On Monday morning, I looked at the charts of the 4 majors and noticed that late US session on Friday, the USD was starting to claw back some ground.
I felt strongly that my hunch of a USD reversal is on the cards!
So I decided to get pricing to buy ATM put options expiring 29 April 2016 with the following details: –
EURUSD – Spot 1.1253, Premium 140bps, B/E 1.1113
GBPUSD – Spot 1.1253, Premium 180bps, B/E 1.1.4282
USDJPY – Spot 111.47, Premium 1.27bps, B/E 112.74
AUDUSD – Spot 0.7596, Premium 106bps, B/E 0.7490
I decided to execute all 4 put options with notional amounts of US$100Mn each.
It’s 6:38pm on Tuesday evening and where is the spot rate for the majors? Well, it’s: –
EURUSD – 1.1211
GBPUSD – 1.4276
USDJPY – 111.62
AUDUSD – 0.7592
Looks like I am also breakeven on my GBP, a little ways for the rest, however, as I mentioned earlier, I feel strong that there will be a USD reversal within the next 30 days.
I mean look at how the majors moved against the USD at FOMC and more so post FOMC, on average about 400bps moves against the USD.
I don’t believe for a moment that these counties can survive on such strong currency valuations when their respective economies are anemic.
Ok, fingers crossed and toes crossed!!!
Good luck in your trading.
The Panthenon Investment Group 