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Position: Long the U.S. Dollar (UUP); Short the Euro (FXE)

This morning, we received several outstanding questions regarding our FX strategy; all are posted below with answers:

Q: Recently, you have been calling for a +3% move in the U.S. dollar; has that target changed, given the +2.6% move we’ve seen off the lows?  

A: Thanks – all TRENDs start as TRADEs… and your question is really THE question to be asking here. I’ll answer quantitatively: 

  1. TRADE line (what was resist is now support) = 76.89
  2. If the TRADE line holds, mean reversion upside to the TREND line = 80.39
  3. That’s +3.8% of what I’d call probable upside from yesterday’s close over the next three months

FX Strategy Update - 2

Q: You went long the U.S. dollar last week using global tightening and the G20 as catalysts. What (if any) are the bullish factors from a quantitative standpoint?

A: US Treasury yields all confirming bullish USD TRADE here – I didn’t have that last week. Can Bernanke pin 2-yr back below 0.37% is the question?

FX Strategy Update - 1

Q: Also, what are your views on the yen, the euro, and the British pound?

A: Views:

  1. Bullish USD vs Euro
  2. Bullish USD vs. Yen
  3. Bearish Euro vs. Pound 

KM

Keith R. McCullough
Chief Executive Officer