Epic EUR Short Squeeze Sends Risk Soaring, Gold Over 1600

Tyler Durden's picture

The squeeze is on. EURUSD is probably the most extreme example of the squeeze-factor potential of what is at its heart a lot more talk and lot less action. Up almost 250 pips from its pre-summit-statement levels, EURUSD is just under 1.2700 - which in context is only back to 6/21 levels. As we noted on June 3, the epic level of CFTC non-commercial EUR spec shorts were ripe for a squeeze-fest, while on the other hand we specifically said "the pain trade will be any appeasing announcement from Europe." Sure enough we got just that (supposedly) and EURUSD is now up well over 300 pips from those levels as the clear pain trade plays out. The USD weakness has driven commodities higher with Gold reaching $1600 once again (6/21 levels). European sovereigns are (somewhat expectedly given the euphoria - though just how much has actually changed is unclear) also rallying hard on the day but while they have compressed spreads markedly, they have stalled at unchanged on the week (though Portugal remains notably wide on the week). Credit and equity markets in Europe are in sync and have snapped higher to 6/21 levels also (with financials outperforming modestly). Europe's equity markets are all soaring - up 3 to 4.5% - as DAX is now outperforming the S&P 500 on the year once again. Big moves (multiple sigma in bond and FX markets) and yet we can't help but think they were hoping for more than just a retracement of one week's price action.

EURUSD's impressive squeeze strength has torn the USD back to unchanged from 6/21...

Commodities surging on USD weakness, with Gold touching $1600 (at 6/21 levels)...


but while sovereigns are clearly improving; on the week they remain wider (with Portugal notably so)...

and European credit and equity markets are in sync but only at one-week highs...


Charts: Bloomberg

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falak pema's picture

hello roller coaster. The FX kings have to shit in their short pants if they felt Merkel Nein was their sweet wine! 

francis_sawyer's picture

Where's Max Fischer?

Hey Max ~ Wanna "change the subject to SILVER" again today?

Jack Napier's picture

It looks like you did it for him. And I thank you. Silver is the achilles heel of this dog and pony show. It can topple the Morgue singlehandedly, it can replace fiat currency in hand, and it is what they fear most which is why it is the most volatile. They want people to fear it, but they can't stop what's coming. Keep stacking.

LULZBank's picture

Care to explain exactly how it is the Achilles heel of the financial system, with the power to issue currency?

Morgue is just one bank, which can be bailed out with hyper inflation as possible side effect. There are many others.

The losses on their shorts can be covered, if they know what they are doing.

pods's picture

I hate to say it, but you are correct.  When they have access to "liquidity" they can outlast you.

If 2008 taught us any lesson, it was that the FED can provide ($26 trillion) liquidity for their friends and owners.

Still not a bad idea to keep wealth outside the USD, but it will not bring down the Morgue.


LULZBank's picture

Dont hate it, just accept it :)

I am all for converting fiat to PMs, short of buying some other asset you want at a good price, but this mania and religious zeal like belief in PMs is what I am against.

And the "pumpers" no different from Buffet selling his book, just with different set of interest and investment prioirties.

Temporalist's picture

It is really not the same at all.  There has been no asset class more publicly denounced by sell siders than PMs.  There has been no asset class that has done so well for so long that wasn't constantly promoted as having a chance to double, triple, quadruple, like the DOW, except for the PMs.  When the PMs were rising and outperforming everything the "analysts" on the financial "news" channels were silent yet when it drops a fraction it's dumped on. The same "analysts" who pumped stocks before every crash and didn't see the bubble also pumped RE and didn't see the bubble claim that PMs are in a bubble.


It is clear, for whatever reason, that there is a joint effort to sell a story line that avoids the truth about the overall secular trend as well as the performance and promise of PMs especially silver which is the metal with the most industrial interest and growing necessity to meet investor and industrial demand on a shrinking supply.


LULZBank's picture

... When the PMs were rising and outperforming everything the "analysts" on the financial "news" channels were silent yet when it drops a fraction it's dumped on...

If thats your investment thesis, being contrarian to MSM, than good luck.

