Daily Briefing 110704

1.  Review.

I said “The Greek saga is closed to a critical phase: the 30 will vote the 78 billion austerity package; if pass, it will probably trigger a EURUSD rally to 1.4450/45 area. I will use this rally to enter short EURUSD at 1.4450/50 area; a daily close above. 1.4710/20 will invalidate this bearish view. Key level to watch is the 1.41” The austerity package passed and EURUSD rallied to 1.4550 with all other risky assets
“Closely watching CRB index to confirm risk aversion on positive EZ news.” CRB index did not posted gains at the end of the week; as proxy of global recovery is signaling that the risk rally should be something short related to Greek saga conclusion.
“I will look at recent lows in stocks, commodities and JPY crosses to trigger further weakness.
I will use this USD weakness as a buying opportunity, looking if technical levels hold. That means short AUD, CAD and NZD against USD and JPY, from just above currents levels that offer attractive opportunities.” I did not, but it should be next week. ” USDJPY flat; I think that 80.00 support holds.” Yes. “Reverse CADJPY at 83, sell AUDJPY at 86” I will do next week at current levels (84, 87)
Trades
Exited long CADJPY at -90 pips.

2.  Analysis.

"Fundamental analysis data"
US CB Consumer confidence 50.5 60.8 61.7
CAD Core CPI 0.5% 0.2% 0.2%
US pending homes sales 8.2% 2.4% -11.5%
German retail sales -2.8% 0.6% 0.0%
Unemployment claims 428k 219k 429k
CAD GDP m/m 0.0% -0.1% 0.3%
JPY Tankan -9 -7 6
CNY Manufacturing PMI 50.9% 51.6% 52%
US ISM Manufacturing PMI 55.3 51.9 55.3
"Fundamental analysis"
Incoming data and forecast continues to point to a moderate growth. CNY and EZ PMI weaker than expected. US ISM PMI is rebounded because of the resumption of JPY supplies. We think that major economies remains in a soft patch at least and we don’t see any sign of increase of growth expectation anytime soon.
US debt debate hit an impasse; the 22^nd of July is the date when we will see if it will be avoided a shutdown the 2^nd of August.
Trichet send signals for a new rate hike the at the next 7 July ECB meeting. For him the underlying growth is positive and medium term outlook for prices is on the upside. This does not mean a clear hike path. Anyway latest EZ PMI data show a contraction path (bat the ECB sole mandate is price stability). EZ CPI is at 2.7% (above the 2% ECB target); PPI and retail sales are due next week.
Approval of new cut by Greek Parliament the 30 allowed IMF to release the founding . Anyway long term outlook is that Greece, with debt load increasing and negative growth, will be not able to repay its debt. Moody’s has placed Italy under review.
With EZ growth peaked before, EZ debt will burden EUR and peripheral debt continues to rumble on; Spain and Italy had a poor auction in the week.
Risk assets (stock and commodities) continue to slide lower this week.
Falling commodities prices could increase consumer demand, but high unemployment, austerity measures and exit of fiscal stimulus point to a major slowdown. This will bias risk assets further to the downside.
This week action confirmed that risk aversion remains.
Silver and Gold falling this week.
My big picture view is:
- commodities and risk asset are turning negative
- US growth is slowing
- global growth is slowing
Long term outlook:
The actual extreme in the bearish USD sentiment can be a reversal sign, and it is starting to apply now.

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ slowing, US slowing, China slowing (risk aversion)	Yes
2	Divergence in FED and BCE monetary policy	FED will be on hold for this year; BOE hikes in July TBD	Yes
3	EZ break up	France and Germany supporting EUR	No
4	PIIGS	More PIIGS related then only Greece	No
5	QE3	Requires: - meaningful rise/(flat) in unemployment rate - sharp fall in inflations (expectations)	No
6	Commodity rise	Falling prices confirming slowdown	No
7	US debt	Debt ceiling	Moderate, 22 July

Currency	Short term view	Long term view
USD	Bullish, extreme short and risk aversion	Bearish (2, 5, 7)
JPY	Bearish	Bearish
CHF	Bullish	Bullish
EUR	Bullish	(2)

"Technical analysis"
EURUSD rallied to 1.45 without any dip. Still in the range 1.40-1.46/7. A daily close above 1.4710/20 will signal a uptrend (unlikely event).
USDJPY failed to break above the 81.50 barrier and still ranging in the 80/1, now at 80.82
AUDJPY break the 85.3-84.3 range, now at 87; 90 resistance looks still far at the moment. Next resistance is 87.5. EURJPY break the 116 resistance, now 117.4, still in the 114/8 range
COT data suggest that is time for a reversal for the dollar.
COT AUD up 46k (-8k), OI 93k (-7k)
COT USD at 4.9k (-1k), OI 46k (-8k)
COT EUR at 32k (+3k), OI 183k (-7k)
COT JPY at 13k (-20k), OI 95k (-5k)
COT CHF at 9k (-2k), OI 51k (-0k)
German/Greece at 13.3% (-0.5%)
German/Spain at to 2.5% (-0.5%)
Bunds at 3.03%. (+0.2%)
JGB at 1.14% (+0.03%)

"Market dynamics”
The risk rally may have more room to go in the short run (FX Live sees EURUSD to 1.47 in the next week). We remain in high alert for failure and reversal. Risky pairs have rebounded to recent range highs and it would need a clear break to become more bullish. Given the risk ahead (US debt, EZ debt, SNP) I think recent bounds can be hard to broken, if any unexpected good news.
I will use this USD weakness as a buying opportunity.
I will enter short EURUSD at 1.4450/50 area after further gains in the 1.46 area; not a daily close above 1.4710/20 will invalidate this bearish view. Key level to watch is the 1.41
Closely watching CRB index to confirm risk aversion on positive EZ news.
I will look at recent lows in stocks, commodities and JPY crosses to trigger further weakness.
If technical levels (range highs) hold I will:
Reverse CADJPY at 84.0/5, resistance at 85.0
Sell AUDJPY at 86.5/87.0, resistance at 87.5
USDJPY flat in the 80/1 area; I think that 80.00 support holds.

