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Monthly Archives: June 2013

Unusual Wednesday, June 26th 2013

Not much in data except for US GDP and that came in weaker and the market hardly reacted to it.

In fact, the USD moved against the other majors right after Draghi’s speech at about 2:30pm Singapore time.

And the majors fell against the USD again at about 10pm, based on ‘nothing really’…………that’s strange.

All in all the majors lost about 80bps to 100bps against the USD.  So we are now below the trading bar, we’re not at the bottom of the last Fibonacci yet and I do not believe it will get there as there isn’t anything drastic coming out from Europe.

Trade: Short GBPUSD on weaker GDP and worsening current account deficit

I saw an event trading opportunity with the UK GDP and current account numbers came out at 4:30pm Singapore time.

I short the GBPUSD at 1.5297 and squared at 1.5267 for a 30bps trading profit.

Then I had to shut down as I needed to leave the office.

Now at 9pm Singapore time, the GBPUSD is at 1.5243………….no worries, based on my stochastics, I should be out at 1.5267 which I did because it retraced back upwards to 1.5300 at 7pm Singapore time.

The GBPUSD actually weaken by 40bps to 1.5243 just 10 minutes ago, and I can’t explain why, when the EUR, JPY and AUD are all holding steady against the USD.  Initial Jobless claims and personal spending came in flat as per forecast.

One hour after Durable Goods Orders………..

One hour after the announcement of better numbers for the US durable goods orders, the current spot rates are as follows: –

EURUSD  1.3109

GBPUSD  1.5444

USDJPY  97.61

AUDUSD  0.9274

 

Basically, except for the EUR which continues to hold a weaker position down by 20bps from the time of announcement, the rest, that is, the GBP and JPY are flat and the AUD is 5bps higher than at 8:30pm.

Seems like the European and US markets are losing confidence in the US Dollar.  However, the Dow Jones is up 96 points this morning in New York.

I believe some calm or rationale has come back to the marketplace for now.

Trade: Two quick trades by shorting the AUDUSD

I was getting bored and so decided to do a quick scalp; decided on the AUDUSD as it technically was looking good.

I Short AUDUSD at 0.9273 and was stopped out at 0.9288 for a trading loss of 15bps.

I saw the opportunity again an hour later and Short AUDUSD again at 0.9276 and this time I squared at 0.9260 for a trading profit of 16bps.

I was one and made on the other, I was all squared; no win, no loss.

I guess we need to keep on trying to sniff out potential trades, we can’t win all the time and we certainly won’t loss all the time either.

Trade: Quick Scalp on the AUDUSD Long at 0.9610 and squared at 0.9620

Was a boring day on June 17th, and though I would toy with the market for a quick scalp.

Stochastics and Ichimoku told me to Long the AUDUSD at 0.9610 and I squared the position at 0.9620 for a 10bps trading profit.

Potential call options discussed on June 14th before Bernanke’s June 20th whack in the head!

I was considering three call options in the AUDUSD, GBPUSD and USDJPY.

In hindsight after the ‘whack’ from Bernanke, it now appears that of the three possibilities, only the USDJPY would have worked out well.

You will remember that the possible call option on the USDJPY was at a strike of 94.90 with a breakeven at 96.99 and a heavy premium of 1.89.  The current spot is at 97.57 and it looks like there is a fair chance that it could go higher by the end of the week, if more positive US data is announced.

Follow up on the thoughts for EUR, JPY and the AUD

The EUR at 1.3090 has broken through the short term channel of 1.3164 and 1.3267.

The JPY at 97.64 is staying within the short term band of 96.21 and 98.25.

The AUD at 0.9260 appears to be quite resilient, staying above the 61.8% retracement level of 0.9230.

The US Durable Goods Orders came in better than forecast and the USD clawed an average of about 30bps from the majors.  I was expecting a bigger move.

Watch to watch out for next week

Monday

———–

4pm  ~  EUR  ~  IFO Business Climate

 

Tuestday

————

8:30pm  ~  USD  ~  Durable Goods Orders

10pm  ~  USD  ~  New Home Sales

 

Wednesday

————–

5pm  ~  GBP  ~  Inflation Report

8:30pm  ~  USD  ~  Finalized GDP

 

Thursday

————

4:30pm  ~  GBP  ~  Current Account and GDP

8:30pm  ~  USD  ~  Unemployment Claims

10pm  ~  USD  ~  Pending Home Sales

 

I believe Tuesday and Thursday will be market moving days, so let’s get ready for it and make decent trading profits out of these opportunities.

Let’s not forget to do our homework.

Here’s wishing all a great weekend.

Outlook for AUDUSD

The AUDUSD has staged a phenomenal meltdown since April this year.  Imagine on 11 April, the AUDUSD was at 1.0581 and by 11 June it was at 0.9324, that is a 1,257bps move!!!!!!!!

The current spot at0.9230, a slight improvement from the post FOMC low of 0.9166.  Where is the AUD going, the target of 0.9200 has been hit.

This is why we need to look at the monthly price chart: –

audusd_monthly chart_21 June 2013

The low was 0.6248 on 1 February 2008 and the high was at 1.1016 on 1 July 2012.

76.4%  ~  0.9912

61.8%  ~  0.9230

50%  ~  0.8678

38.2%  ~  0.8126

23.6%  ~  0.7443

Does the RBA necessarily need to continue easy monetary policy by reducing interest rates further?  I don’t think it needs to, the economy has lower debt compared to any other developed country.  Debt to GDP is also the lowest of any developed and matured economy.  Australia was not involve in the CDO and CMO crisis, it just practiced old fashion banking.  You are not going to be as exciting as the UK or the US, but Australia has less volatility and is more steady all around.

I believe at the current FX levels, it will help Australia to be export competitive for a developed country.  Pharmaceuticals, food and beverage are still very large export industries for Australia, besides, the traditional commodities and metal ores business.

Could AUD reach the 50% retracement level of 0.8678, it is possible, however, what will bring it there?

I believe the bottom is near and thereafter, we can take an opportunistic option trade to ride the upside.

 

 

Outlook for USDJPY

The appropriate and relevant price chart to look at is the 4 hour chart; it shows a high of 103.52 on 12 May and a low of 92.56 on 12 April.  Moving averages has broken through the declining cloud though fast and slow stochastic is showing a downtrend tendency.

usdjpy_4 hourly chart_21 June 2013

The 15 minute chart shows the yen trading in a short term band of between 96.21 and 98.25, about 2 big figure spread.  Good opportunity to make quick profitable trades within the band.

I will shortly share some short term trade strategies with you.