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Rumor Of FX Swap Line Rate Cut Is Euro Hail Mary As Goldman Is About To Be Stopped Out On Tactical EURUSD Trade

Tyler Durden's picture


A dramatic Hail Mary appeared in the FX markets earlier this morning following the circulation of a rumor, since attributed to Goldman sales, that the FRBNY is preparing to slash its FX swap line with the ECB rate, which would in turn make it virtually free to borrow Dollars from the Fed and make the Libor funding market completely irrelevant as the Fed would give dollars to European banks for virtually no money. Frankly, we will believe it when we see it, especially when one considers the source. Why it is none other than the firm's Dominic Wilson who reminded us today that Goldman clients should "Stay long EUR/$, opened at 1.4085 on 18 March 2011, with a target of 1.50 and a stop on a close below 1.35, now at 1.3545"... well make that 1.339 when the supposedly Goldman-initiated rumor hit and has since pushed the currency to nearly 1.35. The problem is this rumor is, without confirmation, patent bullshit, as the last thing the Fed need is for Republican to take it to task, this time completely justified, for sending dollars abroad on a cost-free basis just to bail out Europe again. We would fade this rumor all the way, especially with the EURUSD about 100 pips rich to pre-rumor fair value. Furthermore should the EURUSD close below 1.35, which it will, look for major stop loss signals to be activated which purely on technicals will send the EUR far lower.


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Thu, 09/22/2011 - 09:37 | 1696636 Edward Fiatski
Edward Fiatski's picture

Rumour half-life: 30 minutes.

And don't pity the suckers on Goldman's 1.5 EUR calls for 2012. LOL

Thu, 09/22/2011 - 09:40 | 1696649 unky
unky's picture

1.50 Euro is still possible if another QE is anounced (look, in 2010 the euro was at 1.19 and then went nearly to 1.50 in april 2011)

Thu, 09/22/2011 - 09:49 | 1696690 GeneMarchbanks
GeneMarchbanks's picture

Or if Greece defaults and drops out of the monetary union.

Thu, 09/22/2011 - 09:51 | 1696697 spiral_eyes
spiral_eyes's picture

FX is just a race for who can run the printing presses faster.

Yeah, it's quite interesting to see who is running it faster, but in the end it's all going into the toilet.

Real men price things in gold. 

Thu, 09/22/2011 - 09:51 | 1696698 Edward Fiatski
Edward Fiatski's picture

Big if.


They need a strong USD to kill oil price and get food out of people's fridges in the Arab countries. Can't have more revolutions with oil at 130.

Thu, 09/22/2011 - 09:40 | 1696643 BrocilyBeef
BrocilyBeef's picture

Euro is trash, just located in a different dump.

Safety assets: Gold, Silver, Land, Water, ...shovel, ... gummy worms, ...US Dollar.

Thu, 09/22/2011 - 09:42 | 1696657 Gene Parmesan
Gene Parmesan's picture

I'm long gummy worms (and bears), short peeps.

Thu, 09/22/2011 - 09:53 | 1696706 BrocilyBeef
BrocilyBeef's picture

Gotta be short peeps.

Thu, 09/22/2011 - 10:02 | 1696737 Max Hunter
Max Hunter's picture

anyone long EUR/USD will deserve what's coming to them.. big mistake.. Lower lows... The only thing GS can do is provide shorting opportunities..  Another break below 1.34 is a break through a 4H channel trending down and will be a free fall from there.

Thu, 09/22/2011 - 09:54 | 1696710 XenoFrog
XenoFrog's picture

Luckily there's a sale on silver today. Much to my horror.

Thu, 09/22/2011 - 10:24 | 1696832 Frog-And-Toad
Frog-And-Toad's picture

Do you think you're seeing commodities getting killed because people are selling off contracts, thus making the dollar artifically strong?  

My timing has always been pretty bad, as I seem to make the right plays, but just can't time it right.  I think once people realize that the Twist will put $400 billion in the system as the Fed sells short bonds, there will be a buying frenzy in commodities... Thing is, who knows when that will be?  

