Archived IMT (2010.11.04)

MY BULLISH CALL ON USDCHF fell victim to the broadening USD damage post-FOMC. One hedging possibility is via shorting EURCHF, which is based on fundamentals (stubbornly rising bond spreads in Ireland, Spain and Portugal) and technicals (Double-top at 1.39 & trendline from June 2010). Since long USDCHF and short EURCHF constitutes shorting EURUSD, this runs the risk renewed gains towards $1.4420, which represents the 76% retracement of the decline from the all time high to the June 2010 low. An alternative hedge would be long GBPUSD only if we get a successful break above the $1.6320 trendline resistance (from the Aug high), which could lead to 1.6440s. BANK OF JAPAN will announce later tonight whether it will implement those asset purchases as part of the new QE program unveiled last month. Despite broad gains in yen crosses (yen declines), USDJPY drops back below 80.70 after failing 81.30. The BoJ could consider extra easing to counter the FOMC impact on USDJPY as well a establish a floor ahead of US jobs report.