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Draghi Babbles”What Ever It Takes” EU Equities Rise, Nov 18, 2014

ECB Doing “What Ever it Takes”… Again

I have to admit I had a good laugh when I saw the headline this morning. I guess the old “when things get bad , you just have to lie” theory will always kick in when it comes to government backed appointees. Why would there be any other way when we all know the politicians (also known as elites) will do anything and everything to protect their own butts long before they make hard decisions for the common good. I feel its my duty to point out a few things about this dribble. First of all the first “what ever it takes” speech from Draghi was actually a moment of weakness when he was feeling the pressure in one of his first press conferences and had later admitted to Tim Geithner there was no plan to back it. Below is part of an interview with Tim on the subject.

Geithner: [T]hings deteriorated again dramatically in the summer which ultimately led to him saying in August, these things I would never write, but he off-the-cuff – he was in London at a meeting with a bunch of hedge funds and bankers. He was troubled by how direct they were in Europe, because at that point all the hedge fund community thought that Europe was coming to an end. I remember him telling me [about] this afterwards, he was just, he was alarmed by that and decided to add to his remarks, and off-the-cuff basically made a bunch of statements like ‘we’ll do whatever it takes’. Ridiculous.

Interviewer: This was just impromptu?

Geithner: Totally impromptu…. I went to see Draghi and Draghi at that point, he had no plan. He had made this sort of naked statement of this stuff. But they stumbled into it.

I know I and many others have talked about the laws governing the ECB that dont allow buying of sovereign bonds. However Draghi said this yesterday.

DRAGHI SAYS ECB WILL DO WHATEVER IT TAKES, WITHIN ITS MANDATE
DRAGHI SAYS EXPANDED PURCHASE PROGRAM COULD INCLUDE GOVT BONDS

I have to say that nothing surprises me these days, except the level of stupidity those that wield all the power exhibit. Maybe its just that they think we are stupid enough to believe it. Either way its just not right and of course will come back to bite them in the rear sooner rather than later the way things are going.

EUR/USD Slides On USD Strength, Draghi Dribble

While the EUR/USD dropped well before the Draghi speech due to the USD strenght coming back for now. When Draghi used his super powers one would think that if they truely bought the line the extension of the EUR/USD slide would have been greater than the original. Unless of course now the name of the game in chasing yield will be front running the ECB since the Fed is out of the picture for now. Look for EZ stocks to keep on rising as the ECB prints “Within its mandate”

There is no reason to believe we have a direction on the EUR/USD today so I will look to trade the most significant levels either way. The best level for the short is up around the hourly 200 at 1.2486 but if they reach up close to that during Asia they will probably test higher around the 1.2500 psych level. Otherwise if they do make a decent push up and pullback this morning I will consider the Asian highs with a clean set up. The only place I will look for the long during the London session is at yesterdays lows preferring to see a stop run. I would also be happier to see them push the Asian range to around 30 pips as well.

EUR/USD hourly chart 11-18-2014

GBP/USD Finishes Push and Reverses

The GBP/USD did manage to finish the push for some false conviction during the Asian session yesterday only to pullback into the chop leaving it open on direction as well. At this point I do see the probability of it breaking the lows higher than pushing up but thats not enough to give me  a bias since it will depend on the USD strength continuing today. Not much has changed with the levels other than removing the 1.5692 with it being least significant as an abused daily high. The 1.5658 is a good level to short being the NY/London overlap high but does carry more risk unless they widen the Asian range to the lows first. Otherwise the best potential long is at the lows from last week around the 1.5600 psych level. Yesterdays lows are valid but risky with the psych level right behind.

GBP/USD hourly chart 11-18-2014

EUR/JPY Pulls Back On Yen Strength

As I mentioned yesterday there is really a limited amount of reasons why the Yen got strong early in the day. As the day wore on the EUR/JPY just petered out as the USD strength crept in. Again I wont have a bias on this pair today either even though the fundamentals still back pushing higher. However that will need help from the Nikkei as they front run the BOJ. If that dont materialize then it will hover in this range until they decide which direction to push. Right now the best level to short is Fridays high at 145.82 unless these highs hold  and they push it down to leave the Asian box closer top the lows then run the breakout traders during London. I will also be open for a long from 144.90 but would be happier to see a stop run below yesterdays lows and a good entry just in case they run Yen strength on Japan going into recession. It don’t make sense but weirder things have happened lately.

EUR/JPY hourly chart 11-18-2014

Forex News Today

Today the scheduled releases start with inflation data from the UK. The highest impact being the CPI but even if its is close and some of the others (PPI, RPI) miss big then it will be negative for the GBP. I do see the probability much higher for a negative miss as things are only getting worse for the UK.

Later there is German and Euro Zone ZEW Economic sentiment, both expected to slightly improve. This leaves a miss to either side open but as long as its not large we shouldn’t see much unless they somehow think it can effect the “what ever it takes” plan. Of which there isn’t one 😉

The US has PPI data as well expected to still be in negative territory on the headline figure. If it manages to get above zero then it will be USD positive while a bigger drop negative. Late in the day is yet another Fed member speech but I doubt Kocherlakota will say much to move markets.

Asin session traders have a BOJ Press Conference early tomorrow to add excitement to the day. My first thoughts are since they have thrown everything but the kitchen sink in to get growth they will add that too. However as remote as it is they may just admit failure. Did I just type that? Admitting failure will NEVER HAPPEN.

Happy Trading

Chad

Still no joy on getting my Skype account back. I will announce what chat service I will be moving to at the beginning of next week if its not resolved. Not looking good so far.

MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!

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