Thu, 09/22/2011 - 10:43 | 1696914 Robert Neville
Robert Neville's picture

They aren’t really putting money into the system they are just changing their portfolio allocation. They had hoped that people would see it as an inflationary event but it didn’t work. They are desperate since they are under extreme pressure to stop printing. In the end they will have no choice. In the short term people will sell anything that isn’t nailed down to cover their losses like 2008.

Thu, 09/22/2011 - 09:58 | 1696722 BrocilyBeef
BrocilyBeef's picture

people don't like my safety assets?

Thu, 09/22/2011 - 09:39 | 1696644 Village Smithy
Village Smithy's picture

Spike in GLD volume with relatively small price change. Pivot?

Thu, 09/22/2011 - 09:39 | 1696646 DrunkenMonkey
DrunkenMonkey's picture

Can't blame them for trying .. and those of us that make things in Europe would like it much lower please.

Thu, 09/22/2011 - 09:40 | 1696647 GeneMarchbanks
GeneMarchbanks's picture

Hail Mary's all around.

Thu, 09/22/2011 - 09:40 | 1696650 janus
janus's picture

i guess maybe time to sched. that va-ca to barcelona, eh?

enjoy the ephemeral dollar surge -- it'll be like post WWII days for, oh, as long as it takes the bundersbank to issue that new currency. 

unless chavez and the arabs and putin start demanding gold for oil -- which they very well may.

Thu, 09/22/2011 - 09:56 | 1696714 j0nx
j0nx's picture

They best have spent a lot of their oil money on military and training if they do that because Amerikee will have itself a little terrorist attack that will in turn get blamed on them and used as an excuse to blow their asses back to the stone age.

Thu, 09/22/2011 - 09:42 | 1696652 slackrabbit
slackrabbit's picture

Remember, this is all good according to the Krugman bible.

Please remember to do your bit and set fire to your neighbour’s house.


Thu, 09/22/2011 - 09:43 | 1696658 Gmpx
Gmpx's picture

EUR will be back to 1.40-1.50. The problem is how fast and wide the rates move these days. These moves make any normal non-financial business impossible which leads to job and salary cuts.

Thu, 09/22/2011 - 09:44 | 1696663 Edward Fiatski
Edward Fiatski's picture

Sold to you. LOL I have some Greek 1yr bonds for sale, 130% yield. :-)

Thu, 09/22/2011 - 09:49 | 1696692 snowball777
snowball777's picture

You poor bastard. Best of luck with that wallpaper.

Thu, 09/22/2011 - 10:07 | 1696763 Gmpx
Gmpx's picture

EUR is not Greek bond. EUR is a co-operative currency which makes it the best fiat currency in the world.

Thu, 09/22/2011 - 10:58 | 1696985 edotabin
edotabin's picture

However, it still must be supported by something.  That "something" is the collective will of crooked politicians/bankers. In the beginning they floated Euros around everywhere to build confidence.  Now people are catching on to the scam. As they start demanding answers (things go bad) the effect is like shining light on roaches. They all run for the exits and start the blame game.

People always applaud collective efforts until something goes wrong.

Thu, 09/22/2011 - 10:30 | 1696860 slackrabbit
slackrabbit's picture


(nod to robocop)


Thu, 09/22/2011 - 09:43 | 1696660 lolmao500
lolmao500's picture

Silver is getting killed.

Thu, 09/22/2011 - 09:45 | 1696670 homersimpson
homersimpson's picture

If you look at it from a short term perspective, yes silver is getting killed.. but if you've been around for a while, silver is doing quite well for many here..

Thu, 09/22/2011 - 09:47 | 1696681 Edward Fiatski
Edward Fiatski's picture

That's because you don't trade PM ETFs, either buy it and hold till after the third World War, or get the fuck out of the way.

Thu, 09/22/2011 - 09:52 | 1696701 snowball777
snowball777's picture

Fuck paper.

