Daily Briefing 101025

1.  Review.

I said “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”. USD dropped in for a couple of days, but recovered then to the beginning of the week levels. CRB dropped a little “Probably investor are already placed for November 3 Fed meeting and now there will be a wait-and-see mode” It was basically a trading range week. 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)”. Range was more center on 1.39 level than 1.38. “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” Investors are still waiting Nov 3 FED. I will look to spread Greek German bonds and US, JGB in general”. TYN recovered from the historical lows to 2.55. “Unilateral BoJ intervention is expected again, especially if prices drops below 80 handle. I will put ISDJPY stops t protect against USDJPY weakness.” USDJPY traded around 81 handle and no with no BoJ intervention.
Trades
No trades

2.  Analysis.

"Fundamental analysis"
Data from US were better than expected; this caused a some USD strength with some profit taking due to a high exposure to USD shorts; probably FED will have a QE2 incremental approach and thus QE2 is already priced now. We have to wait November 3 FED meeting to be sure that there will not be more USD lows. In case of the expected QE2 this could be a catalyst for USD rebound. Probably a cold QE2 will cause a nice dip to buy EUR. EUR data ZEW was better than expected, to confirm German recovery even at this EUR levels. China increase of interest rate is a good move to cool down growth to avoid overheating and avoid bubble burst. This would lead to a conviction that recovery could be in place even without US spending.

"Technical analysis"
EURUSD traded at the 1.39 levels, with a short sell off at 1.37; lack of risk off data and wit for FED meeting probably will bring to a trading range in the next week; because is expected a trading range there will be some stop hunting at the extremes. COT data are below. USD still trading 77-78 range; USDJPY traded in a strict 81 area, making a fresh low at 80.85 and some stop hunting up and down. Again at this level BoJ would intervene if the 80 level will be broken. Gold sell of till 1.3000; US futures raised again in to the 1180. GOLD/Oil ratio stable; VIX stable to low levels.
COT JPY stable at 43.7k (-2.2k)
COT USD up to 3.4k (+4k)
COT EUR up to 45.1k (+3.5k)
COT AUD down 59.5k (-8k)
TYN stable at 2.55% (+0%)
JGB stable at 0.89% (0.01%)
Bunds up to 2.47%. (+0.1%)

German/Greece up to 6.8% (-0.3%)
VIX down to 18.7 (-0.5)
Gold/Oil stable to 16.2 (-0.6)

"Market dynamics”

Median grid
EURUSD GRID 1.340 - 1.42, 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 down at 1328 (-40$, Q4),
Crude 81.8 (0$)
EURUSD 1.3955 (+0. 020, Q3)
USDJPY 81.43(-0.10, Q2)

3.  Plan
I will try to profit from this expected trading range, entering long EURUSD on dips and selling highs. Still long USDJPY expecting BoJ intervention, but add stops

EURUSD
I will enter a long B&B on the yob level (1.3757) I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips. I will enter a short B&B on the yob level (1.4057) I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:< >

USDJPY
No more positions to add
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 81.37 -289.0000 -28.9000 -20.7
Open 07-ott-10 USDJPY L 82.3600 83.2600 Q1 0.2 B&B 81.37 -99.0000-9.9000 -7.24
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 -29.0, -8
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