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Daily Archives: August 4th, 2016

BOE done it again!

Market had almost priced in an interest rate cut of at least 0.25% some even speculating 0.50%.  However, the sensible cut would be 0.25% and the BOE did not disappoint.

Market was really waiting for whether or not the BOE will announce a larger asset purchase amount to pump more liquidity into the economy post Brexit to help boost the economy.

I decided to place a one leg straddle with the following details: –

GBPUSD:   Stop if Offered at 1.3300, Spot at 1.3325 and SL at 1.3330

As it turned out the interest rate cut didn’t really move the market, but what cause the floor from under the GBP to collapse was the announcement of an increase of 60Bn to the asset purchase program totaling 435Bn (previously, 375Bn).

My trade was triggered at within 5 minutes the GBPUSD was at 1.3172, I squared the position at 1.3185 for a trading profit of 115bps.  Thank you BOE, thank you Carney.

3 August 2016; Long USDJPY at 100.80 on cash

As shared in one of my earlier tweets, I believe the fx markets are increasingly more difficult to trade on leverage or on options, simply because the premiums are too expensive and the price actions whipsaws too much.

Going forward, I feel that in some trades it would be more prudent to do the trade on a cash basis.  We can then hold the position for as long as needed till the market comes to us.

In the case of the USDJPY, I have seen a recent pattern where whenever it hits near 100, thereafter, given enough time, it will rebound back towards the 105 level and this happens in the short term.

On August 3rd at about lunch time in Asia USDJPY hit a high of 100.74, I decided to Long USDJPY at 100.80.

Since then, it has high a high of 101.65 and is now trending at 101.04.

I am confident that I will be able to make one to two big figures on this trade within a month.

Let’s see……….fingers crossed!