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Trade: on 23 May 2013, LONG EURUSD at 1.2845 and squared at 1.2900

Last Thursday, 23 May 2013, I went LONG EURUSD at 1.2845 immediately after the announcements of the various PMIs for Germany, France and Italy, they were all generally slight improvements.

Initially, market moved slightly, I felt it was good for a 4obps pop upwards, then, it started moving up to 1.2900, I put an order to square the position at 1.2900 and it was taken out as it went higher to 1.2908.   I locked in a trading profit of 55bps or 0.42%.

It went higher into NY trading session but I was at the time out for dinner.

Trade: LONG AUDUSD at 0.9637 and squared at 0.9670

I saw the fast and slow stochastic signalling a buy, so I went long at 0.9637 and squared the trade 5 mins ago at 0.9670 for a trading profit of 33bps or 0.34%.

Trade: Short AUDUSD at 0.9645 and squared at 0.9635

I was so bored, decided to do a quick scalp; short the AUDUSD at 0.9645 and squared the position at 0.9635 for a 10bps trading profit.

Update on 2 month EURUSD call option strike 1.2990, BE 1.3175 expiring 21 June 2013

Time for me to do an update on the 2 month EURUSD call option that I  did back on 24 April 2013.  My cost was 185bps and the breakeven was  1.3175, the current spot of 1.2895, appears to be still very far from my  levels.

There is a real possibility that I  may have made a wrong call on this one and then again, I  may not, it’s really hard to say right now.

The tide which was very bullish USD may be turning this week and we might see the return of the bulls for EUR, GBP and AUD.

Mid week is going to be critical, Wednesday is the release of the BOE’s policy minutes, and also Bernanke speak on that day.

Thursday is crucial as fresh numbers on the flash PMIs will be out.

Friday is when Draghi speaks.

My hunch tells me that we will see alot of action and volatility in the latter part of the week, favoring a weaking dollar.

Trade: Thank you AUD; Long AUDUSD at 0.9765 and squared at 0.9810

Good morning to all, just when I was lamenting about a lost opportunity in the AUD yesterday, I also knew that in the forex markets, another opportunity would present itself.

It did.

This morning.

I Long the AUDUSD at 0.9765 during Asian time after the release of the RBA minutes to ensure no curve balls.  In fact, when the RBA minutes came out AUD tanked to 0.9750, but I waited till the rebound happened and some stability was seen in the charts.  Then, I Long the AUDUSD at 0.8765 at about 9.35am and just squared the position at 0.9810 at 11:30am.

I made a trading profit of 45bps or 0.45%.

Thank you AUD!

CPI data for the GBP this afternoon at 4:30pm, I believe it will be a market mover………….let’s see.

Have a nice lunch you all.

Missed Opportunity: Long AUDUSD

Quiet day on the economic front, however, a feeling told me that the AUDUSD will move today and it did twice today.

The slow and fast stochastic including the ichimoku were spot on!

It happened once this morning at 9am from 0.9741 to 0.9784 and then again when London opened at 3pm at 0.9750 to 0.9789…………………..oh what a waste!

The trades were so so so sweet.  I am only to be blamed as I was too busy replying emails all day and missed it.

Oh well………..cie la vie………….the good thing about the forex market is that everyday is a trading opportunity, so there’s always tonight US time or tomorrow.

I am going to walk away from my screens for now and maybe come back when New York opens, and then, again maybe not, might just spend the monday night enjoying a good dinner with my wife.

Enjoy your Monday everyone.

Trade: Bought Put Option on the AUDUSD at 0.9950, BE at 0.9905 expiring 17 May 201

We sold the put option at about 4:15pm Asian time on Friday at 0.9730 for a awesome 175bps profit or 1.80%.

Thank you Julia Gillard and Glen Stevens!

Trade: Short AUDUSD at 0.9968 and squared at 0.9935 on 14 May 2013

On 14 May 2013, when the world was waiting for Australia to announce their annual budget, we felt that they would probably announce a higher deficit than what market expects, although, there was alot of buzz during Asian trading time that the number was going to be big.

They market expected a deficit of A$14Bn and the final number was A$18Bn deficit.

AUD plunged.

We did a quick  short of the AUDUSD at 0.9968 and squared at 0.9935 for a trading profit of 33 bps or 0.33%.  Fortunately, we did as the AUDUSD rebounded back to 0.9990, after that it was all the way down.

Instead of staying glued to the screen, I decided to buy a  put option at 0.9950 with a premium of 45bps, bring the BE to 0.9905, expiring on Friday, 17 May 2013.

Update on Gold

dji and gold

The above is a chart that superimposes both the gold price graph and the Dow Jones Index.

Generally, there is a negative correlation between gold and the equity markets.

During the boom years of 2006 and 2007, look at how poorly performing gold was, and we see it again during the latter part of 2011 and this year.  Every time there is good economic data on the recovery of the economies and growth story, the price of gold will drop.

However, it is a reality today that gold is an asset class that is part of the asset allocation in an investor’s wealth portfolio.  It is no longer looked upon as a traditional hedging instrument.  It has come of his own in the past 12 years.  Today, there is a deep enough and broad enough market, that is, sufficient retail, corporate, institutional and government are and have invested in gold.

Today, it could be argued that gold is a pseudo currency, it has liquidity, it has an underlying value and it can be used in trade.  When the world is flush with liquidity and interest rates are low, confidence wanes in currencies as investors feel that the underlying value of the currency is weak, given that the global economies are weak, except for the emerging markets and Asia.

I believe the worse is over the the United States and for Euroland, there are still some bumps ahead, however, both economies have exhibited resilience and tenacity, they have turned the corner.  Now, just because they have turned the corner does not mean that the road to economic growth will not have hiccups, it will and we should expect it.

We believe the medium term 3 year outlook for gold would be that it will find a base at about $1,000/-.

Right now, institutional investors, that is, the fund managers are all selling gold or calling for a sell in gold.  The gold market is extremely bias short futures which will continue to add downward pressure to the price of gold.

What is the recommendation?

If you have gold holdings or gold ETFs, do consider rebalancing your asset allocation back to more equities.  The outlook for equities is positive and yet dangerous.

Right now, equity markets are driven and supported by liquidity and not by fundamental growth in the economy nor healthy earnings from corporates.

If the transition to a healthier economy and strong corporate earnings happen when QE is pulled back and interest rates rises, than equity markets will continue to rise.  If this transition is not handled properly, then, we may see some significant correction in the equity markets.

 

Thoughts on Gold…………………the Million Dollar Question?!

I have been asked to share my thoughts about gold.

I am in the midst of putting together my thoughts on this subject, however, my initial thought is that gold has carved itself out to be an asset class to be included in one’s investment portfolio, whether from a diversification point of view , reduce correlation risks, hedge against other asset classes and currency.  This trend has developed through time beginning from 2007.

You will recall that equity markets were booming into 2007 before blowing up in 2008.  In 2007, quite a number of fund managers were beginning to diversify into gold to hedge downside risks in the equity markets and also the bond markets.

When the 2008 financial crisis came, it was a real blow to the banking and financial markets………..DISTRUST stemmed from the aftermath.  Retail and corporate investors, family offices, trusts and institutional funds decided to reallocate their monies into gold while waiting for the financial markets and regulators to sort themselves out.

The financial crisis showed up the structural and policy weakness of the financial and banking sector.  It revealed the lack of governance and compliance.

Then the economic downturn took route from 2010 to 2012, and more monies went into gold as a safe haven.

Anyway, we will be putting up a more comprehensive post shortly.

Look out for it.