However, if MSM is manipulating, and its all smokes and mirrors, than why cant it be the same for their approach to PM investing?

Could it not be that, under ZIRP and now NIRP policies and on the other hand CBs also have to print shit loads of Moneez... They are trying to use PMs as monetary policy tool to control and soak up excess liquidity in the markets, in the absence of interest rate manipualation? Just to prevent hyper inflation for a while.

I know this ponzi of financial system will fall apart, someday... but how and when is the question AND how to make the best of it.

Jack Napier's picture

I already told you why it's the achilles heel, try reading more. Silver is a viable alternative to fiat currency. Gold is great for a currency peg, but for hand to hand exchange gold is too large, and silver is king because of liquidity. It is the one thing that can take away their power - if you people are willing to vote with your wallets and buy physical instead of paper chasing like greedy whores. It's not just about taking down the Morgue, it's about taking power away from the Fed and destroying their money printing machine. If people lose faith in fiat, they are done.

LULZBank's picture

I already told you why it's the achilles heel, try reading more.

No you have'nt or atleast not that I've read it. So now, in very few lines, tell me how are we going to use Silver to bring down the Financial system? I might join you guys, and bring my tribe with me too.

Gold is too large? Swiss are thinking about issuing 5 CHF coins with a 1/10th of a gram of Gold in it. Thats much smaller than a silver oz coin. How about that?

You use fiat paper to buy Silver right? Do you (and your comrades) have more fiat than Morgue or any bank or financal institution? If its really that vital for their survival, they'll buy all available silver overnight!

World has used sea shells, lotus flowers and pieces of leather as means of exchange i.e. currency.

Check this video, Greeks are using TEM's for trading not Silver! *Shock* Horror*


Now, explain to me how do you intend to bring down the financial system, without repeating the lines of that hypnotic eyed, mesmerising kind of voiced chap, who keeps banging on about silver in his videos and thinks creation of America was some divine occurence.

Right-on Left-off's picture

Well Gentlemen,

There you have it.  Your classic Planet wide Bear Trap.

If you were a buyer yesterday or just had to grin and bear if you were long ...  Today you are laughing all the way to the bank and on the last day of the month and last day of the 2nd Qtr.

DeadFred's picture

Sadly I sold my rare bull position yesterday after the Supremes failed to do their duty. Between the Bernanke put and the short squeeze I figured there was huge up potential but decided to be sure I could live to play another day. I think the second push of this ramp will break last spring's highs by a bit. Somewhere about S&P 1460 will be a cheap place to short their delusions once again. The bears will win this game, just make sure they don't put you on the disabled list before the end of the game.

LawsofPhysics's picture

Been buying commodities for the last two weeks, now selling.  You do realize that you only "go to the bank" after you sell right?  End of quarter ramps have become sooo predictable.  Wish it would last forever, but it probably won't.

Bay of Pigs's picture

Come on Gene, you were heavily short gold just yesterday. Are you like Robo now and never have a losing trade?

LOL...no doubt

Right-on Left-off's picture

One thang I never do is call a one day reversal a change in trend.  Sometimes it may be two days and then sometimes three days before I switch positions but never never never with a one day reversal.

It's a form of being grown-up and taking it like a man.  And then like today ... Ya never No.  This has happened many times in the past and will happen many times in the future.

Bay of Pigs's picture

A trend? Indeed. You mean like a 12 year trend UP? 

Gene was/is calling for gold to 1400.


Follow the yellow brick road...

midgetrannyporn's picture

The everything is all better relief rally? ha ha

transaccountin's picture

squeeze? lol, not for those who were short since april. euro not even at highs 2 weeks ago. squeeze? lol

bdc63's picture

9:35amE sounds like a GREAT time to be putting a new Euro short position on to me ...


Cognitive Dissonance's picture

Mission Accomplished.

We'll deal with Monday next quarter.

P.S. - Gold and Silver still on sale. Buy buy buy!

Stoploss's picture

Puttin' the spit shine on the plebes 401k's.

fuu's picture

Paging bob_dabolina, Mr. Dabolina please pick up the white courtesy phone.

