Holding USD, Waiting for the Fed

A bit of range trading today and a stampede out of Pounds. I'd like all the fucking idiotic economists to explain again how well the subprime crisis is contained. Now, we're seeing bank-runs!? Who knows what will happen to Northern Rock. If the Fed keeps rates unchanged tomorrow, it's down the toilet for this lender.

Again, I don't see anything close to 50 bp tomorrow. How could they possibly defend such an action? Bernanke can either get it incredibly right tomorrow or incredibly wrong. If it was my decision to make I'd send a message to speculators once and for all: the party is over?

What a minute, "you're a speculator", you say. True, only I think I'm a bit more true to the game than all the carry-trading idiots out there. A bubble, like the one in credit or Chinese equities, is an opportunity to speculate in a collapse. Being massively long such risky assets and and then demanding that central bankers spike the punch bowl again is simply ridiculous.

Long USD vs. CAD and EUR (entered @ 1.0431 and 1.3888 respectively). Continue to hold steepeners.

Tuesday's data:

N/A Japan Bank of Japan interest rate decision

0130 Australia August imports (-4.0% m/m)

0310 Australia Reserve Bank of Australia Governor Stevens speaks

0715 CH Q2 industrial production (-4.7% q/q)

0715 CH Q2 industrial production (7.3% y/y)

0800 Spain European Central Bank member Ordonez speaks

0830 UK August consumer price index (-0.6% m/m)

0830 UK August consumer price index (1.9% y/y)

0830 UK August consumer price index, core (1.7% y/y)

0830 UK August retail price index (-0.6% m/m)

0830 UK August retail price index (3.8% y/y)

0830 UK August RPIX (2.7% y/y)

0900 Germany September ZEW, economic sentiment (-6.9)

0900 Germany September ZEW, current situation (80.2)

0900 Eurozone September ZEW, economic sentiment (-6.1)

1230 US August producer price index (0.6% m/m)

1230 US August producer price index (4.0% y/y)

1230 US August PPI, ex-food and energy (0.1% m/m)

1230 US August PPI, ex-food and energy (2.3% y/y)

1300 US July net long-term TIC flows (US$ 120.9 billion)

1300 US July total net TIC flows (US$ 58.8 billion)

1700 US September NAHB housing market index (22)

1815 US Federal Open Market Committee interest rate decision

(Source: GCI Financial)