Thu, 09/22/2011 - 09:52 | 1696702 youngman
youngman's picture

Its kind of like the scene in the Posiden Ship movie.....the people that were walking down lower into the water.....they are going the wrong sell today is the same thing...when the dust settles..there will be fewer banks...lots of stock losses...Bond losses...and gold will be the New World Currency...its has to at this the vaults...people, funds, countries are asking for thier real gold and silver....and want to check it out or move it...would you trust a BAC with your gold right now?????  Not me...

Thu, 09/22/2011 - 09:49 | 1696694 Snidley Whipsnae
Snidley Whipsnae's picture

Gold catching a bid at ~ $1735... Exactly where 'London Trader' said the big money had positioned tonnage buy orders.

Gold with wings... Heading to Asian vaults... never to return to the West.

Am adding physical today.

Thu, 09/22/2011 - 09:52 | 1696704 snowball777
snowball777's picture

Damn flying monkeys!

Thu, 09/22/2011 - 09:54 | 1696709 Edward Fiatski
Edward Fiatski's picture

Hey, we'll re-distribute it aftet the next world war. BIS contacts are in place.

Thu, 09/22/2011 - 09:49 | 1696666 hedgeless_horseman
hedgeless_horseman's picture

At $4.05 this am, that THC short has almost doubled since spring.  Maybe time to cover half and book some profits.




Very bad for providers, so other side is to short THC...

Thu, 09/22/2011 - 09:45 | 1696671 Moneyswirth
Moneyswirth's picture

Picked a hell of a day to forget my Etrade password

Thu, 09/22/2011 - 10:07 | 1696762 Josh Randall
Josh Randall's picture

And to stop sniffing glue 

Thu, 09/22/2011 - 09:46 | 1696674 disabledvet
disabledvet's picture

Again the problem is not a lack of dollars but a lack of euro's. Move along! Move along!

Thu, 09/22/2011 - 10:07 | 1696764 falak pema
falak pema's picture

why is that? Does triché have tired printing fingers?

Thu, 09/22/2011 - 09:47 | 1696676 youngman
youngman's picture

I said yesterday the big announcement was a non event...they had to run back to the meeting room to get back to work on saving the EU...that is up front and center right now if your are a bankster....they don´t give a shit about USA employment....

Thu, 09/22/2011 - 09:47 | 1696677 Irish66
Irish66's picture

Shitting their pants again

Thu, 09/22/2011 - 09:48 | 1696679 youngman
youngman's picture

P.S.   there is a bank run going on right now...its just not televised IMHO

Thu, 09/22/2011 - 09:48 | 1696680 walküre
walküre's picture

The CAD is dropping like a stone.

Buckle up. Last time this happened was 2008 and it was not pretty.

Euro is up strong against CAD and other currencies.

Thu, 09/22/2011 - 09:49 | 1696685 Edward Fiatski
Edward Fiatski's picture

BTFD on USD/commodity currencies. You ain't seen nothing yet.

Thu, 09/22/2011 - 09:48 | 1696684 yabs
yabs's picture

yeah silverf is gegtting creamed but as ong as we have Krugmans and bernaks i'll keep it over paper any day

Thu, 09/22/2011 - 09:49 | 1696687 Translational Lift
Translational Lift's picture

as the Fed would give dollars to European banks for virtually no money

Drug dealers giving more to their junkies!!

Thu, 09/22/2011 - 09:49 | 1696689 falak pema
falak pema's picture

Land of the Oligarchs : they can dump on the market their smelly load, having pumped it dry. Up and down it goes but they never lose. When looking at the Forbes "richest men in the world list" i noticed that G Soros net worth had increased by 33% in the last year. Now its 21 billion (I believe from memory). Just goes to show : An Oligarch never loses if he is smart...

As Mankiewicz's script said in 'the Barefoot Contessa' : Making your first million is an achievement, going from 100 M to 110 M is inevitable.

Thu, 09/22/2011 - 09:49 | 1696691 bania
bania's picture

What's the over/under on the "IT'S ON LIKE DONKEY KONG" graphic appearing today?

Thu, 09/22/2011 - 09:51 | 1696699 GeneMarchbanks
GeneMarchbanks's picture

The deer, God I love the deer.

