Daily Briefing 101011

1.  Review.

I said “I will look for potential further up move for EURUSD to the 1.4 area and a break of the 1.35 level would be a potential for a consolidation”. EURUSD reached the 1.4026 and retraced to 1.3900 after NFP; it looks like a consolidation move around those values. USD was under pressure waiting for a non good <nfp announcing a new QE2. “Price is pricing US QE expectation, then 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.” Greece bonds spread deceased and JGB and US 10 years are at historical low. “ Unilateral BoJ intervention is expected again. After the 83.6 test I do not expect to be broken if data will be good for risk on.” BoJ announced further policy stimulus but the market did not paid attention to it. ” Friday job report could be a driver event for USD weakness.” After a USD selloff spike prices did not move that much after announcement.
Trades
EURUSD contra trade short at 1.396 and another long <USDLPY at 83.30 (this bet on JPY weakness is costing me a lot of money).

2.  Analysis.

"Fundamental analysis"
Lack of immanent bad new drove the EUR up to 1.4, mostly a lack of risk off derivers. Bad US NFP, last before next FCOM meeting is viewed as a confirm for the next QE2. Good data came from German industrial production; best then expected AUD employment data support risk on environment. USD and JPY rates are at lowest levels. Lack of use of JPY as carry currency is something new to be watched; maybe USD only is enough to do carry trades. Total lack of bad news from risk generator events (PIIGS and China bubble) are driving a risk on, essentially good for currencies versus USD.

"Technical analysis"
EURUSD tested the 1.40 levels; the move could have a correction, because the move was quick and strong, mainly because of lack of risk off data. COT data are below. USD index broke the 80 support area and is trading 77-78; USDJPY traded in the 82-83 area, making a fresh low at 81.75. Probably at this level BoJ would intervene. US futures jumped again in to the 1140, closing above 100 and 200 MA: it look like a break to new highs. GOLD/Oil ratio stable; VIX stable to low levels.
COT JPY up at 45.9k (+15k)
COT USD down at -1.5k (-3k)
COT EUR up to 48.5k (+7k)
COT stable AUD 69.5k
TYN down to 2.39%
JGB down to 0.87%
Bunds down to 2.25%.

German/Greece down to 7.5%
VIX down to 20.71
Gold/Oil down to 16.25

"Market dynamics”
Prices did not move against USD after the NFP, maybe the QE2 expectation is already priced and maybe it will stop the USD weakness temporarily. I will not expect potential further up move for EURUSD to the 1.4 but a trading range around the 1.38 level as a consolidation, waiting for more QE2 confirmation, for the moment (but end of year outlook is 1.45/1.5). I will be data watching to see Fed reaction for confirmation QE and for risk on support. QE2 will be supportive for risk on because it will give money to big guys to invest in risky markets. Maybe it will be less stronger than QE1 because the expectations are like this. I will look to spread Greek German bonds and US, JGB in general. Unilateral BoJ intervention is expected again, especially if prices drops below 82 handle.

Median grid
EURUSD GRID 1.340 - 1.42, (grid change), up bias
USDJPY GRID 84.00-88.00, neutral bias
AUDJPY GRID 73.00-81.00, long bias

Prices
US up at 1160 , (Q1)
GOLD up at 1346 (Q4), all time high
Crude 82.81
EURUSD 1.3933 (Q3)
USDJPY 81.91(Q1--)

3.  Plan
I will try again profit of this risk on sentiment, entering long EURUSD on dips; prudence at these lofty levels. long USDJPY expecting BoJ intervention

EURUSD
I will enter a long B&B on the yob level (1.3730) as retracement after a 1.3900 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:
3 Open 07-ott-10 EURUSD S 1.3970 1.3820 Q2 0.2 Contra 1.3933 37.0000 3.7000 2.66
1 Open 05-set-10 USDJPY L 84.2600 83.2600 Q1 0.2 B&B 81.92 -252.0000 -25.2000 -16.7

2 Open 07-ott-10 USDJPY L 82.3600 83.2600 Q1 0.2 B&B 81.91 -45.0000 -4.5000 -3.21
4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 3:1)

Total positions per currency:
USDJPY +2
EURUSD +1
AUDJPY 0
Position
USDJPY -16.0, -3.2
EURUSD +2.66
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) .  (9978= -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