Forex rebates on every trade - win or lose!

The Yen softened throughout the European morning and into NY as Nomura Asset Managements launched two new Japanese mutual funds investing in overseas assets. These Nomura funds attracted about 190B of subscriptions. USD/JPY rebounded from its 113.92 session lows to 115.16, while EUR/JPY ranged from 154.55 lows towards its 157.27 high. Overall the USD was soft against the European currencies as FX Dealer chatter focused on the possibility another 'surprise' FED discount rate cut. Lingering concerns of the subprime issued continued into the European session as Cheyne Finance, managed by London- based hedge fund group Cheyne Capital Management, is set to unwind an $2.5b fund after a drop in the value of its portfolio of real estate-related securities. Also, Australia's Basis Capital Fund ($2B under management) filed for bankruptcy protection in the US. Gold was higher on the back of the weaker USD.

Early FX chatter focusing on rumour of several EU banks announcing subprime losses later today at a press conference. Dealers suggesting perhaps a large German, French bank may announce subprime losses.

BOE lends 1.55 billion at 6.755% Wednesday. No names given.

Well I have to say the markets are all very calm at the moment. Are they in denial I wonder or perhaps they don't read the stuff that I do.

Has anyone come up with a plausible explanation that does not involve the word 'crash' for the 65,000 contracts for the SPX 700 calls ?

I wonder if the party making the monster bet has also read of the $90 trillion backlog of commercial paper that had not rolled over on Aug 23.

Perhaps the commentator that said 'the system is collapsing right before our eyes' was having a bad hair day. It'll be alright on the night - won't it ?

At least Moody's is confident - "banks have sufficient capital to meet needs, threats to the global banking system are overstated". That's alright then, I can come out from under my comfort blanket now !

Edit - I have come across an explanation for the apparent monster down bet :

"So a whole lot of CALLS were sold at very low strikes and a whole lot of CALLS were bought at low prices. The currently quoted price for the 95 Call is 51.40 / 51.70. This means that with the SPY at 146.23 as I write this the SPY is valued at 51.70 + 95 = 146.70. These Calls have a delta of 1, meaning they are very tied to the SPY movement at a 1 : 1 ratio.

So you need to look at the two ways each side of the transaction make money. The buyers make money if the SPY goes up ABOVE 146.70 not down. The sellers make money if the SPY doesn't go up. It doesn't have to come down, they have already made their money by selling the calls and collecting the premium.

On the PUT side, there isn't the same volume at these strikes. There is 1 open interest at 85 for example. The only 'odd' volume is that there are 9494 open interest on the PUTS at 96.

This isn't the doomsday scenario that people describe, but it certainly is very, very weird."

Phew! Cable not for faint hearts at the moment. If you've got it, bank it!

Too right ;)

Forex - Dollar firms vs euro, pound after Bernanke comments; yen gains
AFX


LONDON (Thomson Financial) - The dollar firmed against the euro and the pound after US Federal Reserve chairman Ben Bernanke offered some relief to markets by saying that the Fed 'stands ready' to take further action to provide market liquidity as necessary, The yen gained, however, as the currency benefited from ongoing safe haven flows after Bernanke stated that it is not the job of the Fed to rescue investors.

Speaking at the annual monetary policy symposium in Jackson Hole, Wyoming, Bernanke said financial markets can have economic effects 'felt by many outside the markets'. The Fed will 'act as needed to limit the adverse effects on the broader economy' that may arise from the recent turmoil on financial markets.

He warned, however, that it is 'not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions.'

At 3.17 pm BST, the euro was trading at 1.3637 usd, down from 1.3666 previously, while the pound fell to 2.0118 usd from 2.0163 previously.

Against the yen meanwhile, the dollar fell to 116.11 from 116.30.

Thomson IFR Markets analyst Rhonda Staskow said the remarks have two aspects to them - on the one hand it is positive for markets that the Fed is ready to provide more liquidity as necessary. However, the comment that it is not the Fed's jobs to protect lenders and investors will 'dampen the hope of those looking for the Fed to bail them out'.

'This has fuelled expectations that the impact of the credit crunch and housing crisis will continue in weeks to come,' she said.

jessica.mortimer@thomson.com

jkm/slj

Calendar updated for next week's fun and games -- don't forget Monday is Labor Day in the U.S. (when they don't -- labor, that is).

Bonjour mes amis.

Hols are now over unfortunately, although I'm pleased to report that I'm sans white bits. Have I missed anything this summer?

Looks to me like it's approaching crunch time for the Dollar over the next few weeks. I'll paste up a chart to show what I mean when I get some time this week.

These are the Dollar charts that I promised.

First, Dailies over the last 3 years.



Then zoomed in over the last 6 months with some indicators for good measure.

So what d'you reckon Hils? Or anyone else ...

I have a sneaky feeling that gold might have peaked this morning, and whilst there looks to be further overall weakness in the $ shorter term, there's going to be an almighty reversal.

Gotta dash, I'll post a thingie when I get back.

I don't have a view on anything further out than the 1- and 10-minute charts atm, Choccie.

gbp/usd 4hr chart. my view - looks like its up to me, but we've got a channel forming, and also triple divergence on macd so wouldnt surprise me if we dont see the recent top broken for a ...........? The daily looks up to me...........confusing aint it! Think hilary hit the spot, trade what you see atm

I was commenting on the longer term, gofe, with Hils' approaching $ crunch time in mind.

The way I see it, gold may or may not bust through down slopey resistance off last summer's high. And it's certainly giving it a good whack today.

Don't think it's a coincidence that EUR/$ is trying once again today to breach the high from December 2004.

Errrrrrrrr .......... Is it just me who can't access FX PowerCharts this morning? One PC produces a long string of source code where the applet should be, the other is just blank???????????

Had a problem with Netdania too, the java thingie took ages to load this morning, and it's been running very slowly since yesterday.

Intellichart is OK, Choccie.

Funnily enough, Sun Java prompted me to download an update this morning. That might be the cause of the problem. If it ain't broke, why do they try to fix it?????????

Cheers Hils, I'll have a look at Intellichart cos I need to find another source for $ index, as Netdania have removed it from the list for some reason.

I haven't noticed any java prompts? :S

Just had a quick check and Powercharts here OK Hils, but this is on a machine I don't use for powercharts normally, so no user settings present - and no java update prompt yet.

Hil: The thing you need to learn about software is that it's always broke. It's considered polite to fix it when people find out.

MM (California)

PS: thanks for updating the Calendar for me ;-)