From Bloomberg’s Richard Breslow
As we wait and use the current lull to ponder what Chair Yellen and non-farm payrolls will bring, it’s probably not a bad use of time to remind ourselves of what remains trading reality. Especially in the context of the ECB, BOE, SNB, BOJ and Fed all having meetings less than a month away. And all of them, in their own way, in play.
With narrative so clearly following — not leading — price action, it’s worth noting where traders continue to perceive opportunity. You’ll notice I didn’t say “value” because it’s also necessary to remember why certain levels are so repeatedly tested
The answer, of course, is that price discovery in a world of central bank price fixing must factor in where it’s advantageous to front-run the “house”, regardless of price
EUR/CHF, once the clean arbiter of European angst, has been a clear trading buy for three months at 1.08, with virtual instant gratification. Even on U.K. referendum day it held on the close. It’s been folly to sell at this level, yet traders have done so over and over. Fear over greed. It’s the difference between currency and equity traders. The better greed has been to fear the SNB
The Fed likes to whinge periodically about dollar strength. It’s kept a lid on things. But the three times since January 2015 the Bloomberg dollar index could be bought against 1150 its been a painless trade. Something to consider when we’ve been probing 1160 again. Even if you still think September being live is hokum
For this week, the most important tell on sentiment will be the U.S. Treasury auctions. Especially as they involve the two-year and belly. Yesterday morphed from “uh, oh they’re hawkish” to “I knew I should’ve bought the damn dip.” Buy every dip when facing the possibility of a third big NFP in a row? Sure, if you believe in the status quo
Within the ranges, fundamentals can matter. But on probes of any extremes, ask not what you can do for your P&L, but what your central bank is about to do to it
via http://ift.tt/2bt9VLI Tyler Durden