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Friday October 3, 2008 - 12:40:57 GMT
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FX Thoughts for the Day - www.fxthoughts.com
FX Thoughts for the day - Evening - 03-Oct-2008 -1235 GMTEURO, JAP YEN and EURO-YEN
Read our current comments and trade recommendations on EUR-USD, USD-JPY and EUR-JPY by registering at
Our comments on Dollar-Swiss, Sterling Pound and Australian Dollar are given below
The view has not changed much during the day. The market remains highly
uncertain and volatile. Euro (1.3825) continues to face Resistance at
1.39, which was tested a couple of times during the day. USD-JPY
(104.88) continues to remain pressured below the 21-day SMA at 106.20
and could re-test the Support at 104.50.
Swissy (1.1328), has
found Support at 1.13 during the day, however the immediate Resistance
at 1.1330 cannot be overlooked either. Resistance at 0.78 could push
the Aussie (0.7750) lower towards the Support at 0.7660. Cable (1.7653)
is uncertain and faces Resistance at 1.7760 while 1.76-75 provides
Our morning comment is given below.
TRUST BEING SOLD FOR TRASH
are not going to post the usual trading calls today, because there's no
point - the market is too volatile. The biggest trade going just now is
the selling of Trust in exchange for Trash.
The market is
waiting for the House of Representatives to vote on the bailout package
today and betting that the plan will be passed. That may well be so.
point that troubles us is that several rules are being changed in order
to accomodate this plan - one such rule is the "mark to market" rule.
Whether the "mark to market" rule has merit by itself or not can be a
subject of debate (and surely must have been extensively debated when
the rule came into being for the first time), its proposed suspension
just now is being pushed not because there is a debate on its merits/
The suspension is being pushed because Wall Street
knows that there IS NO MARKET for the trash "assets" it holds - and
that is why it wants to replace "mark to market" with "mark to model".
What "mark to model" basically says is, "Trust me, I know more than you
or the market. And, just to clarify, the trash will be marked to MY
model, not to yours".
The Adminsitration is pushing this absurd
amendment to accounting rules. And where is the question of "trust"
anymore, when the owner of the stadium (the Treasury) tells the refree
(the SEC) to change the rules of the game in favour of the loser (Wall
Street) after the game is over? Where is "trust" anymore when banks are
not willing to lend to each other? And yet, the Treasury is asking the
US public (and the world) to trust the banking system.
mind, therefore, TRUST, the most priceless of assets, is being
squandered at throwaway prices today, in exchange for worthless trash.
the Treasury, for all practical purposes, is going to end up taking in
all this worthless trash, which no bank wants to buy (or why else is
there no market for the trash anymore?). Yet, the world is piling cash
into Treasury Bonds. We just cannot understand this.
And when we cannot understand the market and the trade, there is no point participating in it.
Perhaps the USA should remember the words of Abe Lincoln, "You cannot fool all of the people all of the time."
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