LawsofPhysics's picture

I don't know if I would call it a squeeze based on the charts for the year but still a predictable ramp, we have been here before.  wouldn't it be great if this shit-show just keeps going and allows me to keep extracting paper to exchange for physical assets of real value?  

LULZBank's picture

If you wait a while, there might be a better bargain.

LawsofPhysics's picture

I think you mis-understand. Just another friday "end of quarter" gift.  I am not buying gold today, but rather watching the commodities I bought cheap all week go higher and I am selling right now.  My point is the shit-show has been sooooo predictable.  I wish it would last forever, but we all know it probably won't.  FYI- All my physical PMs are quite safe.

LULZBank's picture

Thanks for the explaination, makes sense.

May the fleas of thousand Afghan camels infest the crotch of the persons who downticked me and may their arms be too short to scratch. Amen.

Itch's picture

Euro shorts deserve all they get for not bailing already, greedy bastards were still trying to send it to 1.24 yesterday. The amount of selling around that area yesterday was just absurd, it was soaked up in fine style though. nom nom nom, fnar fnar.

sickofthepunx's picture

yes.  buy PMs!

everyone on this blog needs you!

LULZBank's picture

If these bloggers had any sense, they would be shorting when the CBs are and then buying a lot cheaper.

FranSix's picture

Considering that the manipulation of LIBOR is now turning into another financial scandal, gold should be popping.  You would normally expect gold prices to rally on options expiry, but we are seeing that on the close of the quarter.

Gold lease rates are a function of LIBOR, probably along with so many other asset classes.  But dealing with interest rates as if they were a price level is fraudulent to say the least, because if you were allowed to trade interest rates as if they were a price, you could ostensibly sway the whole market.

Gold lease rates have flatlined for months, while sell-offs in gold prices came surreptitiously.  Lease rates should have climed during sell-off days.  The buy-back at the end of the quarter suggests a quarterly settlement, which is on treasuries, which means interest rate derivatives.


riley martini's picture

Debt transfers the answer to all Europe ills , so simple a cave man could do it .  It was a hard fought battle and in the end we transfered some bad debt to the sheep.

Vince Clortho's picture

Think of all those sleepless nights for the CBs trying to decide what to do with all that debt.

MFL8240's picture


magpie's picture

Game over for him. Obama/Soros just saved the world. 

GeneMarchbanks's picture

Zbig, you mean. Common mistake don't stress it.

LawsofPhysics's picture

You forgot your < sarc > flags.  

You may freely choose to eat your broccoli, however, should you not choose to eat your broccoli you will pay a tax or go to jail.  What's that?  You can not afford broccoli because you are busy providing for your family?  Too fucking bad - "WINNING"

magpie's picture

I'm just stating the facts of the hour. I'm also a contrary indicator.

LawsofPhysics's picture

Fair enough, how much longer will things remain so predictable, it is great isn't it?

magpie's picture

Sigh. As always i'm hoping for someone to call the bluff on the new world currency...

El Oregonian's picture

Screw Romney - He's also a Bankster - Send money to Ron Paul!!!

adr's picture

I'm sure there is a demand based fundamental for oil to trade up 5.5% at 9:30AM.

I bet if I take a look at thegas station down the street it won't be $3.39 anymore. Probably back up to $3.79 now. I hate trying to figure out if I should buy gas based on what might happen in the market the next day.

cherry picker's picture

They are all breaking laws every day, Barclay's, GS, RBS and more and getting away with it.

Yet we cannot break laws to increase our financial "wealth"

It makes one wonder why he shouldn't start making hooch, smuggle or grow weed to make some coin.

I have lost respect for governments of all stripes and types and the Supreme Court seems to have lost the bill of rights and constitution.

Ten years from now, they will be asking themselves why a war between rich and poor started.

LULZBank's picture

Actually, it never ended. The poor were just baited into being "hard workers" while the world expanded on new effecient source of energy, working their asses off on Corporate plantations, feeling getting wealthy.

Now thats its done with, the Rich will take back what they gave to the poor to start with.