Currency Wars? Welcome To The Mad Hatter's Tea Party

Treasury markets are generating ever-lower yields, which are being snapped up by investors willing to accept, that in a yield-starvation environment, the safety of bonds outweighs the risk of incestuous equity trading.  Currency pairs look to be topping-out on the 4-Hour charts, although not yet signaling that the wider market is ready to create a mid-term reversal; not just yet anyway.
Welcome to the pass-the-buck, sound-bite reliant, not-in-my-back-yard, trading environment that has been generated ahead of the mid-term U.S. elections in an effort to put right thirty years of fiat currency trade and five years of gorging on leveraged debt that now has a pay-back.

Alice in Wonderland has nothing on the current situation as things get curiouser and curiouser with each passing day, while Tweedle Dee and Tweedle Dumb entertain the Mad Hatter and the Queen of Hearts.

You really could not make this up, as the Too Big To Fail (TBTF) financial institutions now wonder why they stopped at $7 billion when putting a gun to U.S. taxpayers heads in threatening a financial Armageddon (that they had created) if a bail-out was not forthcoming on that infamous weekend of horse trading, that apparently saved the world from financial collapse. (Alice meets Mini-Me?).
One of two things now has to happen; the financial industry melts down, re-forms, and comes back in smaller sized, less powerful entities, or more relief is handed out via QE from the Federal Reserve as billions more in taxpayer dollars get flushed into the financial septic system. 

The inter-bank landscape really is very unappealing for most right now, and far too toxic for close inspection by anybody not endowed with a protective suit or a very thick public skin.

It may have been far less painful to swallow the Too Big To Fail pill back then, than it will be now to wade through the fall-out that is coming down the pike. Until a solution is forthcoming expect the FRBNY to continue to ramp up equity values whenever POMO days are in full swing, and expect commodity prices to trudge higher out of speculative interest in hedging the dollar rather than preparing for global growth and demand.
Expect gold to find buyers on the pull-backs, and expect the mother of all currency wars to develop as emerging economies vie for a seat at the old-cronies table, at the same time that the old cronies go to battle in an effort to get the U.S. administration to stand behind the public 'strong-dollar' policy.

Make no doubt about it, this is a race to the bottom in regard to currency valuations, and make no mistake that the Federal Reserve will have to fight tooth and nail every day that it attempts to get the Usd lower in value. Trench warfare will now ensue after the G20 meeting at the weekend failed to address the unbalanced view that it is just fine to print the Usd lower, but that other countries can be charged with currency manipulation when protecting their exposure to a collapsing Usd value.

It just gets curiouser and curiouser; one lump or two, in your cup of tea, Mad Hatter? The White Rabbits' pocket watch is ticking down to November 3rd, with two doors and two medicine bottle to then choose.

Bank early, bank often, be prepared to sell the previous session currency high, and buy the previous session low on the days that global equities are going sideways. HFT has forced an environment that 'today' is the new 'next week', and 'next month' is now an eternity away that algorithm trade just cannot get a grasp of.

You really could not make this up, and that is why forex traders really do need to get aligned to wherever the algorithms are taking things. Long-term fundamentals will prevail, eventually, but near-term trade really does need to be closely monitored, with a disposition that allows trades to follow the ebbs and flows of regional market opens and closes, rather than follow common-sense.

Common sense? Oh, that is so pre-Y2K, ask the Mad Hatter.
Forex trading involves substantial risk of loss and is not suitable for everyone. Each investor should assess his or her financial situation and risk tolerance before proceeding. Information, analysis and methodologies provided on The London Forex Broadsheet^TM are for informational purposes only and should not be used as a replacement for research by an individual investor or licensed investment professional. Neither The London Forex Broadsheet nor any of its affiliates shall be liable for any errors, omissions or for any actions taken in response to information contained on www.TheLFB-Forex.com or any affiliated or other linked sites. All users agree that the information contained in The London Forex Broadsheet shall not be re-distributed or reproduced except with express written consent of LFB Services^TM, LLC. Any non-affiliated services which users may access through the links on the web site which may include brokerage firms shall be deemed independent of LFB Services, LLC. The London Forex Broadsheet is not a registered brokerage firm and any links provided to such companies are for your convenience only. The London Forex Broadsheet shall not be liable for any damages or costs of any type incurred in conjunction with your use of the services of any third party listed on the site. The London Forex Broadsheet hereby makes no representations or warranties regarding the accuracy of any information contained on www.TheLFB-Forex.com or any affiliated or other linked sites. This Risk Disclosure shall apply to all communications transmitted from The London Forex Broadsheet.

IMPORTANT INFORMATION: Futures, options and Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures, options and Forex may fluctuate, and, as a result, clients may lose more than their original investments. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The high degree of leverage available in Forex trading means that small price movements will have a much greater impact on account performance and can result in large losses as well as gains. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Invest only risk capital.

Yours sincerely,TheLFB Trade Team

Follow us

Automated Trading
TheLFB trade team has partnered with Tradency and FXCM to make available a premium automated trading program (ATP) and forex signal platform, that also offers full-service trade desk support for all clients, only available from TheLFB website.
TheLFB ATP offers new-generation trading services that auto trades yet still offers interaction and full control and customization services. This new-generation service challenges the out-dated concept that professional trading should be veiled in secrecy. Instead ATP provides detailed information on what is traded, when, and why.