Daily Briefing 100906

1.  Review.

I wrote “EUR felled very quickly; 1.28 first support area looks like broken, next will be 1.24.” 1.26 level hold and now EURUSD is back to 1.2890. “Spread Greek German bonds should be monitored and can sustain negative EUR action.” Spread fall late in the week. “ Short term financial data look like not supportive for EUR. I will watch closely the 1.28 support to confirm the EUR bullish sentiment.” German data are still supporting EURUSD “Regarding JPY and BoJ intervention I will monitor again JGB yields, US 10 yr yields, German bund yields and USDJPY price action during any risk off & risk on events. Those data will help to determine if JPY has bottomed.” BoJ supported some QE but the market ignored. USDJPY spiked on risk on event on Friday, but retraced as usual. Yields in safe haven increased confirming the risk on sentiment on Friday data. Prices and volatility were still in a tiny market.
Trades
I switched to my Saxo account. I opened EURUSD and USDJPY longs after Friday NFP.

2.  Analysis.

"Fundamental analysis"
Last week was characterized by Friday good employment NFP US data that confirmed a reverse in short term market sentiment to risk on. Better than expected AUD Q2 GDP, CNY data that confirmed a not too fast growth; but some bad data from German PMI, that is a serious not good for interest differential in favor of EUR. Large portion of the EZ is doing ok. All these weeks were in a tiny market action. Normal liquidity should return next week. Still valid that BoJ intervention is linked to US growth; if positive data JPY would weaken without need of intervention, but strong JPY could stay for a long time. Important from Fed meeting: Fed will be data watching; QE will be implemented only if data will be bad.

"Technical analysis"
EURUSD felled at the 1.26 levels, and then back to 1.28; no further downside to the next stop is 1.24. COT data are below. USD index hold in the 80 support area but upside was limited; USDJPY traded in the 84 area. Probably is staying down here in these dips. US futures jumped in three days to the 1100, closing above 100 and 200 MA: need to see if only a range bound move or will break to new highs. GOLD/Oil ratio raised; VIX fell to lowest levels.
COT JPY stable at 49.9k
COT USD stable at 14.9k
COT EUR down to -25.5k
COT AUD 43k
TYN up to 2.69%
JGB up to 1.14%
Bunds up to 2.35%.

German/Greece down to 8.86%
VIX down to 21.31
Gold/Oil up to 16.7

"Market dynamics”
Again I say that these days are more oriented for a short term approach based on risk-on/off. I expect that price moves will be more significant and probably we should not see any more data spike and retracement. I will expect action should move from intraday related moves. I will be data watching to see Fed reaction for QE and for risk on support. I will look to spread Greek German bonds and US, JGB in general. Regarding JPY and BoJ intervention I will monitor USDJPY price action during any risk off & risk on events. Unilateral BoJ intervention will be unlikely. Probably we can see a 83.6 test but I do not expect to be broken if data will be good for risk on.

Median grid
EURUSD GRID 1.240 - 1.310, (grid change), up bias
USDJPY GRID 84.00-88.00, neutral bias
AUDJPY GRID 73.00-81.00, short bias

Basically still a risk-off bias by the end of week

Prices
US down at 1077, (Q2)
GOLD up at 1246 (Q3)
Crude 74.27
EURUSD 1.2895 (Q3)
USDJPY 84.34(Q1)

3.  Plan
I will try again profit of this risk on sentiment, even if uncertain entering long EURUSD and USDJPY

EURUSD
I will enter a long B&B on the yob level (1.2888) as retracement after a 1.2900 clear break; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
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USDJPY
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AUDJPY
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EURNOK
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4.  Trades
4.1 open trades, their type & their value:
2 Open 13-ago-10 EURUSD L 1.2873 1.1673 Q3 0.2 B&B 1.2749 -124.0000 -12.4000 -9.73
1 Open 05-set-10 USDJPY L 84.2600 83.2600 Q1 0.2 B&B 84.1 -16.0000 -1.6000 -0.02

4.2 Leverage

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

Total positions per currency:
USDJPY +1
EURUSD +1
AUDJPY 0
Position
USDJPY -0
EURUSD -9.7
AUDJPY 0

4.3  Effect of planned trades

Account summary:
Saxo live account
Starting capital: 1000
Line in the sand level:  7500

1.  Account balance (Settled trades) and growth as a percentage.  (9985=-0.15%)
2.  Account equity (Including open positions) .  (9975= -0.25%)
3.  Account equity if planned trades go wrong: 9973
4.  Pip distance to line in the sand level.  2475, with gear (0.2) 12000