2011-07-13th (Wed) - Quantitative Easing III (QE3)

At the end of the previous trading session I had the following positions;
Long 300,000 USDJPY with ACB of 79.438
Long 200,000 USDCAD with ACB of 0.96322

In today's trading session US markets rallied on Ben Bernanke's speech but gave back some of their gains at the close for an overall up day.

Article - "Bernanke: Fed ready to act if economy worsens - Bernanke lays out options for new Fed action and warns Congress about danger of default"
http://finance.yahoo.com/news/Bernanke-Fed-ready-to-act-if-apf-1990658503.html?x=0&sec=topStories&pos=3&asset=&ccode=

Essentially the message is... Helicopter Ben is back!

For I am not aware of any major deviation from the standard Fiscal & Monetary Policy Playbook that the current condition of the US economy can take without poisoning itself.

I want to reiterate an article I quoted on (2011-06-27th (Mon)) and (2011-07-12th (Tues) - Quantitative Easing III (QE3)) below.

"While the $600 billion purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as $300 billion of government debt over the next 12 months without adding money to the financial system."

Article - "Fed May Buy $300 Billion in Treasuries After QE2"
http://finance.yahoo.com/news/Fed-May-Buy-300-Billion-in-bloomberg-1457319130.html;_ylt=Ak2_x5xz6bQMxVJZfJMT5vS7YWsA;_ylu=X3oDMTE1aWZlcGNuBHBvcwM0BHNlYwN0b3BTdG9yaWVzBHNsawNmZWRtYXlidXkzMDA-?x=0&sec=topStories&pos=1&asset=&ccode=

Bernanke says this maneuver of buying back matured bonds does not add money into the system and will not increase money supply.

So what will the Chinese do?

Will they slowly sell their vast holdings of US Treasuries to create a long-term negative pressure on the US Dollar as they add to the aggregate supply of US Dollars to the markets?

Article - "Researcher: China worried about US economy - Researcher: China worried about state of US economy, closely watching whether QE3 launched"
http://finance.yahoo.com/news/Researcher-China-worried-apf-2605871979.html;_ylt=Aoz7vss4XD.CyAGfkifSxnuxba9_;_ylu=X3oDMTFka2lsM2VuBHBvcwM0BHNlYwNuZXdzSHViQXJ0aWNsZUxpc3QEc2xrA3Jlc2VhcmNoZXJjaA--?x=0

I believe through a serious of events this will lead to a net increase in aggregate demand for US Dollars and a Stronger US Dollar, and perhaps my Thesis will become a hotly debated issue soon.

Currently I have the following positions;
Long 300,000 USDJPY with ACB of 79.438
Long 200,000 USDCAD with ACB of 0.96322

USDJPY is currently 78.746 (2011-07-14, 03:06 am EST)
USDCAD is currently 0.96005 (2011-07-14, 03:06 am EST)

Our first line of credit was activated on 2011-06-16th (Thurs) and our second line of credit was activated on 2011-06-29th (Wed).

Total equity is 11% of June 1st and we are committed to trade ourselves back to our High Water Mark.

Stay Tuned,

Jeff
(2011-07-14, 03:06 am EST)