Daily Briefing 100518

1.  Review.

I said “I would expect risk off remaining low for the next weeks. I think EZ moves will be not convincing the markets and after a small rally EUR will break 1.25 low. I think there is more downside for risk assets even if fundamentals for US, CAD and AUD are good (some indicator will point to a pause anyway). I will expect a short risk asset rally where I close some risk asset exposure”. EUR Is trading 1.2362, almost with no pullbacks. Rally on risk asset was short, but the downside was limited and they rallied on Friday
Trades
My plan was to close risk assets longs on rally but I decided to change bias end of the week, cashing the short I placed almost mid-grid. I was not able to fully exploit EURUSD downside.

2.  Analysis.

"Fundamental analysis"
Fundamental analysis data from US are still slightly good, pointing to a support for the recovery, with unemployment stabilized around 440k but not decreasing. Consumer confidence is increasing. EZ PIIGS are placing in place austerity measures to handle their debt, even if debt/GDP ratio looks like to put some uncertain about the success of those measure (they will require i.e. with debt at 150% of GDP a 7.5% growth to pay only interest at 5%). BCE loan looks like to have postponed only into the future the problem with new debt. EZ economic is underperforming, interest rate differentials and repricing will weight on the EUR in mid-term view.
US hikes are still unclear, just when economic conditions would change appropriately. Gold went up despite the risk on/off shifts. Oil would be a better risk sentiment indicator, and it is pointing low.

"Technical analysis"
EURUSD broke 18 month low, and it looks like ahead to lower levels. It would be a short on rallies. EUR COT short are again at the historical lows (-113k), USD long are the same (+25k), JPY short are decreasing (-34k). USDJPY after hitting 88 level, Is trading back in the 93 area. It should be a buy on these dips. US futures were sold off. AUD long decreased. Basically, except for the EURUSD they all are at the same levels of Monday. GOLD/Oil ratio is going higher from a 13 in the last months to 16 and VIX is still at 34, pointing for a risk off sentiment.

"Market dynamics".
More downside is expected for the EURUSD (1.22 level); I would expect here a correction to 1.32 (adding a long). In the long run EURUSD is expected to go back to 1.18 levels, reselling then at 1.32-4 levels. I would expect risk off remaining low for the next week, but not deteriorate. I will see the risk asset rally at at attractive levels, adding positions to risk asset exposure.

Median grid
EURUSD GRID 1.2300 - 1.30, short bias (grid change)
USDJPY GRID 88.00-92.00, long bias
AUDJPY GRID 78.00-86.00, long bias

Basically still a risk-off bias, but pausing risk

Prices
US down at 1134, (Q1)
GOLD up at 1232 (Q2, grid change)
Crude 72
EURUSD 1.2362 (q1)
USDJPY 92.47 (Q1)

3.  Plan
I already added new trades; I will try to work out of the money positions for JPY longs;.

EURUSD
I will enter short on the yob level (1.2483) for a quick B&B and I will hedge on a couple of level up (-100 pips). I will wait then for a dip to enter a short B&B again at 1.348. I will add a long at 1.22 level
Comment:< >

USDJPY
I will work put to minimize loss for current short, closing current shorts
Comment:< >

AUDJPY
I will work put to minimize loss for current short, closing current shorts
Comment:< >

EURNOK
Take profit, at 7.74 level and add more shorts at pullback
Comment:< >

4.  Trades
4.1 open trades, their type & their value:

2 Open 13-apr-10 USDJPY L 93.2400 Q3 1:1 B&B 92.4700 -77.0000

7 Open 05-mag-10 USDJPY L 94.5900 Q2 1:1 B&B 92.4700 -212.0000
11 Open 06-mag-10 USDJPY L 93.8600 Q3 1:1 Panic 92.4700 -139.0000
14 Open 07-mag-10 USDJPY S 91.3600 Q1- 1:1 Hedge 92.4700 -111.0000
15 Open 07-mag-10 USDJPY S 91.0700 Q1- 1:1 Hedge 92.4700 -140.0000

16 Open14-mag-10 USDJPYL 92.3000 Q11:1 B&B 92.4700 17.0000
6 Open 04-mag-10 AUDJPY L 86.0500 Q4 1:1 B&B 81.9000 -415.0000

7 Open 06-mag-10 AUDJPY L 85.1300 Q4 1:1 B&B 81.9000 -323.0000

11 Open 07-mag-10 AUDJPY S 80.6500 Q2 1:1 Panic 81.9000 -125.0000
12 Open 07-mag-10 AUDJPY S 80.2100 Q1- 1:1Panic 81.9000 -169.0000

14 Open 14-mag-10 AUDJPY L 81.7700 Q2 1:1B&B 81.9000 13.0000
4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 4:1)

Total positions per currency:
USDJPY +4,-2
EURUSD 0
AUDJPY +3,-2
Position
USDJPY -77, -212,-139, 17, (-111,-140)
EURUSD 0

AUDJPY -415, -323, 13 (-125, -169)

4.3  Effect of planned trades

Account summary:
ActivTrades live account
Starting date: 1/4/2010
Starting capital: 1366
Line in the sand level:  750

1.  Account balance (Settled trades) and growth as a percentage.  (1447= 6%)
2.  Account equity (Including open positions) .  (1312= -4%)
3.  Account equity if planned trades go wrong
4.  Pip distance to line in the sand level.  5630, with gear (11) 511