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[Maji]

Maybe this is the reason?

Maji


Citibank Closes All Long Dollar Positions As Unit Plunges
11/18/2003
Dow Jones News Services
(Copyright © 2003 Dow Jones & Company, Inc.)

NEW YORK (Dow Jones)--Citibank, one of the largest traders in global foreign exchange markets and biggest dollar bulls, closed all its existing long dollar positions Tuesday.

The move, on the day the dollar plunged to record lows against the euro, is significant in that the dollar's slide has forced one of the most aggressive dollar bulls in the market to temper its optimism toward the currency.

In a research note, Citibank currency analysts cite three specific reasons: the U.S. decision Tuesday to impose temporary quotas on certain textile imports from China, the dollar's failure to respond to positive U.S. economic data and the breakdown of key technical levels such as dollar index support at 90.56.

Citibank, a unit of Citigroup Inc. (C), retains a bullish outlook for the dollar in the medium term, and will look "for more advantageous entry levels over coming weeks."

But the bank posted 1.5% losses in closing out its long dollar/Swiss position at CHF1.2945, losses of 2% in closing its short euro/dollar position at $1.1940, and losses of 0.7% in closing its long dollar/yen position at Y108.04.

Tuesday, the euro surged to a record high of $1.1960, the dollar fell to a five-month low of CHF1.2931 and dipped below Y108.00, within a whisker of new three-year lows.

[MikeZ]

Maji, thanks,...was just reading this:

Comments on the US economy/Fed rates by San Francisco Federal Reserve President Robert Parry are also interesting, along with Treasury reports and Inflation overlooked.



Dollar Retreats on China Trade Fears
By Gertrude Chavez, 11/18/2003
NEW YORK (Reuters) - The dollar tumbled on Tuesday as the euro surged to new record high after the U.S. Commerce Department said it would cap imports of Chinese clothing, fueling fears that protectionism could undermine a nascent U.S. recovery.

The euro surged to above $1.1932 against the dollar, up over 1 percent on the day. The greenback also lost more than 1 percent in value versus the Swiss franc and extended its decline against the Australian dollar.

"The dollar's weakness stems from many factors. The China news is one of them," said Andrew Busch, global FX strategist at BMO Nesbitt Burns in Chicago.

"It is great electioneering rhetoric, but the import quotas will not stem the tide of Chinese textile imports... nor any other imports from China," he added.

In early afternoon New York trade, the euro <EUR=> was up 1.63 percent on the day at $1.1951, a new record high.

New York-based traders also said some of the move against the dollar came as the euro breached above a key technical level of $1.1860, prompting investors to quickly step in and buy.

Against the yen <JPY=>, the dollar fell 0.63 percent to 108.23 yen. Against the Swiss franc <CHF=>, the dollar was at 1.3018 francs, down 0.7 percent. The Australian dollar rose 1.52 percent to US$0.7219 <AUD=>, near its six-year high, after recovering from Monday's losses.

According to a Reuters report, U.S. Commerce Undersecretary Grant Aldonas said that under trade rules with China, the United States can cap China's exports of brassieres, knit fabrics and dressing gowns at 7.5 percent of the shipments over the past year.

"Fears that the U.S. is getting protectionist with China is bad for global economic sentiment and sentiment toward the U.S. in particular, especially ahead of the U.S. visit to the UK this week and hopes the U.S. would back off of steel tariffs," said Rebecca Patterson, currency strategist at J.P. Morgan Chase in New York.

Trade tensions over U.S. steel tariffs have been a negative factor for the dollar in recent days but U.S. Treasury Secretary Snow said on Monday he saw the risk of a trade war between the United States and Europe as "extremely remote."

Earlier this month, the World Trade Organization said the duties imposed by the United States on steel in March 2002 violated international trade rules.

The announcements about China overshadowed comments from San Francisco Federal Reserve President Robert Parry who said the U.S. economy has room for "pretty strong growth" before inflation becomes a worry for the central bank.

TREASURY REPORT WEIGHS DOWN DOLLAR

The dollar was further undermined by a government report showing that net foreign purchases of both U.S. stocks and Treasury bonds fell in September, analysts said.

