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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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

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)

GeneMarchbanks's picture

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

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. 

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.

BrocilyBeef's picture

Euro is trash, just located in a different dump.

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

Gene Parmesan's picture

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

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.

XenoFrog's picture

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

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?  

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.

BrocilyBeef's picture

people don't like my safety assets?

Village Smithy's picture

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

DrunkenMonkey's picture

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

GeneMarchbanks's picture

Hail Mary's all around.

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.

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.

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.


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.

Edward Fiatski's picture

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

snowball777's picture

You poor bastard. Best of luck with that wallpaper.

Gmpx's picture

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

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.

slackrabbit's picture


(nod to robocop)


lolmao500's picture

Silver is getting killed.

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..

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.

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...

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.

Edward Fiatski's picture

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

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...

Moneyswirth's picture

Picked a hell of a day to forget my Etrade password

Josh Randall's picture

And to stop sniffing glue 

disabledvet's picture

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

falak pema's picture

why is that? Does triché have tired printing fingers?

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....

Irish66's picture

Shitting their pants again

youngman's picture

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

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.

Edward Fiatski's picture

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

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

Translational Lift's picture

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

Drug dealers giving more to their junkies!!

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.

bania's picture

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

GeneMarchbanks's picture

The deer, God I love the deer.

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 ;)

Kina's picture

Gold and Silver not too bad in AUD.