Was trying to get a feel for the range of the GBPUSD.
The 4H – High 1.3441, Low 1.2022, spot at about 23.8% retracement level
1H – HIgh 1.2560, Low 1.2119, spot just above 61.8% retracement level
It suggests that if there is positive news coming out of the UK that the 1H could breakout and then the 4H begins to be relevant.
Have to keep watching……………….
Ever since, Brexit has been looming over the UK, all data attributed to manufacturing and services has been on the radar screen.
This evening was the UK Mfg PMI. I didn’t really know which way it was going to swing, but I could sense that it would be a weaker data, so I placed a one leg straddle with the following details: –
Stop if Offered at 1.2566, SL at 1.2586 and Spot at 1.2589.
The data came our flat at 55.9 same as forecast, GBPUSD hardly moved, so I withdrew the straddle trade.
Tonight, Theresa May is addressing the nation on how she is going to implement Brexit.
She mentioned that the Government will put the final Brexit deal to a vote in both houses of parliament.
Does this mean that there is a possibility of a repeal in the Brexit?
Market seems to like what is it hearing from Theresa May.
I decided to place a straddle when her speech started with the following details: –
GBPUSD: Stop if Offered at 1.2120 (SL 1.2140), Spot at 1.2158, Stop if Bid at 1.2175 (SL1.2145)
My Bid was triggered and I rode it up till I squared the position at 1.2325 (High was 1.2346) for a trading profit of 150bps!!!
Thank you Theresa May and what a trade to start the Year of the Rooster!!!
Long USDJPY at 115.31 and squared at 116.40 for a trading profit of 1.09yen.
Short GBPUSD at 1.2696 and squared at 1.2616 for a trading profit of 80bps.
After Brexit, any data that can give an inclination to the economic health of the UK would be important. This afternoon, the UK Manufacturing PMI would be one these important indicator.
Markets was expecting 49.1 slightly better than previous month of 48.2.
I put my straddle with the following details: –
Stop if Offered; 1.3120, Spot at; 1.3146, Spot if Bid; 1.3170
Corresponding stop losses at 25 bps away.
As it turned out, the number came in very strong at 53.3 which took markets by surprise, the GBP spiked up at triggered my Bid trade at 1.3170.
I squared my trade at 1.3242 for a trading profit of 72bps. Not too bad for the first day of September.
The spot is now 1.3250.
I wasn’t about to put on a straddle trade for this economic data, instead, I kind of made up my mind to chase the market if the data came out strong.
My gut feel tells me that the data would be somewhat muted. Guess what, it came out strong at 1.4% versus expectations of 0.1%. I immediately jumped in at 1.3125 and rode the market up and decided to square my trade at 1.3167 for a trading profit of 42bps.
Not too bad for a quickie!
Now are we going to see any action tonight in the US; Philly Fed Mfg Index and Unemployment Claims?
Market had almost priced in an interest rate cut of at least 0.25% some even speculating 0.50%. However, the sensible cut would be 0.25% and the BOE did not disappoint.
Market was really waiting for whether or not the BOE will announce a larger asset purchase amount to pump more liquidity into the economy post Brexit to help boost the economy.
I decided to place a one leg straddle with the following details: –
GBPUSD: Stop if Offered at 1.3300, Spot at 1.3325 and SL at 1.3330
As it turned out the interest rate cut didn’t really move the market, but what cause the floor from under the GBP to collapse was the announcement of an increase of 60Bn to the asset purchase program totaling 435Bn (previously, 375Bn).
My trade was triggered at within 5 minutes the GBPUSD was at 1.3172, I squared the position at 1.3185 for a trading profit of 115bps. Thank you BOE, thank you Carney.
This was going to be the first set of important data to garner the impact of Brexit on the UK.
Today was Markit Flash Mfg and Services PMI.
At about 4:27pm, after the GBP had run up about 50+bps since 3pm, I decided to do a straddle trade, a small trade size on the Long position and bigger position on the Short position as follows: –
Stop if Offered; 1.3243 Spot; 1.3273 Stop if Bid; 1.3310 with corresponding SLs at 30bps off my levels.
The data came out mixed.
Mfg PMI came out stronger at 49.1 vs 48.9, but Services PMI was much weaker at 47.4 vs 48.9. Clearly, the banking and financial services sector was hit badly.
The overall composite was down 47.7 vs 52.4.
Immediately, my short position was triggered at 1.3243. I quickly closed of the Long portion of the straddle.
I followed the market till about 4:56pm when, the GBPUSD had already dropped by 100bps. I squared my position at 1.3170 for a trading profit of 73bps. Not bad at all!!!
The current spot is trading at 1.3125.
I am now going to go with my wife for a durian party at Marina Bay Sands. Enjoy your weekend everyone.
Yesterday’s UK employment data was most encouraging. However, it is data prior to Brexit, it would be interesting to see the data the following month or two. We need time to let ’emotions’ run through the economy, then and only then, will we have a more appropriate picture of post Brexit impact.
However, in the meantime, the data was good.
I decided to chase the market by going Long GBPUSD at 1.3100 and squared at 4:54pm at 1.3165 for a trading profit of 65bps. Not bad.
Had to leave for an evening cocktail. In hindsight, the GBPUSD moved higher after 5pm and again this morning at 7:30am Asia time. Currently, it’s holding at 1.3229.
Hmmmmm……..missed out on the 100bps move, oh well. at least the drinks last night was great!
I am glad David Cameron resigned as PM, he clearly didn’t get the confidence vote that he needed to keep the UK in the EU, so there’s no point in staying on, the people how silly as they have made their decision.
This made me reflect on Singapore. As a Singaporean, I was quite concerned in the 2011 general elections when PAP won by an average of about 56%+, which was not great by Singapore standards, but a clear signal from the electorate that the people of Singapore were not happy with PAP.
I am so glad and encouraged that PAP, our government, my government, paid attention, took heed and spent the next few years engaging Singaporeans; by and large solving and resolving a number of pressing issues. This culminated in PAP’s surprising victory in the 2015 elections with an average win of nearly 69%.
England, I am no longer referring to the UK anymore, because I believe the UK is gone! If we trace back in history, the 18th century was the glory days of England and the UK. It was the greatest empire in the world, ever since, then, England has been carving a downward path till today.
Though it would have been largely beneficial for the UK to stay in the EU, history tends to repeat itself, so the Brits again have made a poor decision which seals their fate and another negative chapter in the history of England.
Watch the world as it unfolds, Scotland will leave the UK and strike up its own deal with the EU. North Ireland may join up with the rest of Ireland, and then, strike a deal with the EU. Wales will also probably leave the UK, leaving the UK to just merely England. That is what is going to happen, mark my words, it will all unfold in the next 5 years to 7 years.
England has lost everything, it no longer has a manufacturing base, all its brands are now owned by foreigners, up to 1/3 of the liquidity in the financial markets has been moved to Dubai, up to 45% of its exports is attributed to the EU, it has no innovation, it has no invention.
The only thing going for it is that it’s a services economy and that has been eroding the past few years and with Brexit, the pace will pick up.
So, all that is left is England an education centre, a financial markets centre and a strong pharmaceuticals industry.
How is England going to feed 46Million people in an environment where the country has matured and is greying, coupled with low growth, low productivity, burdensome welfare system, far too much burden on the shoulders of the young British people.
Scary!!!
I am born in the Year of the Tiger.
The Panthenon Investment Group 