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Tag Archives: foreign exchange

USDJPY…….Long at 100?!

Ever since Brexit accompanied by the economic problems in Japan, it appears that a trading opportunity is emerging.

As a safe heaven currency now, every time, negative comments are made of post-Brexit and EU, JPY is usually bidded up to 100 and sometimes higher at 98.98. I noticed that the JPY has hit 100 or better three times since post Brexit and each time rebounding back to 102.70 to 103.20.

Guess what it’s back up to 100.75 now, and moving at the 20% range of the stochastic curves.  Possible rebound back to 101, then to 102?

To play the plan vanilla options is not worth it as the vols are high resulting in elevated premiums.

What to do?  How to capture the potential opportunity?

While the whole world was focusing on the GBP, I was also looking at the USDJPY

At near 10:30am or about the time when results from at least 70% of the polling centres were coming in with Brexit clearly on the table.  The JPY strengthened from 104 down all the way to 98.87.

When news came out that the BOJ may come in to intervene against the stronger yen, I decided to put in a spot position at 100.00 with a stop loss at 99.70.

I kept following the position till it reached 102.70 and I squared the position for a yum yum 2.7 yen!!!

Thank you Brexit and BOJ!

23 June @ Day of Voting for Brexit or Bremain

Decided to take a small punt though I wasn’t exactly comfortable with the volatility.

A two day put option was 120bps, which means for every 1Million nominal option size, the cost is $12,000/-.

Nonetheless, decided to take a small position with the following details: –

2 Day Put Option

Option Amout: $2Million

Strike: 1.4862

Premium: 115bps

Breakeven: 1.4747

It’s gone crazy now!!!!

About half of the results are in and Leave leads by 3.5%, GBP plummets.

I decided to take profit on my option and sold the option five minutes ago at 1.3490 for a whopping 1,257bps or a payout ratio of 10.4:1!!!!!

I am out for the rest of the day! Thank you UK!

Further update on NFP and USDJPY

I also did a trade on the USDJPY but not a straddle trade, instead, I just took an off chance view that the NFP could come in weaker and placed my bets on the JPY as follows: –

USDJPY: Stop if Offered; 108.53, Spot; 108.83 with SL; 108.80

As it turned out NFP came in very weak and my out of the money trade was triggered.

I squared the EURUSD earlier, and kept the USDJPY trade alittle longer and got out half an hour later at 107.45 for one big figure trading profit of 1.08!!!

Best part about it was I got out of this trade while in a lounge with friends drinking wine.

Here is wishing all a great TGIF – Thank God It’s Friday!

3 June @ NFP!!!!!

This week has been a sleepy week despite important events like ECB, manufacturing data, ADP and of course, tonight, NFP?!

Since there weren’t any trading opportunities throughout the week, it would stand to reason that the FX markets would be ‘itchy’ to create a movement if a sufficient reason was given.

Today’s NFP to cap off a lacklustre week or is it?

Anyway, we had to be there, so at 8:28pm, I put in my trade as follows: –

EURSUD: Stop if Offered; 1.1125, Spot; 1.1154 and Stop if Bid; 1.1180 with corresponding SLs at 30bps away on both sides of the goal posts.

As it turned out, NFP came out at a shocking 38K versus forecast of 159K, with alittle offsetting by unemployment rate at 4.7% verusus 4.9%

My Bid trade was triggered at 1.1180 and I waited till about 5 minutes later and squared at 1.1260 for a trading profit of 80bps……….not bad!

Thank you NFP!!!

Everyone have a great weekend!

I am out of here and going to take my wife out to meet friends for drinks.

RBA Rate Decision – Game in play

I hope all of us was there at 12:30pm today for RBA’s rate decision?

This meeting of RBA has been getting a lot of noise in the media since the past three weeks.

I decided to buy a AUDUSD Put Option with the following details: –

Strike; 0.7696, Premium; 34bps, Breakeven; 0.7662, expiry 10am NY 4 May

As it turned out, the RBA decided to cut interest rates by 0.25% to 1.75%.  As expected market reacted selling the AUD down aggressively.

Within 15 minutes, I decided to sell the option at 0.7563, locking in trading profits of 99bps!

Thank you RBA.

