{"id":20864,"date":"2013-12-29T17:45:02","date_gmt":"2013-12-30T01:45:02","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=20864"},"modified":"2014-01-17T21:29:17","modified_gmt":"2014-01-18T05:29:17","slug":"the-british-pound-and-euro-surge-despite-higher-u-s-rates","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2013\/12\/29\/the-british-pound-and-euro-surge-despite-higher-u-s-rates\/","title":{"rendered":"The British Pound And Euro Surge Despite Higher U.S. Rates"},"content":{"rendered":"<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on December 30, 2013. <a href=\"http:\/\/seekingalpha.com\/article\/1920111-the-british-pound-and-euro-surge-despite-higher-u-s-rates\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>On Friday, the U.S. 10-year Treasury bond yield hit 3.0%, matching a high for the year. Rate are rising again across the yield curve.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_20866\" aria-describedby=\"caption-attachment-20866\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_USBondYields.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_USBondYields.png\" alt=\"U.S. Treasury yields are on the rise and back to highs of the year\" width=\"550\" height=\"330\" class=\"size-full wp-image-20866\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_USBondYields.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_USBondYields-300x180.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-20866\" class=\"wp-caption-text\">U.S. Treasury yields are on the rise and back to highs of the year<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/research.stlouisfed.org\/fred2\/graph\/?graph_id=133387&#038;category_id=8065#\" target=\"_blank\">St. Louis Federal Reserve<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>This steady march in rates should support a stronger U.S. dollar index (UUP). Yet, as the chart below shows, the U.S. dollar continues to hover just above its lows for the year. (Over the last three weeks, the U.S. dollar has managed to bounce off its QE3 reference price &#8211; the dollar&#8217;s level when the Federal Reserve announced QE3 last year).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_20852\" aria-describedby=\"caption-attachment-20852\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_DXY0.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_DXY0.png\" alt=\"The &quot;QE3&quot; reference price holds as support yet again\" width=\"550\" height=\"375\" class=\"size-full wp-image-20852\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_DXY0.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_DXY0-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-20852\" class=\"wp-caption-text\">The &#8220;QE3&#8221; reference price holds as support yet again<\/figcaption><\/figure><br \/>\n<strong>Source for charts: <a href=\"http:\/\/www.freestockcharts.com\/\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>The British pound is one of the currencies in the index holding its own and then some against the U.S. dollar. I have spent many posts discussing my bullishness on the pound in reference to improving economic conditions. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_20854\" aria-describedby=\"caption-attachment-20854\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_GBPUSD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_GBPUSD.png\" alt=\"The British pound just barely holds onto its breakout\" width=\"550\" height=\"375\" class=\"size-full wp-image-20854\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_GBPUSD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_GBPUSD-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-20854\" class=\"wp-caption-text\">The British pound just barely holds onto its breakout<\/figcaption><\/figure><\/p>\n<p><figure id=\"attachment_20853\" aria-describedby=\"caption-attachment-20853\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_GBPUSD-weekly.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_GBPUSD-weekly.png\" alt=\"The British pound maintains its longer-term breakout\" width=\"550\" height=\"375\" class=\"size-full wp-image-20853\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_GBPUSD-weekly.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_GBPUSD-weekly-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-20853\" class=\"wp-caption-text\">The British pound maintains its longer-term breakout<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The euro (FXE) is the majority component of the U.S. dollar index. The economy and yield stories do not work so well for me when trying to digest the euro&#8217;s contribution to the dollar&#8217;s inability to lift-off toward the top of its multi-year trading range. {snip} I continue to think the euro is rising just as a general anti-dollar bet. That trade seemed to reach a pinnacle on Friday when the euro inexplicably surged against all major currencies. This move is seen most clearly in Friday&#8217;s action for the euro against the U.S. dollar. <\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_20857\" aria-describedby=\"caption-attachment-20857\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EURUSD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EURUSD.png\" alt=\"The euro surges and completely fades...\" width=\"550\" height=\"375\" class=\"size-full wp-image-20857\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EURUSD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EURUSD-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-20857\" class=\"wp-caption-text\">The euro surges and completely fades&#8230;<\/figcaption><\/figure><\/p>\n<p><figure id=\"attachment_20856\" aria-describedby=\"caption-attachment-20856\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EURUSD-intraday.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EURUSD-intraday.png\" alt=\"...it all happened in the blink of an eye....\" width=\"550\" height=\"375\" class=\"size-full wp-image-20856\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EURUSD-intraday.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EURUSD-intraday-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-20856\" class=\"wp-caption-text\">&#8230;it all happened in the blink of an eye&#8230;.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>I continue to think short euro will be a strong trade to start 2014. The eurozone has a very unpleasant combination of rising unemployment AND high interest rates (in the periphery). {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_20869\" aria-describedby=\"caption-attachment-20869\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EuroAreaUnemployment.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EuroAreaUnemployment.png\" alt=\"The trend for unemployment in the eurozone is still UP\" width=\"550\" height=\"330\" class=\"size-full wp-image-20869\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EuroAreaUnemployment.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/12\/131227_EuroAreaUnemployment-300x180.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-20869\" class=\"wp-caption-text\">The trend for unemployment in the eurozone is still UP<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/research.stlouisfed.org\/fred2\/graph\/?id=LRHUTTTTEZM156S#\" target=\"_blank\">St Louis Federal Reserve<\/a> (updated through September, 2013)<\/strong><br \/>\n<\/center><\/p>\n<p>Be careful out there!<\/p>\n<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on December 30, 2013. <a href=\"http:\/\/seekingalpha.com\/article\/1920111-the-british-pound-and-euro-surge-despite-higher-u-s-rates\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>Full disclosure: short euro<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This is an excerpt from an article I originally published on Seeking Alpha on December 30, 2013. Click here to read the entire piece.) On Friday, the U.S. 10-year Treasury bond yield hit 3.0%, matching a high for the year. Rate are rising again across the yield curve. Source: St. Louis Federal Reserve This steady &#8230; <a title=\"The British Pound And Euro Surge Despite Higher U.S. Rates\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2013\/12\/29\/the-british-pound-and-euro-surge-despite-higher-u-s-rates\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[456,59,794,20,21,237],"tags":[299,376,127,447,384,60,1591,197],"class_list":["post-20864","post","type-post","status-publish","format-standard","hentry","category-bonds-2","category-economy","category-europe","category-forex","category-u-s-dollar","category-united-kingdom","tag-dxy0","tag-eurusd","tag-fxb","tag-fxe","tag-gbpusd","tag-interest-rate","tag-u-s-dollar","tag-unemployment"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The British Pound And Euro Surge Despite Higher U.S. Rates - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2013\/12\/29\/the-british-pound-and-euro-surge-despite-higher-u-s-rates\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The British Pound And Euro Surge Despite Higher U.S. Rates - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"(This is an excerpt from an article I originally published on Seeking Alpha on December 30, 2013. 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Click here to read the entire piece.) On Friday, the U.S. 10-year Treasury bond yield hit 3.0%, matching a high for the year. Rate are rising again across the yield curve. Source: St. Louis Federal Reserve This steady ... 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