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Daily Forex EUR/USD, GBP/USD Commentary July 4, 2012

Today we again have the EUR/USD holding in the chop and finding support at Mondays lows. With the ECB meeting and rate decision tomorrow the chances for the market to hold this chop goes up. I do still have a slight bias for the short but it could go either way. Today I will be looking to short from the highs on clear manipulation or go long from the lows. The potential for a longer run is low today.

The GBP/USD is still holding the topping formation from Monday but is still finding support at the 4hr 200ema and has the same potential for the chop today.I do still have a slight bias for the short but I will be keeping an open mind looking for the manipulation at yesterdays low for the possible long. Otherwise for the short I would like to see manipulation at yesterdays high or the high established during the US session. Both are close in price and have a good chance to hold.

Forex News Today

Scheduled releases are almost non existent today with Final Services PMI from the Eurozone that is expected to hold steady.

The UK has its Services PMI data also that is expected to drop slightly. This does have potential to surprise so I will be watching for the manipulation around this time on the GBP/USD

The US is celebrating Independence Day and will be closed for the day. Happy 4th to all my American readers. Have a beer for me.

Local Governments Around The World Have Been Muppetized

The devious actions by the world largest banks never ceases to amaze me. Just how they think they can keep on fleecing the populations around the world and think it wont come around and bite them in the ass just escapes me. Of course we are finding out how they manipulated LIBOR and the heads are just beginning to roll. Even though we all know there wont be any jail time or be-headings if I had my way. But just a little slap on the wrist and a “ok go off and play” business as usual attitude from the bought and paid for politicians. This is literally nuts. It made me so glad I made the right move years ago and got the hell out of dodge and can watch from afar. What really gets me was this article that I am sure will get you riled. Which describes how the banks have been fleecing local governments all over the world making billions over the years while local governments go bankrupt. Here are just a few examples from some studies done recently.
For more than a decade, banks and insurance companies convinced local governments, hospitals, universities and other non-profits that interest rate swaps would lower interest rates on bonds sold for public projects such as roads, bridges and schools. The swaps were entered into to insure against a rise in interest rates; but instead, interest rates fell to historically low levels. This was not a flood, earthquake, or other insurable risk due to environmental unknowns or “acts of God.” It was a deliberate, manipulated move by the Fed, acting to save the banks from their own folly in precipitating the credit crisis of 2008. The banks got in trouble, and the Federal Reserve and federal government rushed in to bail them out, rewarding them for their misdeeds at the expense of the taxpayers.
California’s water resources department . . . spent $305 million unwinding interest-rate bets that backfired, handing over the money to banks led by New York-based Morgan Stanley. North Carolina paid $59.8 million in August, enough to cover the annual salaries of about 1,400 full-time state employees. Reading, Pennsylvania, which sought protection in the state’s fiscally distressed communities program, got caught on the wrong end of the deals, costing it $21 million, equal to more than a year’s worth of real-estate taxes.
The most obvious example is the city of Oakland where a chronic budget crisis has led to the shuttering of schools and cuts to elder services, housing, and public safety. Oakland signed an interest rate swap with Goldman in 1997. . . .

Across the Bay, Goldman Sachs signed an interest rate swap agreement with the San Francisco International Airport in 2007 to hedge $143 million in debt. Today this agreement has a negative value to the Airport of about $22 million, even though its terms were much better than those Oakland agreed to.
The windfall of revenue accruing to JP Morgan, Goldman Sachs, and their peers from interest rate swap derivatives is due to nothing other than political decisions that have been made at the federal level to allow these deals to run their course, even while benchmark interest rates, influenced by the Federal Reserve’s rate setting, and determined by many of these same banks (the London Interbank Offered Rate, LIBOR) linger close to zero. These political decisions have determined that virtually all interest rate swaps between local and state governments and the largest banks have turned into perverse contracts whereby cities, counties, school districts, water agencies, airports, transit authorities, and hospitals pay millions yearly to the few elite banks that run the global financial system, for nothing meaningful in return.

Greece used currency swaps, the biggest of which were with Goldman Sachs Group Inc., to hide 5.3 billion euros ($7.7 billion) of debt from 2001 to 2007, Eurostat, the European Union’s statistics office, said in a May report. When the arrangements were added to the nation’s accounts, it spurred a surge in borrowing costs and triggered Europe’s debt crisis.

The list goes on and on. Everyday I see such things and how not one of these guys is really held accountable it drives me closer to alignment with the conspiracy theorists out there. The world has gone mad and my hope is that when proverbial crap hits the fan that heads will literally roll in the streets as the bankers and their political cronies get swift justice that gets written into history and sets a precedence for what will happen in the future to those who want to do the same. Of course I will be first in line for the job of pulling the rope that drops the blade of the Guillotine.

Happy Trading


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