EURUSD - Just Your Normal 2 Day, 650 Pip Roundtrip

Tyler Durden's picture

Given the hoped-for money printing and European sovereign bond monetization from the ECB would tend to reduce the value of the EUR, today's belief that a new government in Greece and Italy will somehow fix all that ills this vast economic region seems to have won. The EURUSD pair has performed a miraculous 650 pip roundtrip in the last two days as Bund yields rise, EFSF spreads deteriorate, and European funding remains blatantly stressed. Perhaps it is Ben's willingness to print vs Stark's that is playing out (among many other things) in this battle to the bottom.


We pointed to the EUR-USD swap spread model last night and EURUSD has indeed retraced perfectly to those expectations. Goldman's supportive stance obviously helped on this thin day

Chart: Bloomberg

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GeneMarchbanks's picture

Stark got the Goldman memo I see.

HedgeAccordingly's picture

Spot gold is quietly up nearly 30 points.... .. 

redpill's picture

Kudos to you Forex traders.  Having the balls to put money out there right now when you know you could get absolutely railroaded at any second is admirable.

ZH Forex Term of the Week: Stop Loss!

GenX Investor's picture

The autobot 5000 trading system has to bid it up before it can sell it off.

What do you call it when everyone is trying to front run everyone else’s front running? A prisoner’s dilemma or a survivor roundtable... What do you do Gordon? What do you do?

steveo's picture

It is a buy program day, no doubt

rape the bears


FinHits's picture

In Stark contrast to the US, ECB does not print (yet). Simple as that.

Euroshorters may be eventually right, if they time their short to ECB print event, but meanwhile USD strenghtening is almost completely based on risk off days. Risk off days have outnumbered risk on days, so Euro has gone down a bit from 1.40, but the Ben-printer USD is the mid-term losing bet until ECB joins the race to bottom with weak EUR.

Germany is stopping the Euro rot, probably unwisely, because weak Euro could fix the European recession and debt crisis to a bearable level. It could be that they will eventually yield at around January 2012, after hammering home that this time big government is dead for a real, and must be implemented irrecoverably, before the savior-like inflationary boost comes from the ECB.

pendragon's picture

anyone else going completely mad trading this bastard?

DormRoom's picture

"How to beat the dealer [1]" in blackjack


you sit at the table, after a lot of low cards come up, and apply the Kelly Criterion for bet sizes.  Low cards tend to help dealers, while facecard tend to make dealers bust.  So you wait for the deck to be bias towards face cards.



It's seminal work in trading and risk management.


All the easy money was made in Mar. 2008-Jan 2011.


You should just wait for the next crash, then enter the game.  You're betting in an environment where the odds are against you. picking up  pennies in front of a steam roller


Right now, wealth preservation should be the going concern.



DaBernank's picture

Don't over-think it. Buy ULE and EUO at the same time and sell at different times. There's a chance to lose or gain a great deal of money from a chart like above. Me, I just converted a stack of actual Euro notes into actual Philharmonics yesterday at the Austrian mint in Vienna. Good Luck.

Cdad's picture

In an environment where so many things are "hard to believe," it is hard to believe that the pole axing on the USD can be sustained.  Again, I suspect it is the Street's best effort to wring every last ounce of black juice out of the oil trade, which has also seen such fubar trading as has the Euro against the dollar.

In any real, functioning market, people rushing in to buy things up 2-3% would be arbed out in minutes...lending credence to the position that there is no market anymore...but rather an out of control Pachinko machine in its place.

GeneMarchbanks's picture


I don't want you to be one of those guys muttering to themselves " The markets are rational, I'm rational X50 " when this is all over so I suggest kindly stepping aside when things look the way they do now.

In addition, I agree with those sentiments. I'm not trading this though.

Cdad's picture


It is EXACTLY at a moment like this, when all rationality is lost and all greater fools rush in...when the most money is made.  

I have no currency positions, however, I do have positions sensitive to currency reversals.  As well, I got my longe RIMM hedge [?what have I become?] on in case the mad cow disease persists.  

pods's picture

Well I guess we know where the equity rally came from.


economics1996's picture

Uncle Ben always ready run the printing press for his friends.  Printing money is so much FUN!!!  Just once I would like to see these elitist work one day on a construction site for their money.

walküre's picture

so... all is fixed, yes?


Just how did Italian bond rates drop so magically overnight? Did the Mafia show up and broke a few hedgies bones or did the ECB buy bonds with money it doesn't have from a leveraged EFSF that nobody understands?

Leverage yourself up to your eyeballs is the name of the game. Then change your name and disappear.

Wash, rinse, repeat. It's all fair game.

A Man without Qualities's picture

Italian bonds are trading in a vacuum at the best of times, no futures, CDS market pretty much dead.  There have been a few changes and a few rumours, but yields have come back which is not much of a surprise.

It's worth remembering that Italy is a G8 nation, the third largest sovereign bond market and a key risk in the banking industry, via derivatives and plenty of other stuff. AND THEY HAVE BEEN HIDING STUFF FOR DECADES.

Italy has been here before and before the Fed stepped in in order to avoid TEOTWAWKI.  It's a pure binary bet, because a disorderly collapse in Italy would be the great reset.  Berlusconi knew this, which is why he was willing to play chicken to leverage Italy's position.  The new guy is a globalist who will take care of the system first, the Italian people second...  

alien-IQ's picture

I have given up trying to make sense of this. Instead, I have decided to start drinking...HEAVILY.

Belarus's picture

The long term trade is the certain trade: the dollar will continue to lose it's mojo no matter what happens in Europe. Trading is for suckers. Think beyond today's headlines gentleman. 

