ECB benchmark rates -25bps, more hosing of slightly limited liquidity at the banking problem and risk rallies, and then recedes with a vengeance. Surprise. I can’t be bothered to think about the politics or the other discussions – that will be for the weekend after the scope of the Brussels disaster currently referred to as a summit comes fully into view.
The important thing is how markets reacted to the news. Equity was muted considering unemployment numbers came off really strong from the US – anyone worried it will be revised higher later?
But more importantly, yen rose like a star in dollar terms, tag-teaming with the euro at first, then fell back slightly before locking with the dollar, rising like a cobra against the euro and baring its fangs. Net effect? Stronger yen in both euro and USD terms. Bet Noda and Azumi are pleased. Hopefully, if they get that casino legislation off the ground, then at least today’s action in the yen shows they won’t have any problems attracting foreign capital! Wee!
On the account of “I’m so surprised I have to hyperventilate” gold futures hit the top of the triangle falling trendline mentioned yesterday at 1754, crossed it for… oh, 2 minutes, peaking at 1756, and then fell back with a vengeance as well. In numbers, now please be seated: -47 dollars to 1709. 2.7% in less than one hour. Hit the triangle bottom there save 5 bucks and bounced up 10 dollars (0.6%) in 4 minutes.
I hope you’re seated. Now, you might not want to read this if you’re going to bed, and if you’re saving this for later, please remember to have completely finished your morning coffee on the day you chose to read it. You have been warned.
The 47 dollar drop during 44 minutes had 6 individual minutes where prices dropped a total of 43 dollars. The fall from 1756 started pretty slow as well, with “only” 8 dollars of falls in 18 minutes and not a single one of the 6 candles included. So, 37 dollar fall in 26 minutes with 6 minutes contributing 43 dollars down. Pretty impressive work from our dear market manipulating institutionals, right? Euro trades smooth, yen trades smooth, and commodities (every commodity shows the same trend, but the only one that was more exaggerated than the gold futures were silver futures) look like they got struck by step functions. PM’s, the more leveraged and speculative they are, and to an extent any commodity, gets hammered like a college kid post exams – one slam every 4 minutes – and we’re supposed to actually believe this is natural when risk is off broadly? Looks like the CB’s of the world took the buying opportunity and went long at the dip, and more smooth orderflow returned, but markets have never given better opportunities for swing trading! Just can’t wait to see what happens when hedge funds et al need to open shop in the new year, and the institutionals can’t push the short covering around the triangle down much further as CB’s go in and shore up their reserves on every ping to the 5 year rising trend in gold.