Bernanke Hath Spoken
Kevin Davitt | Jul 17, 2013 10:40AM ET
The text of Bernanke's speech was released just over an hour ago. There was nothing that shocked the markets as he arguably struck a chord in the gray area between the perceived Hawkish tone of 5/22 and the more dovish Fed Speak since then (having seen Bonds fall out of bed and the Equities throw a short lived temper tantrum).
Here's the text from the Fed's website .
The US Dollar sold off and the rest of the FX complex generally rose vis a vis the USD. Two weeks ago I pointed out that the Dollar Index has struggled mightily over the past five years between 84.50 and 85.00. Hopefully readers were able to capitalize on the pullback in the Greenback. In the same vein, I explicitly advocated for long Euro deltas between 128 and 127.50 around the same time.
From July 9:
On March 27 the Euro (ECU13) traded as low as 127.70. On April 4 the Euro also traded down to 127.70 and then reversed course. In the middle of May the Euro found support @ 128. Going back to November of 2012, the Euro held a test of 127.50. From a technical standpoint -- it looks like the Euro could/should find support very soon.
From a trading standpoint, I would look to get some long deltas in this area using a strategy that fits your risk profile. Aggressive premium sellers could get short the July 19 expiration (Week 3) 127.00 puts for 50 ticks. Collect $625 each less frictional costs and risk being long futures from a synthetic 126.50. Genuine bulls could employ a fence where you sell OTM puts to finance OTM call purchases. Defined risk types could just get long calls or buy futures with a stop.
Here and now, I tend to believe when Brian Williams starts talking about commodities (like Gasoline) the top is likely in or around the corner. Inventory data in the Energies at the bottom of the hour. Should be interesting.
- Eyes on RBOB outright.
- Eyes on WTI outright (Does 107.18 hold?).
- Eyes on Brent v. WTI spreads.
- Eyes on WTI calendar spreads (Will the Dec 13 - Dec 14 spread come off?).
- In the Metals......watching Gold (will it break $1300 again?).
- Silver trying to pierce $20.00. Implied vols are BELOW 20% (ATM) in Gold again and BELOW 30% in Silver.
- Complacency sets back in quickly.
Coffee continues to the upside with frost fears in Brazil.
On the pop this morning in Equities clients were able to enter the SEPT 30th 1750 call v. 1600 put risk reversal (long put, short call) for 10 points. July VIX futures expired this morning. Cash VIX hovering around 14%.
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