About Currency Currents

With Currency Currents, you can stay tuned-in to our current global-macro view and our analysis of key investment themes driving currency prices.

We consistently focus on the key asset classes responsible for the flow of global capital -- including equities, fixed income, commodities and, of course, currencies.

Nothing is off limits to us in this free-wheeling look at the markets. Some days you’ll receive ramblings on trading psychology, while other days we may take an academic approach in explaining esoteric economic issues. Ultimately we have one goal in mind: to help you get a handle on the key investment themes driving global capital flow. Because if you know where the money is going, it increases the probability that your position in the market will be a profitable one.

Who is Jack the Pipper?

Jack Crooks is Black Swan Capital LLC, President and Chief Trading Officer.

Jack is founder and president of Black Swan Capital LLC. He has also operated a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. In addition, he was general partner in a firm specializing in currency futures and commodities trading. Neither firm is now in operation.

Prior to entering the investment arena, Jack worked in various corporate finance positions. He has written extensively on the subject of global currencies and international economics.

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RBA Gets It Started

Posted 13:01 01 June 2010

Key News

Chinese Monetary Official: Housing Risk Greater Than in US, UK Pre-Crisis (Naked Capitalism)
Fears Rise in Europe Over Potential for Deflation (New York Times)
China Real Estate Bubble Bursts in Bond Market: Credit Markets (Bloomberg Businessweek)

Quotable

“Study carefully, the character of the one you recommend, lest their misconduct bring you shame.”

Marcus Tullius Cicero

FX Trading – RBA Gets It Started

What did the RBA do? Nothing.

And their inaction confirmed what traders have been anticipating: a very unstable foundation for the global economy. Thus, despite the outlook for Australia’s economy in the long-run, it’s certainly no time to be raising interest rates any higher.

So after a very quiet memorial day in the forex market, the Australian dollar, naturally, is reacting most sharply to the RBA’s assessment of global economic conditions. And the euro isn’t doing so hot either.

4-Hour AUDUSD & EURUSD: correction over?

The euro has already touched fresh lows on its test of critical support levels; the Aussie is quickly erasing last week’s rise today.

And here’s another chart to pick through. It shows 1) the US Dollar Index futures, 2) the non-commercial long positioning on US Dollar Index Futures, and 3) the month-over-month change on US dollar Index Futures non-commercial long positions.

There’s been quite a steep drop-off in total non-commercial longs since the beginning of the year, but based on the long positioning action, it seems a lot of the speculative excess has worked itself out. In other words, there are plenty of buyers right now who will be looking to jump back in on the dollar as global worries provide additional fuel for the risk aversion trade.

We’d been shuffling around our positions last week and the week prior, expecting a dollar correction. We mostly got it. And based on price action alone, the buck could have easily fallen back further. But the above analysis tells us that this correction could easily be over already.