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Tag Archives: USDJPY

NFP

Even though ADP earlier in the week came in on the money, that is, 179K versus forecast of 171K, there was still an off chance that NFP today could come in stronger than forecast.  Then again, it’s the summer and usually there are more job creations during this period.

I decided to put my straddle trade on the EURUSD and USDJPY at about 8:26pm with the following details: –

EURUSD   –  Stop if Offered at 1.1108, Spot at 1.1138, Stop if Bid at 1.1168 and corresponding SLs at 30bps out.

USDJPY   –  Stop if Offered at 100.80, Spot at 101.18, Stop if Bid at 101.48 and corresponding SLs at 30bps out.

As it turned out, NFP came in very strong at 255K versus expectations of 180K.

Both my trades was triggered.

I squared the EURUSD at 1.1048 for a trading profit of 60bps.

I squared the USDJPY at 101.82 for a trading profit of 0.34.

A pretty good end to the first week of trading in August.

It’s TGIF and I am going to shut down my computer and go meet some friends for drinks!!!

Here’s wishing one and all a great weekend.

3 August 2016; Long USDJPY at 100.80 on cash

As shared in one of my earlier tweets, I believe the fx markets are increasingly more difficult to trade on leverage or on options, simply because the premiums are too expensive and the price actions whipsaws too much.

Going forward, I feel that in some trades it would be more prudent to do the trade on a cash basis.  We can then hold the position for as long as needed till the market comes to us.

In the case of the USDJPY, I have seen a recent pattern where whenever it hits near 100, thereafter, given enough time, it will rebound back towards the 105 level and this happens in the short term.

On August 3rd at about lunch time in Asia USDJPY hit a high of 100.74, I decided to Long USDJPY at 100.80.

Since then, it has high a high of 101.65 and is now trending at 101.04.

I am confident that I will be able to make one to two big figures on this trade within a month.

Let’s see……….fingers crossed!

NFP…….missed it but got a reprieve

I was late getting back from dinner to catch the NFP. 
Got home at 830pm, NFP came out much stronger at 287K, majors weakened against the Dollar on average by 50bps. 

Then within 15 minutes the majors reversed against the Dollar erasing all gains. 

I couldn’t catch any trading opportunity, then all of a sudden I observed that the US JPY was down to 100. 

In my last article I discussed the 100 yen level as a possible bottom to Long the yen. 

So I decided to Long at 100.03 and in 20 minutes it hit 101 and I decided to square the position for a trading profit of 0.97 yen. Almost one big figure. Not bad to end the week. 

By the way if this article seems strange it’s because I am using my IPhone to write this article rather than my laptop. 

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!

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!

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.

Sold off some options before expiry…….

The FX markets has proven to be most unpredictable.  On the March 22nd, I felt strongly that the USD was oversold and the charts seem to indicate it, however, after Yellen’s speech at the NY Economic Club, the USD was killed.

All the majors rallied against the USD and in fact, made new highs for 2016.  This was more disheartening, however, I was fortunate in that I played the potential opportunity while waiting for the market to come to me by way of options.  Therefore, I have accepted my absolute losses which was the premiums I paid for the options upfront.

I have been hearing from the banks and on the ground that many FX clients have been caught on the wrong foot.  Worse still though the USD has made back some gains, the JPY went against the rest of the majors by strengthening against the USD.  Can you imagine that the JPY has moved 5 big figures since the last week of March?!

Anyway, when I started seeing the USD gain back ground against the majors I decided to sell of two of my outstanding options; the GBPUSD Put Option and the AUDUSD Call Option.

On April 6th after London opened, the GBP was aggressive sold off, I decided not to wait again like I did two weeks and so decided to sell the put option at 1.4030 for a trading profit of 252bps (breakeven was 1.4282), option originally expiring on April 29th.

On March 31st after NY opened, the AUD continued climbing up against the USD, I put in an order to sell the call option at 0.7700 and it got triggered, locking in a trading profit of 280bps, call option had an expiry date of July 9th.

While the trades turned out in my favor it was not without days and weeks of disbelief that my call was potentially wrong, but instead of waiting closer to expiry, I decided not to star a gift horse n the face, so take profit on the options.

As you can see, the risk reward ratio wasn’t great, on average about 1:1.  A better trade would be 2:1 or higher.  Anyway, I am just glad to be out.

Now I still have three outstanding put options; EURUSD, USDJPY and AUDUSD which are not in the money and we are going into the second week of April.  I have some time left and let’s hope the market moves in my favor.

 

Putting my money where my mouth is…..?!

On Monday morning, I looked at the charts of the 4 majors and noticed that late US session on Friday, the USD was starting to claw back some ground.

I felt strongly that my hunch of a USD reversal is on the cards!

So I decided to get pricing to buy ATM put options expiring 29 April 2016 with the following details: –

EURUSD   –   Spot 1.1253, Premium 140bps, B/E 1.1113

GBPUSD   –   Spot 1.1253, Premium 180bps, B/E 1.1.4282

USDJPY   –   Spot 111.47, Premium 1.27bps, B/E 112.74

AUDUSD   –   Spot 0.7596, Premium 106bps, B/E 0.7490

I decided to execute all 4 put options with notional amounts of US$100Mn each.

It’s 6:38pm on Tuesday evening and where is the spot rate for the majors?  Well, it’s: –

EURUSD  –  1.1211

GBPUSD  –  1.4276

USDJPY  –  111.62

AUDUSD  –  0.7592

Looks like I am also breakeven on my GBP, a little ways for the rest, however, as I mentioned earlier, I feel strong that there will be a USD reversal within the next 30 days.

I mean look at how the majors moved against the USD at FOMC and more so post FOMC, on average about 400bps moves against the USD.

I don’t believe for a moment that these counties can survive on such strong currency valuations when their respective economies are anemic.

Ok, fingers crossed and toes crossed!!!

Good luck in your trading.

USD Reversal???

Since last Friday, the back of my neck was feeling itchy and I couldn’t thinking that the USD was oversold after the FOMC.

I decided to look at the 4H charts on the GBP, EUR, JPY and AUD and here they are: –

4H_usdjpy

4H_eurusd

4H_audusd

From a technical point of view, isn’t a USD reversal a high probability???

Janet Yellen’s speech and Q&A did not warrant such a strong sell down in the USD, this is my personal opinion.

I am looking at buying put options against the majors till maybe end of April, will have to check the premiums to ascertain whether it’s expensive or not.

The saga continues……………..