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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (18968)	4/6/2017 9:12:07 AM
From: The Ox	Read Replies (1) \| Respond to of 33421

Czechs End Swiss-Style Currency Cap, Triggering Jump in Korunaby April 6, 2017, 5:34 AM CDT April 6, 2017, 7:46 AM CDT Board voted to remove limit on koruna after more than 3 years Bets on currency gains lured record amounts of foreign capital The Czech central bank cut its currency loose from a one-sided peg against the euro, setting in motion a trade that drew billions of dollars in foreign investment into the bond market and spurring the koruna to its strongest level since 2013. The Czech National Bank’s board voted Thursday to exit the Swiss-inspired mechanism that kept the koruna weaker than 27 per euro after inflation returned to target. The decision, announced on the bank’s website after an extraordinary meeting, initially sent the koruna swinging on both sides of the cap before it settled 1.3 percent higher at 2:39 p.m., the biggest appreciation in emerging markets. The move may prove disappointing to investors who have piled into Czech assets in the hope of making a quick profit once the bank lifted the cap. Policy makers had vowed to avoid a scenario similar to that triggered by their Swiss colleagues in 2015 when, without warning, they dropped a regime limiting currency gains to kick off a 29 percent surge in the franc in a single day. The Czech central bank also warned that investors hoping to cash out quickly may struggle to find counterparties for their positions. “The initial gains are less than investors were probably looking for,” said Paul McNamara, a money manager who helps oversee $6.3 billion at GAM UK Ltd. “There’s potential for this to go wrong, as the long-koruna position is huge and the door too small. That’s exactly why we stayed away from this trade.” Wide Tolerance By allowing the currency to trade freely again, the Czech central bank is signaling confidence the economy can withstand a stronger currency that will make exports less competitive and undercut import-driven prices. While policy makers initially imposed the cap to stave off deflation, annual price growth now exceeds 2 percent and gross domestic product is forecast to expand at least 2.6 percent in the coming three years, according to economists surveyed by Bloomberg. The yield on Czech two-year bonds jumped 31 basis points to -0.06 percent. Eastern European currencies edged higher, with the Polish zloty reversing a loss of as much as 0.2 percent against the euro and the Hungarian forint rising 0.2 percent. “I expect the CNB to have a pretty wide tolerance band for euro-koruna moves, roughly between 25 and 28 per euro,” said Pavel Sobisek, chief economist at the Prague-based unit of UniCredit SpA. “I personally don’t expect the exchange rate to attack any of the band’s boundaries any time soon.” The latest official data show that the central bank bought 47.8 billion euros ($51.3 billion) in the four years through January to prevent the koruna from gaining beyond the limit. Adjusted for natural inflows seen in the balance of payments, the overall speculative position was about 50 billion euros to 60 billion euros as of March, according to estimates by Jan Bures, an analyst at the Czech unit of KBC Groep NV. ING Groep NV puts the intervention volume at about 36 billion euros so far this year. But at least some of the speculative capital fled the koruna after the central bank stopped providing guidance at the end of March on the likely timing of the exit. The koruna has since shown volatility not seen in years. Governor Jiri Rusnok said earlier in March that policy makers won’t be “overly sensitive” to initial swings and will let the market find an equilibrium. “The CNB stands ready to use its instruments to mitigate potential excessive exchange rate fluctuations if needed,” the bank said in the statement. bloomberg.com

To: The Ox who wrote (18968)	4/6/2017 4:25:44 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Ox, I can believe the SPX 5 minute ADX is registering an extreme number. Wednesday's market act was the biggest intraday swings in 14 months I heard mentioned a few times. a check-back to the 2289 area or 2280 area is very plausible.. that should be the next stop. the 2341 area has been acting to hold up the SPX for a few weeks.. the 50 DMA has come right up to that level and the SPX has to rally or we fall back to the 2288 area which is the double magnet of the 1.618 of a price projection and the .618 of the second price projection I explained how those price projections where calculated in this post and also mentioned that Katie Stockton of BTIG was on Squawk Box on March 5th and stated the SPX needed to pull back to 2280. I mentioned Katie Stockton of BTIG 4 different times in March on this thread... and the idea that the market needed to consolidate and move back to the SPX 2280 area. Message 31039713 Message 31039272 the High Yield Debt Market says time should be arriving for a pullback, as witnessed by the HYG breaking down below it's 21 dma and remaining under it and violating the uptrend in place this past year ... a pull back to the 50 dma or 2280 as Katie Stockton suggested last week. the hourly spx was got hung up at the .764 area on the hourly chart yesterday, which is also the 1.618 area of the 3/26/17 low in the SPX and today the SPX was repelled by the .618 line which is the gold one we did not quite reach Message 31058235 The NASD had an outside reversal yesterday ... THE NDX which has been the real zeitgeist of the market had a really dramatic outside reversal yesterday. The meeting with the Chinese leader is a truly potential market direction generator...... we shall see. John