Net fixed income purchases by foreigner dropped steeply to $5.6 billion in September from $25.2 billion in the previous month. Foreigners sold stocks amounting to $6.3 billion in September, reversing $11.6 billion of net purchases in August.

"The report shocked the market, although it shouldn't have, since this occurred in September when the G7 meeting in Dubai was held," said BMO's Busch. The Group of Seven finance minister's meeting in September called for flexible exchange rates, precipitating the dollar's generalized descent against most major currencies.

IDEAglobal currency strategist Sean Callow said September's decline in foreign interest in U.S. assets fits with the 5.3 percent tumble in the dollar index during the month.

U.S. INFLATION OVERLOOKED

Earlier investors shrugged off tame U.S. inflation data for October. The U.S. consumer price index was unchanged versus estimates for a 0.1 percent increase. The core index, which strips out volatile food and energy prices, rose 0.2 percent, just above the 0.1 percent gain expected on Wall Street.

[currencia]

Yes, an interesting article Maji and certainly something to think about. Unfortunately, the info was useless for trading unless you learned of it on Monday. And. if you learned of it on Monday like some did, you risk changing your name to Martha Stewart.

These articles are good things to keep in the back of our head to understand the breadth and depth of the forest we trade in. But, it does little to help us with the shooting of the squirrel from just one of the trees in them thar woods as a day trader.

Indeed, the break of this euro high immediately gives me pause to stop and reflect, and I stopped trading to pause before the article you post. Your article helps with this decipher however.

Do not be too surprised if euro drops to below CitiBanks close out price however.

Good squirrel hunting to you and yours.

[Burtakus]

I would assume that the levels that are posted for Citibanks exit was when the last of thier positions was closed out. Menaing that they were closing out positions all the way up and didn't finish until almost the end of the run.

Otherwise they were not the primary inflluence that moved the market because thier exits are near the end of the moves for the day.

I would imagine that there were a few Martha Stewarts out there today!

[novice]

Why do you need a reason?

When an old dog dies, a child asks why his dog died?

A parent replies it was his time son.

Why do you need to explain short term swings with fundamentals?

Short term swings are a function of market psychology not fundamentals. The fundamentals today vs yesterday vs last week are the same.

As I understand it insider trading is legal and encouraged in forex. Nice work if you can get it.

[James]

This move was not a "short term swing" or an "unexplained move".

This was part of an ongoing primary bull trend which started a long time ago and will probably go on for some time still.

Although I respect the views of the euro bears in this forum, I cannot understand them

Buy on dips

[novice]

I was only talking about the last 24-48 hours.

[novice]

Long term EUR/USD is in an uptrend. Fundamentals cause and can explain it.

But how do fundamentals cause short term (i.e. less than a week) rallies and declines?

The fundamentals (i.e. twin deficits, money supply, war take your pick) are the same this week as last week.

Were the fundamentals bearish on monday causing a dip? But changed on tuesday causing a rally? No the fundamentals were the same on tuesday as monday but the mood of the market had changed.

I follow the same idea (i.e. buy dips during uptrends).

[Maji]

Novice

A short term movement can be attributed to a lot of economic and/or political events. Think what happened during the unfortunate events of 9/11/01. I had posted that news article because I believe that Citibank had enough USD long positions that liquidating them was bound to create ripples.

Just my opinions again. Have a great day
Maji

[eternalfuture]

Hi all,

I have my 'bla bla bla' about the topic here posted on Tekunda's (Why yesterday) thread located at:

http://www.moneytec.com/forums/showthread.php?%20postid=25621\

For shellback, if you begin your trade with short positions, does it mean you are doing some profit-taking? I mean short is your opening move, your profit taking would be on the 'long-side'.

Even a move north is a possible profit-taking.

About reasoning,

We all need a reason to justify our action. Have you ever been asked why you took a buy or why you took a short position and then you replied: "Huh? I dunno."

Novice,

You can add one more negative factor on your Dollar Top Woes list: trade row, both with EU over steel and with China over textile.

