The Panthenon Investment Group

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.

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.

Rumours that George Soros short the AUD through the option market last Monday, meant that he could have short the AUD at about 1.04, which means he is looking at a huge trading profit.

We decided to make a small bet today as we were not comfortable given that the AUD has weaken substantially from last week.

We made a quick bet and short the AUD at 1.0240 and squared the position at 1.0188 for a trading profit of 52bps or 0.51%.

We knew that the ECB rate decision was going to create volatility in the fx market.  We were not sure whether we could catch the movement when the announcement came out.

Instead, we did a proxy by focusing on the AUDUSD, knowing that it will also react positively if the Euro was going to strengthen and it did.

We long the AUDUSD at 1.0225 and square the position at 1.0270, the high was 1.0283.  We made a trading profit of 45 bps or 0.40%.

We were swindled by the market last Thursday and Friday.

Data out from Australia was weak; employment weaker, unemployment higher.

PM Gillard commented that there was room for RBA to lower rates.

All these is suppose to put pressure on the AUD, but it didn’t, instead it powered all the way up to 1.0582.  We believe it’s because the direct AUDCNY started on Thursday and we were just fighting the flows.

We bought a put option on the AUDUSD this morning on the back of poor Westpac consumer sentiment number.

Let’s see what happens in the next 24 hours.

Our sell order of 1.05 was triggered last night during New York time.  Our realized trading profits is 135bps or 1.28%.

The market has proven us correct, the AUD continues to build on strength, the current spot of 1.04961 is trading above the 50 day average of 1.0456 and the 150 day average of 1.0439.

The trade balance posted a strong number with deficit narrowing to (0.18)Bn compared to the previous (1)Bn, this is a very strong comeback.

Our target is to close out the option when we hit the 1.05 level.

The Daily Chart; shows strong support for the AUD, the trendline has broken through the cloud and is reversing the cloud’s declining outlook to a rising outlook.

You will recall that our breakeven is 1.0365 and the current spot of 1.0446, gives us a decent 81bps, I think we will hold this position.