Thu, 09/22/2011 - 09:58 | 1696720 lizzy36
lizzy36's picture

We all love the deer.

But threshold for its appearence has gotten higher since august.

Must be down at least -400 for its to appear.

Or behaps BAC with a $5 handle ;)

Thu, 09/22/2011 - 09:49 | 1696693 Kina
Kina's picture

Gold and Silver not too bad in AUD.

Thu, 09/22/2011 - 09:56 | 1696717 Dugald
Dugald's picture



Thu, 09/22/2011 - 09:50 | 1696696 Caviar Emptor
Caviar Emptor's picture

The conjurors are running out of tricks, and their "magic" no longer impresses. Things that seemed "real" will get put to the test. The age of "miracles" is coming to an abrupt and ugly end (remember "V-Shaped Recovery?) 

Thu, 09/22/2011 - 09:53 | 1696708 buzzsaw99
buzzsaw99's picture


Thu, 09/22/2011 - 09:56 | 1696716 BrocilyBeef
BrocilyBeef's picture

I think I set too many price alerts. I keep setting them lower but they keep triggering. I'd like to buy about 300-400 ounces in the next 6 weeks. Gonna try and swipe the knife... tomorrow.

Thu, 09/22/2011 - 09:57 | 1696718 Downtoolong
Downtoolong's picture

Seems like it's time to go long the rumor index. I can't believe Goldman missed out on that innovation since they could control and manipulate it like every other index they trade in.


Thu, 09/22/2011 - 09:58 | 1696721 Caviar Emptor
Caviar Emptor's picture

Tyler: In other words, US policy can be summarized as such: Let's be austere with citizens, but let's be wild and crazy with every overseas slutty bank. Again.

Thu, 09/22/2011 - 10:03 | 1696739 scratch_and_sniff
scratch_and_sniff's picture

Euro being thoroughly brutalized here, silver getting killed too, this is hairy.

Thu, 09/22/2011 - 10:04 | 1696744 yabs
yabs's picture

the only green shoots will be the ones growin g out of the Bernanks burial ground at this rate

Thu, 09/22/2011 - 10:11 | 1696773 Dingleberry
Dingleberry's picture

The only question is........what is Ben and the gang going to do now???  Best guess:  he will print, and do secret foreign swaps (which we will find out about in a year or 2), and/or come right out and do QE3.  Which of course means QE4, 5, etc...... Only a matter of time now before a big bank blows up, either here or across the pond. This shit is wobbling out of control, and at a faster rate. 

Thu, 09/22/2011 - 10:12 | 1696780 eurusdog
eurusdog's picture

Although there is plenty of time before the close today, I have news for Goldman, if not today, then soon the EURUSD is going to close below 1.3500. Weak extensions to 1.3200 will be seen!

Thu, 09/22/2011 - 10:13 | 1696782 Which is worse ...
Which is worse - bankers or terrorists's picture

I'm smelling a EURUSD entry point next month :)

Thu, 09/22/2011 - 10:22 | 1696827 PicassoInActions
PicassoInActions's picture

When will Japan interfier? I am losing on jpy crosses

They need to sale few hundred billions of JPY, and at this prices i cant afford any new gadgets, that sux


Thu, 09/22/2011 - 10:27 | 1696845 eurusdog
eurusdog's picture

They will not intervene until you book your loses on those trades!

Thu, 09/22/2011 - 11:04 | 1697009 PicassoInActions
PicassoInActions's picture

That is totaly sux, but   since Obama sold me hopium - i will wait till monday.

All i need a 100 pips up in JPY crosses and i am fine.

But then again... there is always tomorrow and more losses


Thu, 09/22/2011 - 10:22 | 1696828 yabs
yabs's picture

I just hope the bernank stays out the way

the twist is the best thing he has doine so far

IE it had the least effect thus allowing markets to work properly

we need thje crash

the crash is the cure

Thu, 09/22/2011 - 10:24 | 1696838 eurusdog
eurusdog's picture

Silver just cleared nearly +$3.00. Currently at $39.37 Perhaps the signs of control are eroding!

