Daily Briefing 101018

1.  Review.
I said “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” Price instead went to 1.415, but returned to beginning of week level, maybe suggesting that QE2 is priced in, after the Friday announcement that QE2 is coming. “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” Spread decreased and market seems do not care about European sovereign debt  for the moment. “and US, JGB in general.” That  remains at historical lows, probably because lot of money is parking there waiting for QE2 “Unilateral BoJ intervention is expected again, especially if prices drops below 82 handle.” Price reached 80.93 but no intervention
Trades
No trades
2.  Analysis.
"Fundamental analysis"
Lack of immanent bad news and Greece bond spread lowering reinforced a risk on bias. Disclosure of QE2 (even if not the entity) caused some profit taking but it is good for risk (basically free money to put in risky trades) . Stocks are up, mainly for the same reason because employment data still suggest that economy is not recovering.  Lack of JPY carry trades caused JPY to strengthen again; it needs interest differential  to change after some good US job reports. Total lack of bad news from risk generator events (PIIGS and China bubble, confirmed by a cooled trade balance data) are driving a risk on, essentially good for currencies versus USD.
"Technical analysis"
EURUSD broke  the 1.40 levels; the move could still have a correction, because the move was quick and strong, mainly because of lack of risk off data. COT data are below. USD still trading 77-78; USDJPY traded in the 82-81 area, making a fresh low at 80.93. Probably *again( at this level BoJ would intervene. US futures jumped again in to the 1170, 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 stable at 45.9k (+0k)
COT USD stable at -1.4k (-0.1k)
COT EUR down to 41.5k (-7k)
COT AUD down 67.5k (-2k)
TYN up to 2.55% (+0.15%)
JGB stable at 0.88% (0.01%)
Bunds up to 2.37%. (+0.12%)
German/Greece down to 6.5% (-1%)
VIX down to 19.03 (-1.25)
Gold/Oil up to 16.8 (+0.6)

"Market dynamics”
Prices did not move against USD after the Friday QE2 confirmation, suggesting again the QE2 expectation is already priced and maybe it will stop the USD weakness temporarily. A sharp drop in CRB and risk index could confirm this. Probably investor are already placed for November 3 Fed meeting and now there will be a wait-and-see mode. Even if risk is on, I will expect potential further up move for EURUSD not exceeding the 1.41/1.42 levels, but probably a trading range around the 1.38 level as a consolidation, as grid mean (but end of year outlook is 1.45/1.5). QE2 will be supportive for risk on because it will give money to big guys to invest in risky markets; so I am long of risk currency against USD (not JPY). 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 80 handle. I will put ISDJPY stops t protect against USDJPY weakness.

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 1174 , (+30, Q2)
GOLD up at 1368 (+30$, Q4+), all time high
Crude 81.4 (-1$)
EURUSD 1.3975 (+0. 040, Q3)
USDJPY 81.46(-0.30, Q2)

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

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
Comment:<I did a short instead >

USDJPY
Comment:< Still underwater…>

AUDJPY
Comment:< >

EURNOK
Comment:< >
4.  Trades
4.1 open trades, their type & their value:

1 Open    05-set-10 USDJPY L 84.2600 83.2600 Q1 0.2 B&B 81.47    -279.0000 -27.9000 -19.932
Open    07-ott-10 USDJPY L 82.3600 83.2600 Q1 0.2 B&B 81.47    -89.0000-8.9000 -6.36
4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 3:1)
Total positions per currency:
USDJPY  +2
EURUSD 0
AUDJPY 0
Position
USDJPY -28.0, -7
EURUSD 0
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