Trust all of you also managed to capture this opportunity……….(“,).

More drama later into the week…………

FOMC

This is what I usually try to avoid; a FOMC meeting where only a statement is published and no press conference.

Then, the whole world begins dissecting the statements and using different words to support their views, this usually causes big whipsaws as we just saw a few minutes ago.

Just before the release of the statement, EURUSD was holding at 1.1332, when the statement was published, it fell to 1.1275 as the reference to global risks was taken out which implied that the Fed will just focus on the US and not use the rest of the world as an excuse for not raising rates.

Then, the market zeroed in on the word, ‘stance’ of the monetary policy to mean an accommodating stance, EURUSD reversed and shot back up to 1.1333.

Anyway, I put in a small OTM order betting the downside with the following details: –

EURUSD   –   Stop if Offered at 1.1300, Spot 1.1332, SL 1.1330

As it turned out the first move was down and it triggered my trade, I quickly decided to square off the trade at 1.1275 when I was speed reading through the statement and felt that the statement was quite balanced.

Gripping and stressful trade, and only rewarded with trading profits of 25bps.

Looks like June will be the D-Day!

Goodnight everyone.

GBPUSD in April

The story of Brexit has dominated the GBP pretty much the entire month of April.

It started at about 1.4272 on April 1st, hit a low of 1.4019 on April 6th and 7th and from there it established four highs topping at 1.4632 on April 26th.

1H + Fibo suggest that spot is trading at the 100% level

4H + Fibo suggets that spot is trading at 50% level

Any negative surprise to the GDP data will surely see GBP crashing! Wall Street is expecting a range between 0.4% to 0.5% with general consensus at 0.4%.

Let’s see.  Let’s all be there to capture any potential opportunity if it presents itself.

We did well this morning with the AUD CPI, will out positive momentum continue this afternoon in the UK trading session?!

Australia quarterly CPI………….a trading opportunity

This morning 9:30am Singapore time was the Aussie CPI quarterly numbers.  This time around, the CPI is important to support what is going on in the economy; rising real estate prices, rising food prices, rising wages.  Forecasters was expecting 0.3% for the quarter.

I decided to place my straddle trade at 9:27am with the following details: –

AUDUSD   –   Stop if Offered; 0.7728, Spot at 0.7758, Stop if Bid; 0.7788 with corresponding SLs at 30bps away

As it turned out the CPI came in NEGATIVE at (0.2)%, it surprised me too!

Immediately the AUD tanked, triggering my Stop if Offered at 0.7728, the initial drop was 88bps down to 0.7670, then, it began to pick up more momentum.  At about 1:42pm the spot level was at 0.7633 and I decided to square the position to lock in my trading profits of 95bps.

It’s 2:40pm Singapore time now, and the spot is at 0.7614.

So the total move from the spot at 0.7758 to now is 144bps!  So you see, a significant data event and one that financial markets has been talking up to create volatility coming into the data, usually will react violently if the data was significantly different from expectations.

This afternoon is UK quarterly GDP, are we going to see any surprises.  Lately, economic data coming out of the UK has been dismal except for the continuing rise in real estate prices.

The 4H + Fibo indicates that the current spot level is at the 50% level.

The 1H + Fibo indicates that the currenct spot level is at the 100% level.

So it looks like any negative surprise to the GDP data could easily cause the GBP to tank?!

Let’s all the be there later.

Quick Update on the Put Options…………

Ok, it looks like my call was wrong.

Profited from the GBP because the put level was on the higher range.  In hindsight, the levels of the AUD, EUR and JPY were all kind of the mid range between the high and low goal posts.

Today’s Australia CPI was negative, indicating that the Aussie economy has gone into deflation the past quarter. This was good for my spot trade which I will share in another write up and makes my put option look alittle better but honestly, the I doubt the AUD level will be hit before the end of this month, only two more days.

Looks like I may be throwing away the options paid for the AUD, JPY and the EUR, then again, if I did a mark to market, then, I lost less doing the options then continuing the hold say an ‘open’ spot position, which would have necessitated a top up by now.

So, as I have always shared with all of you, if you have a fundamental view of a strategic view, then, play the potential opportunity by way of an option, rather than doing a spot transaction.