Short note leading to "exciting" end to the week with FOMC (tonight), G-20 from tomorrow onwards, and Sundays German Election. We had our weekly investment yesterday and it was not much of an event to be honest - I will write the usual log for it later tomorrow, but bottom line
There are no signs of this "liquidity driven" market stopping for now..
Going into Fed and G-20 we note with some surprise a couple of central bank moves: Bank of Canada announced yesterday on their web-site:
BANK OF CANADA TO END TERM LOAN FACILITY OCTOBER 28
BANK OF CANADA TO END PRIVATE SECTOR PRA PROGRAM OCTOBER 27
BANK OF CANADA MAKES LIQUIDITY PROGRAM ANNOUNCEMENT ON WEB SITE
BANK OF CANADA TO END TERM LOAN FACILITY OCTOBER 2
BANK OF CANADA TO END PRIVATE SECTOR PRA PROGRAM OCTOBER
BANK OF CANADA SIGNALS END TO SOME EMERGENCY LIQUIDITY PROGRAM
Bank of Norway the today announced they were considering hiking rate
These are early leaders but it is clear indication that most centralbanks are now at least considering their exit strategy. This is ONE MAJOR MACRO change which needs to be monitored into-FOMC and G-20 - the consensus is for all meetings to "promote and confirm the bias for no-exit and loose monetary policy". Risk is for less "bearish comments" than expected...
The second and more relevant issue is the US Dollar: There is NO sentiment or positions supporting the US Dollar.... but with Gold above 1.000 US dollars and US Dollar falling each and every day the central bankers can not IGNORE the warning signals.
The risk from here is that the central bankers realise that a strong US dollar will be in the interest of the US. The only way to hold down the 10 year yield (as proxy for funding price of US deficit) will be to make the US dollar stronger in order for foreign investor to at least make money on the currency. Clinton understood this - and so did Summers who has major role in the new joke of an administation
I expect some periphael changes in US willingness to accept continued weaker US Dollar - if not at the G-20 then in Fed official comments...
Buy some 3 month USD c EUR p.. here - Europe is toast @ 1.4800, but as Jesper correctly says: Who cares? The politicians are afraid to do the right things as waning growth and rising unemployment are more "tangible" issues to deal with..
Remains the same - looking to exit long and go short...but I'm alone
Some links for you:
Fed said to start talks with dealers on using reverse repos
Stock rally will end within six months, Tice says:
FX Concepts: S&P has 2 weeks 'til tumble starts'
The Fed's dollar conundrum