Thursday morning

After the Fed statement, I noticed the euro was trying to break out to the upside.  Not surprising initial move because according to interest rate parity, exceptionally low rates until 2013 is not good for the dollar.  Anyways, looks like the Euro failed to break higher (investors rushed into USD as equities got slammed yesterday) and now is actually trying to break lower this morning on elevated stress in France and Italy.  I look at FXE, the Euro ETF, which is hovering around the 141 level this morning.  Funny thing is, as I write this SPX futures just bounced 20 and FXE bounced 60 cents or so to 141.10.

Short term chart:

1 yr chart:

Notice the key 141 level.  If we hold this, I expect the Euro to move higher back to 144 which will provide support for equities and commodities as USD moves lower.

SPX futures are fluctuating wildly this morning.  Up 20 to down 20 (testing 1100 key support) to up 10.  Europe is considering banning short selling.  Initial jobless claims a little better than expected by 5k.  Gold down 1% as CME hikes margin requirements.  Treasuries also down.  Another interesting thing to note is the Swiss franc, down huge this morning - Swiss National Bank said yesterday it would significantly increase the supply of liquidity to banks and the money market because it believes its currency is massively overvalued.  This move lower in FXF is another sign of "risk on" behavior, even if the catalyst is central bank intervention.  Seems like everyday we see more policies as a desperate attempt to stem a global crisis: gold margin hikes, ridiculously low US rates, Yen intervention, CHF intervention, possible short selling ban in Europe - all designed to incetivize riskier behavior.  The question that remains is whether investors will react accordingly.