Top 5 Banks Plead Guilty To FX Manipulation May 22, 2015
Guilty Pleas From Top 5 Banks on Libor and FX Manipulation Means Something Is Up
Although even I scoffed at the guilty pleas and fines to be paid by the top five banks for their parts in the FX and Libor manipulation scandal. It seems that some were expecting cheering in the streets that something was done.
However something has definitely changed in the way the regulators are looking at the big banks. Remember all the past scandals ranging from laundering money for Iran and Mexican drug cartels (the list goes on and on) that only resulted in fines and a promise to not do it again. Part of the deal was there was no admission of guilt, now that has changed. Even though the amount of the fines is just a drop in the bucket compared to profits earned and most likely just a small percentage of illegal profits made during the manipulation, the guilty plea is what stands out.
Now does this mean that they are finally going to crack down on these banks? Yes to a degree it does but I have a strong desire to look deeper and ask, why now? The only thing that makes any sense is that they (the government/politicians) are running out of ways to cover their own butts. Remember the statement from the EU Commissioner “we know what to do, but we dont know how to do it and save our jobs”.
In short they are running out of patsies. They have done all they can to protect the corrupt banks that have paid off politicians via campaign donations while distracting the people with a so called economic recovery that has failed to materialize for anyone but the rich. They already tried blaming the flash crash on some poor guy trading from his mothers basement just doing the same thing the HFT firms do. Somehow he managed to do it better and made a little money so who better to jail since the bank executives and employees are “too big to jail”. And again the people just took it in stride because there was nothing done about the HFT firms.
So what does this guilty plea mean? The government is getting scared. Thats what it means. They are going to need some top bank heads rolling if they are going to have any chance of keeping their jobs when the house of cards comes crashing down. Even then I have a feeling that when the people do start cheering about people at the top getting their just dues, there will be a lot of government officials sitting in line right next to them. This is just the beginning, I hope.
EUR/USD Holds Inside Range
The EUR/USD did have a little head fake above Wednesdays highs but couldnt produce a sustained move most likely due to the bad data all around the Euro Zone yesterday. This leaves me open on direction today at looking for higher probability entries at the extremes. The best level for a short is up at 1.1166 while the safer long will be at the lows around 1.1078. The Asian lows do coincide with a proven support level but considering the added risk I will need to see them widen the Asian range and play the breakout traders to the highs of it before I consider a set up at the Asian lows.
GBP/USD Euphoric On Better Retail Sales Data
This nice push we have on the GBP/USD does make me bias for the next push up today. I am a little concerned that it was just GBP strength taken up mostly in the EUR/GBP but none the less it would seem as though the UK has the cleanest dirty shirt for now. Providing we dont get massive disappointments on up coming data this should continue. The best long will be from the 1.5644 level but if we get conviction above yesterdays highs before the test lower I will look for the continuation trade from the backside of 1.5691.
EUR/JPY Has A Weak First Push Up
This push to the upside on the EUR/JPY does make me slightly bias for the next run today but I will be cautious of the rejection and topping and more open for the short. I expect it will need help from the EU in either case. The first level I will look for the long is at 134.31 but considering its proximity to current price they may test lower before any push and the better level is down at 134.08. Any shorts will carry higher risk against the push but the best level looks to be the 135.13 while the 134.85 has the hourly 200 as confluence. To take any short today I will need some convincing price action preferably at the higher levels.
The calendar is littered with central bank head speeches today so barring a big miss on the data releases the markets are more likely to be choppy as they digest what they all say. It all starts with BOJ Press Conference starting 30 minutes after the German GDP release at the start of the Frankfurt session. If GDP misses big then we should see some Euro weakness/strength since Draghi dont speak till later and if he does his typical pump/dump then any Euro strength will get a boost before a potential drop. At the same time Draghi starts his dribble the German IFO Business Climate is released so if its positive then the Euro should get a bounce as Draghi starts the pump.
Just before the NY session starts BOE Carney has his turn at pumping the GBP but I expect ban extended move will take some talk of a rate increase thatmay not happen.
The US has their CPI data today expected flat. I dont expect a big surprise upward considering recent data and the probability of a bigger disappointment is higher in my view. Having said that I thought the same on the UK Retail Sales yesterday 🙂
An hour after the CPI release Super Mario and Carney start a speech at the same time. That should be interesting. Then later in the day Yellen takes the podium to spout her dribble on how well the US economy is doing. This will be a fun end to the week. Draghi, Carney and Yellen Oh my!!
Have a great weekend
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