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Daily Archives: April 7th, 2015

70% of the banking community was expecting RBA to cut rates today, 80% of the economists were expecting RBA to hold rates.

What do I think?  I don’t know, however, what I do know is that the media has been playing up the RBA rate decision since last week, so market sentiment is high, which means implicit volatility will be high.

At about 12:20pm, when AUDUSD spot was hovering around 0.7600, I decided to place my order;

Long, Stop if Bid at 0.7630 with SL at 0.7600

Short, Stop if Offered at 0.7565 with SL at 0.7600

What happened?!

RBA surprised the market by holding rates!

AUDUSD shot up to a high of 0.7710 at about 1.21pm.

I of course, decided to square off half the trade at 0.7685 for a trading profit of 55bps.

Thinking that there might be some more ‘legs’ in the AUD, I decided to write a call option at 0.7690 expiring tomorrow and I received premiums of 33bps.  My breakeven is 0.7657.

I placed a sell order at 0.7670 and it was hit, so I locked in profits of 40bps + 33bps = 73bps.

Now at 9:25pm Singapore time, the AUDUSD has corrected back down to 0.7647.

The only exposure left now is the open call option which I sold at 0.7690.  I have placed a Long, Stop if Bid at 0.7690.