Bring On The Clowns

If we are not seeing a case of deliberate attempts to break the back of their own currencies among these Central Bankers, then “Scotty, beam me up!”

With the Fed Fund futures showing sharp increases AHEAD of the FOMC statement of rate hike probabilities, yesterday’s ultra dovish statement had everyone positioned on the wrong side of the currency markets yet once again. The result was yet another unleashed chaos courtesy of our Central Bankers.

The Dollar collapse, combined with the production cut numbers in oil from the EIA this morning, lit a fire under the energy markets. The fire also spread to the mining shares and into gold.

Here is a two hour chart of gold. Look at the surge in volume again. After being range bound between $1237-$1225 ahead of the report, the metal blew through the top of the range in short order and basically went vertical with barely a pause until it hit $1260 where it took a bit of a breather.

This thing now looks like it is going to try to test $1270 once more. It has garnered willing sellers above $1275 and has not been able to spend much time above that level before moving lower but that was before we knew how dovish the FOMC was. Whether or not that is a game changer is unclear but the Fed certainly did take one of the factors that would have been considered a negative away from gold with their statement yesterday.

Two other factors remaining are currency debasement and risk.

Look at the Dollar chart.

Apparently 98.50 basis the USDX is too high for this Fed so out comes a dovish statement. The question is how do Draghi and company, not to mention Kuroda and company answer this??? I honestly don’t know. What I do know however is that the ECB in particular must be fuming this afternoon. They just unleashed their big bazooka last week and for what? The Euro is climbing back up again.