | Link to Comment Ferg .
Ferg .'s picture

Big uncertainty with this latest wave of revolutionary sentiment . Riots and  linked primarily to ... commodity prices .The contagion patterns may be unpredictable but the outbursts are not . People shouldn't be surprised . What do you expect when you quite literally begin to starve entire populations or force them to divert their scarce funds for other essentials like fuel ?

Europe is safe from those types of violent upheavels for now , although mass protests are starting to become more frequent . Had a few of them here in Ireland already and do expect more in the next year or so .

Fri, 01/28/2011 - 21:39 | Link to Comment Ferg .
Ferg .'s picture

Tend to forget that the GBP was the world's reserve currency before the Dollar . Yes the Bank of England does have quite a shady history , something I continue to look into ( intriguing topic ) , although it's a bit more muzzled by the British parliament these days .

ZH had an excellent piece regarding Fed swaps during the worst days of the crisis , wish I could find it .

GBP/USD at parity would be pretty unthinkable in my view . It's hard to reconcile the aggressive QE in the US ( far more aggressive than the BOE's ) with a Dollar move of that magnitude . I do agree though that if the USD is going to tank it'll be against the JPY and/or the CHF . That would quite probably ruin both those nations , especially Japan ,which is on the brink of a serious fiscal/economic calamity as it is . You're right though , they can't do shit about appreciation . They've tried intervening and it's been costly and ineffective .

The Aussie will remain strong as long as :

1. The interest rate differential continues to benefit the AUD/USD carry trade.

2. Australia manages to retain decent growth ( which really means that China needs to retain decent growth ) and avoid asset price collapses .

3. Equities continue higher .

Fri, 01/28/2011 - 22:50 | Link to Comment Orly
Orly's picture

Still shady.  Here, have a gander at this video.  It is pretty interesting.  You should know that I am not one of those clip and paste YouTube video clowns who pretends it is commentary.  I very rarely offer any video proof of what I say.  But, this one is a little- okay, a lotta- strange:

http://disclose.tv/action/viewvideo/59319/Lord_James_of_Blackheath_Speech_on_Foundation_X/

________

"That would quite probably ruin both those nations , especially Japan ,which is on the brink of a serious fiscal/economic calamity as it is."

Your idea of Japan is a bit mistaken, if I may.  The Japanese will be fine because they deal internationally in international currencies, doing most of their buying and selling in the local market, i.e., with Brasilian reals or Mexican pesos.  The only way their operations get hurt is if the money is mandated to be repatriated to Japan.  It won't be.

They do have to get their ducks in a row regarding their debt but just this week, the economy started to show signs of long-dormant inflation and their unemployment rate picked up.  If it is one nation that can work its way out of this mess, it is Japan.

Notice the latest action in the US 10-year note.  It is going down, therefore, the USD goes down against the yen.

In regard to the Swissie, they have all the money and they make their living off of other people's money.  The more people pile into the Swissie, the better for their banks, make no mistake.  They sell a lot more financial security than they do swatches and Toblerone bars, so that would actually play directly into their hands, despite what Hildebrad says.

Sat, 01/29/2011 - 21:22 | Link to Comment Ferg .
Ferg .'s picture

Now that was a genuinely intriguing video . Very strange indeed . In fact , I've just halted my weekly chart preparations to look a bit further into it .

 

To a degree that's true . But when products are maunfactured in Japan itself and shipped abroad there is no escaping the effect of a strong Yen . Just a few days ago Daihatsu ( which does not possess any factories in the region )announced it was shutting down its European business , citing Yen strength as a key cause . Also money may not be mandated to be repatriated but many exporters choose to do so and with regard to profits the effect is fairly devastating .  I read a few months ago that Toyota were beginning to prepare themselves for the possibility of a USD/JPY rate of 60.00 .

I'm not sure I'm confident that Japan is on the road to recovery . Politically the country is a mess with a revolving door of prime ministers . Its demographic situation is probably the worst amongst any of the world's top economies ; a rapidly ageing population with a strict immigration policy is an awful combination . Their huge debts and ineffective banking sector are also concerns .  I get the feeling it's going to take some sort of calamity to instigate the necessary reforms .

If that 10yr yield doesn't start turning around I'm out of USD/JPY . Well , out of a long position . I'll short on a decent break below support at 82.00 .

