Euribor cycle analysisYou know fiat currencies that are not pegged to anything they say but is it really true…
Isn't fiat tied to the people in dept, families with mortgages, isn't that what keeps it stable, right?
If this is correct, doesn't that mean that in the big picture, the interest rate cycle is all that matters if you want to understand the economy. I believe so.
But that's not all, I've noticed something funny.
Do you want to see?
Try calculating the dates between bottoms, the cycle length actually doubles each cycle, each cycle comes at the right time... how is that even possible?
Can we now look to the future?
Is everything written in the stars or in someone's book..
Or am I just crazy?
Maybe both, but either way, I think the chart is trying to tell us that there's going to be an AI/robotics-driven super cycle that lasts until 2056, with everyone running cheap money.
What do you think is the "cause" of the depression of 2056. Maybe the robots will go to strike and the AI will turn hostile?
But wait, what is cause and what is cause, or is there just a cycle that causes everything?
Forget it... it's better not to think too much. Watch TV or go for a walk.
Euribor
EUR/USD 3-month LIBOR vs EURODOLLAROverall there is bad data out for U.S. and the Euro zone. The bad data might not stop yet as we will be continuing seeing bad economic data in 2019 as global growth slow down.
USD and JPY is known as safe heaven, and could be the reason we have seen large moves in the JPY over the past couple of weeks.
U.S 30 year mortgage rate declined to 4,75% and could give USD a push next time data of Mortgage application and house sales is released. this will also support the inflation, while commodities will also likely support a stronger dollar against the Euro.
The 3M Euro money supply is down from previous numbers and could also support a decline in the Euro.
On the Chart you see a widening spread between EURIBOR(the red line) rate and EURODOLLAR rate (The blue line). This means that Deposits of the euro gives you a -0,33% While holding EURODOLLAR´s give an interest rate of 2,68%, and with the widening spread, the Highest rate is always the winner.
Short from 1,15700 And adding more to my Short at 1,13650 and again at 1,12900.
Remember that ECB is about to end QE and bond buying program, which means that the liquidity that ECB gave to the Euro and the market is slowly fading.
LONG EURCHF - SNB BID INTERVENTION @ THE 1.08 HANDLELong EURCHF - 9/10 Conviction:
1. Having watched the 1.08 level closely post-brexit it certainly looks as if there is some FX intervention going on at the 1.08 handle - suspicions enforced even more as SNB President Jordan has said in the past that FX intervention is on the cards should CHF move even higher when we were around this level previously.
2. Ive been looking for a way to effectively play long euro positioning based on the view that the ECB has come to an end of its record easing cycle, EURAUD bids felt pain in the front end of the week before popping following ECB thus I think EURCHF is a better suited proxy given the ultra low vol.
3. Volatility is also v low so risk of downside is limited, plus SNB are clear they will can intervene so the chance of long-term losses with this trade are close to 0, especially when you look at the price action
4. Over in rates the 3m euroswiss futures differential (dec-march) are implying a 2bps cut with dec -0.76 vs mar -0.78, whilst the 3m euribor implies 0.5bps of hikes with dec -0.31 vs mar -0.315.. both in recent months have experienced significant selling as rate cut hopes have plunged as inflation begins to show some footing especially in Energy.
Trading Strategy - buy EURCHF <1.081 dips 1.09/1.096TP:
1. Buy EURCHF on any dips into the 1.081 level, 100pips TP but it is also advisable to take 50 or by looking at the intra day (1hr) moves even taking 10-20pips is possible several times a day as the market constantly moves higher after ANY dipping below the 1.08 handle.
- i wont be running a stop on this trade given what my opinion of the SNB's commitment is and the very low IV and HV
LONG EURCHF - SNB BID INTERVENTION @ THE 1.08 HANDLELong EURCHF - 9/10 Conviction:
1. Having watched the 1.08 level closely post-brexit it certainly looks as if there is some FX intervention going on at the 1.08 handle - suspicions enforced even more as SNB President Jordan has said in the past that FX intervention is on the cards should CHF move even higher when we were around this level previously.
2. Ive been looking for a way to effectively play long euro positioning based on the view that the ECB has come to an end of its record easing cycle, EURAUD bids felt pain in the front end of the week before popping following ECB thus I think EURCHF is a better suited proxy given the ultra low vol.
3. Volatility is also v low so risk of downside is limited, plus SNB are clear they will can intervene so the chance of long-term losses with this trade are close to 0, especially when you look at the price action
4. Over in rates the 3m euroswiss futures differential (dec-march) are implying a 2bps cut with dec -0.76 vs mar -0.78, whilst the 3m euribor implies 0.5bps of hikes with dec -0.31 vs mar -0.315.. both in recent months have experienced significant selling as rate cut hopes have plunged as inflation begins to show some footing especially in Energy.
Trading Strategy - buy EURCHF <1.081 dips 1.09/1.096TP:
1. Buy EURCHF on any dips into the 1.081 level, 100pips TP but it is also advisable to take 50 or by looking at the intra day (1hr) moves even taking 10-20pips is possible several times a day as the market constantly moves higher after ANY dipping below the 1.08 handle.
- i wont be running a stop on this trade given what my opinion of the SNB's commitment is and the very low IV and HV