On the same day of September 3rd, I bought a call option on the AUDUSD for two days expiring September 5th. The spot was 0.8982, breakeven was 0.9032 and the premium was 50bps.
On September 4th about 11pm Singapore time or 11am NY time, I decided to sell the option as the spot was at 0.9180, I made a yum yum profit of 148bps or a 2.96X payout, not bad at all. My initial expectation was between 2X to 2.2X.
I executed a Buy on AUDUSD at 0.8985 as I felt that it was basing at that level based on Ichimoku and Stochastics.
Took profit at 0.9035 for a trading profit of 50bps.
I saw another quick opportunity based on technical analysis and shorted the AUDUSD at 0.9275 and squared at 0.9260.
Ok, time to update the last two trades I did in June. On 28 June 2013, Long AUDUSD at 0.9233 and squared at 0.9260.
The USD isn’t waiting for the nonfarm payroll numbers this friday, it has already staged a move against the majors.
USD moved against the EUR at 1am, dropped by 89bps.
USD moved against the GBP at 7:15pm, dropped 75bps.
USD moved against the JPY at 8:30pm, dropped by 89bps
USD moved against the AUD at 6;45pm, dropped by 29bps
So, it appears that the AUD has been the most resilient against the onslaught of the USD. Maybe the market if waiting for Governor Steven’s speech later this morning to get a confirmation of the RBA statement published earlier yesterday. You will recall; RBA held rates at 2.75%, felt that the drop in the AUD is helping the economy, feels that the economy is continuing to adjust to a different business model and less reliant on mining and resources, felt that housing is holding steady, felt that borrowing is coming back, and felt that there could be more room for currency to weaken which would help the economy
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.
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.
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.
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: –
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.
Option expiring 15 July or 15 August.
1 month; Strike 0.9600, Breakeven 0.9715, premium payable is 115bps.
38% target at 1.0027, difference is 312bps, payout is 2.7X.
50% target at 1.0137, difference is 422bps, payout is 3.67X
2 months; Srike 0.9600, Breakeven 0.9785, premium payable is 185bps.
38% target at 1.0027, difference is 242bps and payout is 1.30X
50% target at 1.0137, difference is 352bps and payout is 1.90X.
I am born in the Year of the Tiger.
The Panthenon Investment Group 