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Bridge Loans to ... Everywhere
Despite another historic intervention by US authorities, the intended market reaction evaporates in the midst of heightened market worries and risk aversion. Forex traders pare down earlier yen losses and maintain pressure on the dollar.
USD/CAD also presenting a short oportunity as it reaches sentimential high on AIG bailout and fundamentals: oil, gold lead one to speculate that eh Loonie will appreciate during today's N.Y session.
Bailouts are like a honeymoons. They are both sentimental peaks - the end of the innocence and the beginning of reality.
I shorted USD/JPY yesterday evening at 106.347. Why?
1. Good technical short opportunity - price nearly two (1.96)stdev above mean close on 30 minute and hourly charts, reaching R1 as well.
2. As stated above bailouts are like honeymoons and I believe the markets are realizing that that they have married a lip stick packing pig - sorry, couldn't help myself. AIG is one of the largest swap insurers in the market. AIG's failure highlights the fact that the level of financial/corporate failure is so extreme that normal market protections cannot contain the failure. This will scare even the most risk seeking investors to safety.