Oct

7

I recall February 14th of 1994, the day dubbed "Valentine Day massacre" by  currency traders. Palindrome decided to cover what was rumored to be over 2  trillion Short Yen position. The position was in fact smaller; but market  smelled blood, and had him pay up un-fathomable 4 full figures, for a whopping  $600m daily loss…

Approaching U.S. Columbus Day Bank Holiday, there are few obvious parallels.  There is a factor, however, to keep traders up on their toes: most currency  pairs are presently stretched way out of their historic norm.

Case 1:  .95 Swiss Francs never bought 1 USD in the entire FX history to-date,  rallying daily over 4 straight months now!

Case 2: Australian Dollar has never before traded at  parity with USD, rallying  daily over 4 straight months now!

Case 3: Japanese Yen is assumed to chase its all-time record against USD,  following 5-month rally!

Case 4: even the beleaguered Euro-currency, below 1.19 three months ago (with  calls down to parity at that time) has just sprinted to 1.40 instead!

So the SNB [Schweizerische NationalBank] is ready to quietly offer its own currency (for Euros?), the BOJ is  ready (not so quietly) to sell its currency for Dollars, the market  participants  worldwide are ready to finally stop bidding up unbelievably costly US fixed  income paper. So what do you think of conceivable currency trend reversal:   before the holiday, during the holiday or after the holiday?


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