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Tag Archives: foreign exchange

13 Dec @ UK Claimant Count

Another sought after UK economic data.

I decided to place my straddle with the following details: –

GBPUSD; Stop if Offered at 1.3323, Spot at 1.3344, Stop if Bid at 1.3365

Claimant count came out worse at negative 5.9K versus forecast of 3.3K, and previous month was revised upwards to negative 6.5K from 1.1K. Bad situation in the employment scene in the UK.

Unfortunately, the GBPUSD spiked upwards and triggered my stop if bid and before I could do anything, it fell and hit my stoploss at 1.3344, so I ended up with a small loss of 21bps……………such is life!

12 Dec @ UK CPI

Nowadays inflation data of all first world countries is an important economic data to watch out for. Today, is UK CPI.

I decided to place my straddle trade with the following details: –

GBPUSD; Stop if Offered at 1.3335, Spot att 1.3341, Stop if Bid at 1.3365

As it turned out CPI came slightly higher at 3.1% against forecast of 3.0%. Core CPI was the same at 2.7%.

The GBPUSD moved up and triggered by stop if bid, however, after less than 10 minutes it simply had no legs.

I squared the trade at 1.3375 for a small trading profit of 10bps.

Deja Vu……….FOMC………BOE….?

As it happened last month with the BOE, market decided to sell off the GBP when BOE announced the rate hike………….the classic rally on rumours and sell on fact.

Of course, in the GBP’s case, the GBP rallied aggressively prior to the rate decision by BOE.

In the case of the US Dollar, it has lost ground to the EUR.  GBP’s weakness is because of the failure of the recent round of Brexit talks between the EU and Theresa May.

The JPY is the reverse with US gaining ground coming up to the FOMC decision. AUD has weakened recently because of the fear of a softening economy.

So how will the US Dollar react on FOMC rate decision day?

Right now, it appears that it can go either way, so it looks like I will be putting on a straddle to capture either direction if and when it happens.

Are we expecting volatility? Yes!

Sad….sad…..sad…..AUDUSD option trade

It looks like the two AUDUSD call options that I bought; one expiring tomorrow and the other one on December 14th will both expire WORTHLESS.

And I am going to be hit with a loss of 142 bps being the premiums paid upfront. Actually, at the start, I have already decided to risk the 142bps, so it’s okay but still sucks! Hahahahahahahahaha……………ok people………..alittle humour?!

This year end is proving to be really difficult to trade, maybe, should just close my trading books and call it a day for 2017?!

Then again, we have major potential events happening this month, will it bring with it high volatility given the lower trading volumes?

Let’s see.

Quickie on the GBPUSD

Today was UK Services PMI, and typically a hot data.

I decided to put on my straddle just before the announcement of the data with the following details: –

Stop if Offered at 1.3370, Spot at 1.3388, Stop if Bid at 1.3410

As it turned out the data came in weaker at 53.8 versus forecast of 55.2.  Instead the GBP strengthened and triggered by Stop if Bid.

As I needed to leave the office to have dinner with my wife, I decied to square the spot trade at 1.3430 for a small trading profit of 20bps.

15 Nov @ 1 day USDJPY call option

As it turned out, the USDJPY never did have any legs, so the option expired with a loss of 0.30yen.

15 Nov @ 1 day USDJPY call option

I am deciding to take a small punt and buy a one day call option on the USDJPY with the following details: –

Strike: 113.20

Premium: .030

Breakeven: 113.50

Let’s see.

USDJPY……….Divergence point?

4H chart shows that the USDJPY is about touching the 200DMA.

At this point, the USDJPY can rebound back to 114 or meltdown to 111.70, how will it move.

Is this a buying or selling opportunity?!

Let’s see whether it can defend the support level of 113.20?!

Is the AUDUSD entering a period of softer AUD?

I totally missed this………………SHOOT!

Looking at the Daily chart, I noticed that spot crossed the 200DMA on November 4th at 0.7697.

Does it mean that the AUD is heading for a protracted softening?

I have already bought two call options with breakeven averaging 0.7710………about 130 basis points away right now………….hmmmmm……..will I have a chance in the next three weeks for the AUDUSD to recover?

Let’s see.

TODAY 6PM @ Central Bank Communications Conference

An event organized by the ECB, bringing together the mightiest central bankers of the major currencies of the world together to TALK SHOP?!

Will we expect any surprises during this meeting or will all the central bankers keep a neutral tone on their respective monetary policies?

Let’s see where the different central bankers positions are at the moment: –

Yellen: the rate hike in December is a done deal and Wall Street has fully priced in the hike. Everyone is now speculating about the ‘path’; both speed and magnitude, this will move the financial markets.

Draghi: he keeps on maintaining a neutral position, saying that monetary policy could go either way depending on the needs of the Eurozone.  However, he did mention that the easy monetary policy is coming as the policy has produced positive economic results in the eurozone area supposedly far better than the USA.

Carney: he is also hinting about a rate hike but didn’t pull the trigger in the last BOE meeting.  Is the BOE deliberately keeping the GBP bidded?  We know that the UK economy is a services economy, a financial markets economy and an education economy. The education sector is rather inelastic, so even is the GBP is stronger, people who need to fund their children’s education in the UK will just keep on paying the higher exchange rate.  The services economy and financial markets economy is beginning to feel the exodus of firms moving out of the UK.  Volumes of trades in the financial markets for the time being is still stable.

Kuroda: no sign of monetary tightening from him. He keeps on reiterating that Japan will have no problem hitting its inflation target of 2%, but the fact is it’s still far away.  Abe’s 4 arrows economic policy had limited impact on the economy and thankfully, he has been re-elected, so any new arrows to look forward to?

The world seems to be in a state of flux both from the economic perspective and also from the monetary policy perspective.  Financial markets like the USA has gone crazy, with P/Es never seen before in the past 10 years.  Is liquidity channeling itself into the financial markets instead of the real economy?  It may appear to be so.

December 2017 will be rememberd in history as one of the pivotal months of the past 10 years.  I am not so sure traders will be closing their books just yet and miss out on what could be one of the best trading periods for the entire year.