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Tag Archives: gbpusd

Trades done just prior to FOMC

I was watching the fx rates the 15 minutes prior to the 2am FOMC announcement, rates were holding steady in a very tight 5 bps range.

While it is near impossible to guesstimate what Bernanke is going to do, the general consensus in the marketplace is that he will make some ‘light’ tapering so as to follow through with what he has been saying the past two months.

I placed a total of 4 trades: –

AUDUSD  –  Buy Stop if Offered at 0.9388, spot was 0.9368

EURUSD  –  Buy Stop if Offered at 1.3395, spot was 1.3372

USDJPY  –  Sell Stop if Bid at 99.10, spot was 98.85

GBPUSD  –  Sell Stop if Bid at 1.5950, spot was 1.5971

Then at 2am, Bernanke shocked the financial markets with ZERO tapering!  All the majors jumped against the USD, I was triggered on my AUDUSD and EURUSD.

I squared the AUDUSD at 0.9460 and the EURUSD at 1.3455 when I saw that the momentum was flattening out, then again, half an hour later, the majors resumed their torture on the USD.  Trading profit on the AUD was 72bps and on the EUR it was 60bps.

Today, Asian afternoon and London morning, AUDUSD is at 0.9507 and EURUSD is at 1.3567.  Oh well, one can’t capture the maximum move, I am happy with what I made in 15 minutes last night.

I was out playing golf this morning and got home early afternoon.

Option Trade: Bought GBPUSD Put Option expiring 27 September

Today, I bought a GBPUSD Put Option expiring 27 September 2013, at the strike of 1.5915, breakeven of 1.5826, premium of 88bps.

We are 100bps higher because of Summer’s exit from the running for the Chairmanship of the Federal Reserve.  Inspite of the recent better economic data, I believe the UK cannot afford to bear with the current exchange levels as it may prove to be rather painful and counterproductive to the economic growth for the country.

Let’s not forget that only on September 2nd, the GBP was trading at about 1.5550.

The 76% retracement level based on the 4H chart is 1.5692, this is about 134bps from the current spot rate and against the cost of the option, it is a 1.52X payout probability.

Trade: Spread Stop if Bid and Offered for GBPUSD to capture Claimant Count Change

GBPUSD was holding at spot of 1.5760, I decided to do a spread trade; 20bps either side of the fence, stop if bid and stop if offered.

Data came out much better -32 versus forecast of -21, GBP popped up to 1.5820.

It triggered my Buy Stop if Offered at 1.5780 and I squared at 1.5815 for a trading profit of 35bps.

Now, GBPUSD spot is back down to 1.5773.

Trade: Short GBPUSD on weaker GDP and worsening current account deficit

I saw an event trading opportunity with the UK GDP and current account numbers came out at 4:30pm Singapore time.

I short the GBPUSD at 1.5297 and squared at 1.5267 for a 30bps trading profit.

Then I had to shut down as I needed to leave the office.

Now at 9pm Singapore time, the GBPUSD is at 1.5243………….no worries, based on my stochastics, I should be out at 1.5267 which I did because it retraced back upwards to 1.5300 at 7pm Singapore time.

The GBPUSD actually weaken by 40bps to 1.5243 just 10 minutes ago, and I can’t explain why, when the EUR, JPY and AUD are all holding steady against the USD.  Initial Jobless claims and personal spending came in flat as per forecast.

Thoughts: Possible 1 month GBPUSD Put Option

Strike at 1.5660, breakeven at 1.5506and premium is 149bps.

61.8% ~ 1.5751

50% ~ 1.5587

38.2% ~ 1.5424, difference is 82bps and payout is 0.55X

0% ~ 1.4894, difference is 612bps and payout is 4.1X

Thought: Overview of the FX market

EURUSD

———–

The EURUSD is currently trading above the 61.8% level of 1.3321, the 76.4% is at 1.3437 and the 100% is at 1.3640 established on 1 February 2013.

Last night’s high was at 1.3385and the low was at 1.3282.

 

GBPUSD

———–

The GBPUSD is presently trading above the 61.8% level of 1.5754 with the 76.4% at 1.5957 and the 100% at 1.686 established on 21 December 2013

Last night’s high was at 1.5723 and the low was at 1.5650.

 

AUDUSD

————

The AUD is a currency that really begs to be thrashed.  The current spot is trading below the 0% level of 0.9671, the 23.6% is at 0.9891, 38.2% is at 1.0027 and the 50% at 1.0137.  How much will it take to drive the AUDUSD to the 50% level, I don’t think alot.  Home loans is down, consumer sentiment is down, however, employment is up and unemployment is down.

Let’s look at this more closely.

 

My hunch tells me that there is opportunity in the following: –

Call option on the AUDUSD

Call option on the USDJPY

Put option on the GBPUSD

Right now, we need to do a cost benefit analysis to determine which strategy is cost efficient and profit effective.

 

Trade: LONG GBPUSD at 1.5552 and squared at 1.5592

I bought the GBPUSD at 1.5552 and squared at 1.5592 prior to the GDP announcement for a trading profit of 40bps or 0.25%.

Post Carnage from last night

eurusd 7 june 2013

 

gbpusd 7 june 2013

After last night’s spectacular moves by the EUR and GBP averaging more than 190bps, the current spot is at the 50% retracement level.  The market can now make very violent swings given the current volatility.

While I am of the opinion that the non farm payroll numbers will probably disappoint given the earlier poor showing of the ADP numbers, we are going into Spring and the start of new job placements.  On the off chance, that the non farm payroll numbers coming in stronger than forecast, we should see USD powering back against the EUR and GBP.

Volatility in equities and forex are high right now, and hedging through the options or CFD market is very expensive.

If one is being prudent to potentially capture either the upswing or downswing, buy a call/put spread option would be a safe bet, as one would WIN either way.  However, the cost of the spread option till Monday 10 June is a hefty 114bps.  So is it worth it?  NO.

Which means, one will have to take a gamble on one side.  My advice is to place a stop loss as it is our only protection.

I am deciding to stay out of the market today and instead, spend time with my wife going to the spa and a nice dinner.

Here’s wishing all of you a great weekend.  Remember, in the forex market there is always another day of opportunity, so if you don’t feel comfortable…….don’t push yourself.

 

Trade: GBPUSD Buy Limit at 1.5330, Spot at 1.5302, squared at 1.5370

Following from my thoughts for the GBPUSD earlier, I went ahead to place a buy limit order at 1.5330, SL at 1.5310, while spot was at 1.5302.

UK Services PMI came out very strong at 54.9 versus expectations of 53.1.  Immediately, the GBP spiked up triggering my limit order, I followed the spike till I saw the stochastic peaked and sold at 1.5370, the high was 1.5371, it is now trading at 1.5356.

Locked in a yum yum trading profit of 40bps or 0.26%.

GBPUSD: Services PMI @ 4:30pm Singapore time

What do I do???

Looking at the chart it appears that the current spot is at about the 50% retracement level between the high of 1.5581 and the low of 1.5023 established in the month of May.

This means that the GBP can literally swing either way, depending on the PMI data.  I believe the data will outbeat the forecast of 53.1.  The past 3 months has been showing an uptrend and there’s no reason to be otherwise.

gbpusd_hourly chart_may 2013_6 june 2013

Checked the option, to buy a call option till this Friday seems rather expensive at 68bps.  So it looks like I may have to place a limit buy order or maybe, even a spread order, that is to buy and to sell the GBP.