Automated inter-market systems rule the world. Banks are looking to hedge off their risk at all times as they profit from spreads paid by you, me, CTA’s and most of the hedge funds playing the markets.
Today we saw Canadian Manufacturing surprise strongly to the upside. This is the straw that broke the illiquid camel’s back. You have to understand that when the Canadian Dollar gets really strong it forces US Dollar weaker in initially then based on fundamentals US Dollar will move. It also buoys the US stock market as automated systems kick into high gear offsetting risk and flipping positions to go long Canadian Dollar, Long Carry trades like GBPJPY, Long Wall Street, Long commodities; all of which funded by the cheaper currencies from Switzerland and Japan. Consider the Canadian Dollar a currency of luxury that is not needed unless times are good and we can afford to splurge a little. Then also consider when economic news hits the wires that we are more wealthy than we previously knew there will be buying of diamonds, gold, oil, Canadian Dollars etc. That’s basically what happened today. The massive wealth hysteria was perpetrated by a technical formation on Wall Street that caused speculators to buy 15 minutes before the Canadian news release. Oil was poised to break historic highs which is like a magnet for the attention seeking Wall Street monster. So in the end we have massive speculation on technical formations and fuzzy fundamental news. It’s just another day on Wall Street.
I hope you survived it.
0 comments
Post a Comment