Ragnar24's picture

Agreed, but the daily "irrationality" of everyone else is making me nauseous.  I know, I know... the market doesn't lie, but misunderstanding is not lying... and the collective market has proven it doesn't understand implications of headlines (as volatility would infer).

GtownSLV's picture

But wait there's a rumor I'm starting now that a correction memo to the correction memo to the original S&P memo cutting France soverign is eminent and should reverse the last reversal of the orginal EUR/USD reversal. 

Central Wanker's picture

I don't believe Stark.Apparently nobody else does either.

Germany will pay at least EUR 1 trn (in already granted aid packages, EFSF obligations and rescuing its own banks) if ECB doesn't start monetizing the PIIGS debt.


If you EUR makes up around 2/3 of the DXY, can't this shit just continue back and forth to infinity?

BeatTheMarket's picture

who builds the fastest printer in the world? USA or EU?

catch edge ghost's picture

A classic head up the ass pattern.  Here, the left shoulder is entirely missing, illustrating how easily the head was able to enter the crack.  Notice the right shoulder emerged quickly as well, which in our analyst's opinion, indicates the lack of convictions. And a lot of lube.

gmak's picture

Very interesting. Is it possible to find out the composition of the EURUSDSW user index that the author has (first link in article after chart)? Or is it proprietary?

Waterfallsparkles's picture

After the 400 point Sell off are there any Shorts to Squeeze?

Although, Bernankie likes to print on options expiration day to screw up the Options.  Most stocks now are on weekly options.


chinaguy's picture

Per Adam Button:

An idea is floating around that the ECB/EFSF are considering setting a maximum threshold on yields for each country. They will then defend these levels — in essence pegging yields. ie. Italian 10s won’t be allowed to trade above 5%.

This might be what’s underpinning these moves

alien-IQ's picture

Sounds like they're reviving the Soviet experiment. What can possibly go wrong?

Free markets...what's that?

RSDallas's picture

Couple this with the some 750 point round trip of the DJ.  This has to be fed intervention.  There are no other explanations for the huge round trip ranges that we are experiencing.  It's that or these trading desks are now in collusion (which they probably always have been) to the extent that they have quit trying to beat each other and they are now playing the Fed worldwide in unison.

Thought criminal's picture

I agree something smells here - the market didn't jump after the italian austerity package was approved, but approximately three hours later when there were no significant events. Correct me if I am wrong...

RSDallas's picture

Couple this with the some 750 point round trip of the DJ.  This has to be fed intervention.  There are no other explanations for the huge round trip ranges that we are experiencing.  It's that or these trading desks are now in collusion (which they probably always have been) to the extent that they have quit trying to beat each other and they are now playing the Fed worldwide in unison.

Caviar Emptor's picture

Stock market is just a proxy for monetary stimulus. It already was a bit like that before 2008, now the transformation is complete. That's cause there's very little in fundamentals left to 'invest' in. If monetary gets tight market will tank. If monetary gets loose it will run, but never fast enough to factor in dollar dilution aka decreased buying power of the dollars invested. 

jomama's picture

what. the. fuck.

onarga74's picture

Bank stocks look like they want to roll over.  Maybe The Scone changed his mind and wants to rule Italy en eternità

kito's picture

is the gloom and doom in my head? its sure starting to seem like it........

istt's picture

It is the Beggar Thy Neighbor scenario that is playing out.  Clearly, most investors believe Bernanke will print as fast as the Euro deteriorates, which is why our markets have not dropped off a cliff.  If it were othewise, the huge sums of Euros that are being churned out now and will be in the future would make the dollar rise sharply and in turn our markets collapse.  It is anyone's guess, though, how this plays out.  We know the ending is not good but we just don't know exactly how we get there.

quacker's picture

It is beyond belief, absolutely beyond belief that here in mid November that rallies explained by the word "hope" can still be happening. As in the Yahoo headline "Stocks soar 2% amid Eurozone hopes."

Does anything EVER need to actually get one iota better? .. or can it go on for eternity with rallies due to cancelled referendums, resignations, ECB statements, changes in governments .. just an endless parade of jawboning and bullshit with the actual situation always getting worse. Will results EVER matter?

NotApplicable's picture

Reversion to the "downright mean?"

AldoHux_IV's picture

Price stabaletee = long eur/usd = carry trade = wealth transfer = happy NWO.


derkesthai's picture

My take on the FX action is that TPTB, mainly sovereigns [esp. Germany] are bidding up the EUR to restore confidence. Not too long ago, Merkozy had a meeting, after butting heads saying again they had a plan and the ECB would not be used to, in effect, bail out French banks, flashing a rally in ES and EUR/USD around the world for nearly a week non-stop.

We have not really come off of that October high since. It seemed to me at the time that Merkozy team were instead of bolstering confidence by solving the root problems were attempting to restore confidence by managing the financial markets. They focused on curing the symtoms, not the disease.

Another point; it also seems to me that these huge up-spikes are financed with money that isn't at all concerned with making a profit judging by deep pocketed shorts jumping immediately in with the resultant drive back to pre-spike levels among other things. Now who doeasn't care about making a profit? Those that are using other people's money.

As well, the spread on EUR/USD is attractive and surely a lure to FX day traders exacerbating the volitility. The NZD/USD has been tracking very closely to the EUR/USD and I've been using it as a proxy.

Bottom line; there is no doubt in my mind that sovereigns are now playing at the wall street themed casino with taxpayer money.


derkesthai's picture

That should have been EFSF vs ECB.