The recent move, which you defined as 'short-term swing' was explainable with a slice of news (US-China trade row) which will turn out to be a factor that could impact the overall USD sentiment.

As for Maji, the thread-starter...
Citibank's move to liquidate USD longs, perhaps, just a reaction towards recent development of USD, not the cause, but the effect.

Useless, maybe, but if they can wash away their USD longs, it would be possible for other big-banks to do the same thing, too, right?

Cheers!

[novice]

Originally posted by eternalfuture


Novice,

You can add one more negative factor on your Dollar Top Woes list: trade row, both with EU over steel and with China over textile.

The recent move, which you defined as 'short-term swing' was explainable with a slice of news (US-China trade row) which will turn out to be a factor that could impact the overall USD sentiment.

Do you mean explainable before or after the fact (i.e. "USD crash")? If something is only explainable after the fact what use is it to traders as opposed to journalists? Also it was explainable by a dozen other reason (e.g. Citibank selling, Bush being in London risk of assassination etc).

I tend to look at the trade row issues as current account/capital account issues.

I meant no offence, but my main point was fundamentals are almost the same today as yesterday as last week. Relatively small changes in fundamentals don't explain let alone predict short term price movements (i.e. less than a week).

I did not mean to sound flipiant about not needing a reason to trade. What I meant was I prefer TA to provide a reason to trade in the short term not fundamentals/news. On the other hand I prefer fundamental to judge the longer term as opposed to TA.

[eternalfuture]

Novice,

This is what I think (others may think differently); USD crashed FURTHER, AFTER US announced the quota on Chinese textile products. This sudden news was unanticipated before. Had the move was anticipated before, it still would provide explanation.

The USD selloff after the announcement (the cause) was merely a reaction (the effect), explained by the news.

Small or big changes in fundamentals may accumulate further to enforce a trend or to weaken a trend. The trade row with China added more woes to USD fortunes.

You seem to separate the analysis for short-term (by using TA) and long-term (by using FA). The future is the net results of current and past events. Thus, whether you analyze the short-term (current) by means of TA or FA, all will in the end shape the future, that is, the long-term. I mean, even FA can be used in short-term, while TA can also be used to forecast the longer-term-trend (try monthly chart).

Fundamentals almost the same currently with yesterdays. But will it be the same again tomorrow? Fundamentals almost the same currently with yesterdays, perhaps, because the observation took place within one down cycle. Fundamentals rather different during Clinton Administration. Recall the days when USD/CHF at 1.8300 and euro/usd at 0.8225.

Recall, too when all economic figures seem to be just no good for Japan's economy. Compare them to today, when signs of recovery has began piling up on Japan's economy.

Again, these are just my opinions.

Cheers!

[novice]

I guess I was just expressing the problems I have with using fundamental analysis in the short term.

Personally I can not react to news to make trades. I would be constantly chasing my tail over various news items. Also without a rigid decision making tree I feel I would find myself making impulsive gambles based on news items. Also I would not know if the news has already been discounted or how much weight to give to the news.

I like to use TA long, medium and short term.

But I only use FA for the long term. Within reason, if something dramatic (e.g. 9/11) happens this would change.

About Japan in the past and the US under Clintion to my mind thus is a long term timeframe. I agree that FA on this timeframe is very important. I just find FA with a timeframe less than a month very hard. And FA with a timeframe less than a week counter-productive.

[eternalfuture]

Novice,

Even if we don't use FA at short-term, others do. Thus the market still moves on a mix between FA and TA reasoning.

FA on a short time frame is important as the longer time frame.

Why?

Imagine a trader bombarded by good US economic figures for a whole week. The positive news will build a positive image of USD gradually. Further enforcing his tendency to buy USD.

I do not disagree if you said that Japan in the past and Clinton's days were of longer timeframe. How could that be? If we split those days into one-day-basis analysis ranging from the start of Clinton days till the end, every one of those pieces surely of short-time-frame.

The long distance between today and those days does not mean that they were of longer time-frame.

Anyway, just my thoughts.

Cheers!

[EvenTually]

Hi, im just crashing on your thread