Thu, 09/22/2011 - 10:31 | 1696863 The4thStooge
The4thStooge's picture

Sale on PM's WOOO! BTFD!!!! C'mon $35 silver. Daddy needs a couple hundred more eagles!

Thu, 09/22/2011 - 10:35 | 1696878 yabs
yabs's picture


really last time  I looked it was 37

wow maybne keiser is right and the thing to watch is JP morghans share price which is down at 28 and thus they lose power and control?

he may be right that maybe the only thing to watch

Thu, 09/22/2011 - 10:36 | 1696885 yabs
yabs's picture


really last time  I looked it was 37

wow maybne keiser is right and the thing to watch is JP morghans share price which is down at 28 and thus they lose power and control?

he may be right that maybe the only thing to watch

its 36 where i look where do you get 39?

Thu, 09/22/2011 - 10:49 | 1696944 neevarp
neevarp's picture

Bullishness still prevails in the EUR/USD ...

Thu, 09/22/2011 - 11:02 | 1696999 Edward Fiatski
Edward Fiatski's picture

Indecision, not bullishness. One second it's hanging there, the next it will be kissing the 23.6 fib from Jan's lows.

Thu, 09/22/2011 - 11:30 | 1697143 neevarp
neevarp's picture

And the 23.6 fib level of jan low is _____ ? :)

Thu, 09/22/2011 - 11:37 | 1697177 Edward Fiatski
Edward Fiatski's picture

13361. EUR was stick-saved at 13399, lots of stops below this line. :>

Thu, 09/22/2011 - 11:39 | 1697196 neevarp
neevarp's picture

Oh okay. Thanks. :)

Thu, 09/22/2011 - 13:33 | 1697832 Edward Fiatski
Edward Fiatski's picture

Two rumours are worth at least 100 pips, right? Right. Tight stops will kill you in this volatility; someone wants EUR at 1.35. The higher it climbs, the sharper the fall, those stops below 13400 look juicy.

Thu, 09/22/2011 - 10:52 | 1696959 Mrs Kensington
Mrs Kensington's picture

Nobody can credibly argue for 1.4 to 1.5 in EURUSD any time soon.  Many people have been caught out recently on the "Greece will muddle through", "Trichet will hold or raise rates", and "dead-cert QE3 will send gold/ silver to the moon" trades.  All these are being unwound at the same time and it is rare to see so much denial and false scenario pedalling in one 24 hr period as we have seen since Bennie's fireside chat yesterday.

Greece - they will be pressed into an "orderly" default within three weeks. Only it won't be orderly.

Thu, 09/22/2011 - 10:54 | 1696972 yabs
yabs's picture

its surpriises me how the euro has held up so far

makes zero sense at all

Thu, 09/22/2011 - 11:07 | 1697020 Bold Eagle
Bold Eagle's picture

Come one, the ECB raised rates two times this year. Euro is going strong! Strong dollar makes zero sense.

Thu, 09/22/2011 - 11:33 | 1697159 Mrs Kensington
Mrs Kensington's picture

yes, and the raises are seen as having tipped the PIIGS over the edge. It is also said by insiders that Trichet has too much arrogance and pride to start cutting before the end of his tenure in the autumn.  So it needs a Euro crisis to force him to, and he can blame the crisis, not the terrible policy.

The only reason EUR is up is others are at zirp.  Take the IRs away and you have a bottomless chasm down which that euro will fall.  Roubini calls eurozone recession as of today.  Dollar too week for too long.  GOP and US public (who aren't gold nuts) don't like it.  Imports inflation which stokes social unrest.  Remember that from almost every other country this year?

Thu, 09/22/2011 - 12:35 | 1697543 BarryG
Thu, 09/22/2011 - 17:11 | 1698902 speconomist
speconomist's picture

Ooooh, boy, if this works I'm sooo much donating some money to ZH in order to thank you Tylers.

Short placed, let's see, it's a pity that I don't have it from 1.44 or from 1.38 yesternight.

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