That's true . The wonders of of fractional reserve banking are probably benefitting Swiss banks more than those of any other nation . However , the once sacrosanct secrecy of Swiss banks is slowly being eroded by outside political pressure , particularly from the US , and a noble band of whistleblowers who've been stealing info left , right and centre  . All those tax evaders will have to look elsewhere soon , back to the Cayman Islands perhaps ? 

Bit random , but just thought this is an appropriate link :

http://www.youtube.com/watch?v=cLUh-CLGiPw&playnext=1&list=PL939A6B23EA4367EC 

:)

Fri, 01/28/2011 - 12:46 | Link to Comment Cdad
Cdad's picture

This whole session is very nearly...almost now...to become about the USD stud man, totally depraved, pissed off, oiled up, and ready to do everyone at GS headquarters.  Another 25 pennies on the Dixie and that closet door will probably give and he'll be makin' movies.

He has put a huge crack in the door of L. Blankfein's coat closet.  You can hear his screaming all the way down the hall...and he is shouting Bernanke's name.  I also understand that cousin Vix just blew past security downstairs.  Holy crap...this is not going to be pretty as every last algorithm, tasked with arbitraging to death every single thing on the surface of the planet, is about to experience a disruption in ones and zeros...as everyone runs for gool.

The Roach Motel is in flames now.  And we all know that without the Roach Motel creation units machine running...there is no reason for individual stocks to even exist.  Tear down the mirror ball!

So...the stick save...where could it come from?  I don't see it.

OMG...the hinges...the hinges are coming off! 

 

Fri, 01/28/2011 - 17:34 | Link to Comment Orly
Orly's picture

Enjoyed that, didn't you?

Fri, 01/28/2011 - 12:51 | Link to Comment alien-IQ
alien-IQ's picture

glad to see this trade working in Nic Lenoirs favor. Go Nic!!!!

(and yeah I went short after $DXY broke above 78)

Fri, 01/28/2011 - 13:36 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The problem with artificially stimulated...let alone massively inflated through government meddling...stock markets...

...the problem is that all those the government has made Faustian, implicit pacts with, to get everything erect - they're going to cash their chips in and bail, contrary to any agreements the government, or The Ben Berank/Sack-Frost/ObaMao, think they have in hand, when something wicked comes their way.

And then the sheeple get spooked when the BSDs no longer feel like hanging long.

And as we all know, that's what makes for waterfall selloffs and meltdowns (which this is not, obviously, but the risk of that event grows literally by the day now, especially given how propped these ridiculous markets are).

Color coming in?

Oh Ben Bernanke, you wily, shrewd, Keynesian, central planner and master fluffer of all that is fiat-based, debt-denominated, toxic in nature, paper and notional - you...until you are humbled by reality, and realize that even you can't control real market forces.

Fri, 01/28/2011 - 14:06 | Link to Comment MarcusAurelius
MarcusAurelius's picture

If you follow these idiots you get what you deserve....anyone happen to see the 4 hour rising wedge last night on the EURO before it fell to 13589 today and falling. Look for 1.3400 before you see any upside. Maybe lower. I took the EUR/CHF for 120 pips and the CAD...these are much safer trades as risk aversion returns. Oh make sure you buy the dips on the USD/CAD....I am sure Goldman would recommend you sell. That these guys actually have a following who believe them any more is somewhat of a mystery in itself?

Fri, 01/28/2011 - 14:19 | Link to Comment Ferg .
Ferg .'s picture

Yeah that wedge was very obvious , and the fact that we we're testing a Fib level and horizontal resistance after a huge run up pointed further in the direction of a reversal . Beautiful confluence of signals to short .

USD/CAD is a bit of a pain IMHO . Choppy as hell .

Fri, 01/28/2011 - 17:39 | Link to Comment Orly
Orly's picture

The other side of the USDJPY/USDCHF short may be the USDCAD long, especially as oil comes down.

Counterbalance.  Ballast, as it were.

:D

Fri, 01/28/2011 - 19:04 | Link to Comment Ferg .
Ferg .'s picture

I'm not so sure oil will be heading south with the current volatility in the Middle East , big spikes today . But the USD/CAD is well overdue a large move to the upside . I only like it as a range trade pair though .

Nicely put :)

Sat, 01/29/2011 - 00:43 | Link to Comment scratch_and_sniff
scratch_and_sniff's picture

Give them their due's. they got one right this year, lets see how they're luck holds out for the remainder of it...i dont envy the way they have to make they're calls.

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