MorningWord 6/6/12: Central Bank Watch Party

by Enis June 6, 2012 9:25 am • Commentary

MorningWord: 6/6/12:  Dan is halfway across the world in Hong Kong for the next few days, and I hope he comes back with some insight into whether the China slowdown story is real or irrational fear.  In the meantime, I’m filling in for him on the Morning Word, though he should be posting a trade idea or two from his remote location.  

Today’s price action overnight has been quite volatile.  The dollar got smacked during Asia hours, partly from just being overbought with others assigning it to QE3 comments from Fed Governor Evans (though I put less weight on that because he’s always dovish, just like Governor Fisher is always hawkish).  The risk rally was on from there, and at their peak, futures were up 16 points, before the ECB rate decision this morning.

Unchanged rates and a bit of a tepid news conference from ECB head Draghi have moved the Euro back to flat vs. the dollar (though higher beta currencies are still broadly up vs. the dollar) and futures to up 8 points, halving their gains.  The 1300 level is the battleground for today.

In other markets, I have been disappointed by the price action in SLV overnight (trading around 28.70 right now), as my timing was obviously poor on the SLV puts.  I am going to watch precious metals over the next few days to decide whether to adjust the position.

Fed Governor Yellen speaks tonight, and Bernanke speaks tomorrow, so there is still plenty of fodder for central bank speculation over the next couple days.