Key events:
Tuesday: RBA cash rate
Wednesday: US ISM PMI, CAD building permits m/m
Thursday: German Production, ECB bid rate, US Unemployment claims
Friday: US Unemployment rate, NFP

Median grid
EURUSD GRID 1.400 - 1.460, down bias
USDJPY GRID 80.00-84.00, neutral bias
AUDJPY GRID 82.00-90.00, neutral bias
USDCHF GRID 0.8225-0.8725, down bias

Prices and Risk on/off view

Risk Indicator(+/-)	Status	Comments
AUDJPY (on) EURJPY EURUSD USDCHF (on) USDJPY	87.0 (+2.7) 117.4 (+3.4) 1.452 (+0.02) 0.847 (+0.0150) 80.82 (0.40)	Q3 Q4 Q4 Q2 Q1
US TYN (on)	3.18% (+0.30%)	Recent highs
Dollar Index (on)	74.6 (-1.6$)	Near May 76.44 top
US futures	1263 (-2$)	Q2
Gold Silver Oil	1486 (-15$) 33.8 (-0.4$) 94.7 (+3.4$)	Q3
VIX Gold/Oil Gold/Silver (off)	15.8 (-4.8) 15.8 (-0.5) 43.9 (+0.1)

Risk view is on:
- US 10YN at higher levels
- US index at 74.6
- Gold /Silver ratio strong
- JPY rebound to recent trading range highs
- CHF weak versus EUR and USD

3.  Plan
Exit long USDJPY long with even a small profit, trying to avoid losses.

EURUSD
Comment:< >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURJPY
Comment:< >

USDCHF
Comment:< >

CADJPY
Comment:< >

4.  Trades

Positions
USDJPY +2
EURUSD 0
USDCHF 0
AUDJPY +0
EURJPY 0
CADJPY 0

Daily Briefing 110627

1.  Review.

I said “I will use this rally to enter short EURUSD at 1.4450/50 area; a daily close above. 1.4710/20 will invalidate this bearish view.” Nothing of this happened. “Closely watching CRB index to confirm risk aversion on positive EZ news. I will look at recent lows in stocks, commodities and JPY crosses to trigger further weakness.” I didn’t watched that closely, but further weakness is confirmed.”Because of the risk off sentiment, where the dollar is late to get stronger, I will use this USD weakness as a buying opportunity, looking if technical levels hold. That means short AUD, CAD and NZD against USD and JPY, from just above currents levels that offer attractive opportunities.” They remained closer to the previous lows and then no selling opportunities. “No buying for USDJPY, I think that 80.00 support holds.” It did. “Reverse CADJPY at 83, sell AUDJPY at 86” No chances for doing that.
Trades
None.

2.  Analysis.

"Fundamental analysis data"
German ZEW -9, -1.7 -3.1
EZ ZEW -6 9.5 13.6
German PMI 55 57 57.7
CNY HSBC 50.1 * 51.6
US New Homes sales 319k 311k 326k
Unemployment Claims 429k 414k 420k
German Ifo 114.5 113.6 114.2
US Core Orders 0.6% 1.0% 1.0%
"Fundamental analysis"
Incoming data and forecast continues to point to a weaker 2H 2011. Weak than expected EZ ZEW and PMI.
FCOM lowered 2011 GDP forecast down 0.3 to 2.7%-2.9%. UK reported weaker numbers.
Debate is the slowdown is temporary or not, we are inclined to a more substantial slowdown and the incapability of central bank to provide fresh stimulus.
QE3 wan not discussed, but I think it will come in autumn (and it will be announced end of August); FED will remain ho hold for an extended period (three meetings).
ECB is insisting on austerity measures and this poised further rate hikes.
RBA is on hold due to recent EZ concerns.
Approval of new cut by Greek Parliament the 30 will allow IMF to release the founding ; it seems that:
- people Is preparing to add funds to these bailout EU
- China is willing to support EZ
- IMF new chief will give markets some comfort
- PIG issues will move out of the spotlight but they will cap EUR rallies
- Money will flow to settle down Greece issue if necessary.
Anyway long term outlook is that Greece, with debt load increasing and negative growth, will be not able to repay its debt. Moody’s has placed Italy under review.
With EZ growth peaked before, EZ debt will burden EUR.
Worth to repeat this:
“Big money is shifting from Greece concerns and focusing on worrying about global growth slowing. This is O’Neil, Goldman Sachs chairman:
1. Asset manager are seriously negative on global growth
2. Japan is rebuilding after tsunami
3. The market underestimate the slowdown in China, to a 7% growth to contain inflation issues
4. Greece risk, including the problem for the banks, is small.”
Risk assets (stock and commodities) continue to slide lower this week.
Falling commodities prices could increase consumer demand, but high unemployment, austerity measures and exit of fiscal stimulus point to a major slowdown. This will bias risk assets further to the downside.
This week action confirmed that risk aversion remains.
Silver and Gold falling this week.
My big picture view is:
- commodities and risk asset are turning negative
- US growth is slowing
- global growth is slowing
Long term outlook:
The actual extreme in the bearish USD sentiment can be a reversal sign, and it is starting to apply now.

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ slowing, US slowing, China slowing (risk aversion)	Next driver
2	Divergence in FED and BCE monetary policy	FED will be on hold for this year; BOE hikes in July TBD	No, wait for July
3	EZ break up	France and Germany supporting EUR	No
4	PIIGS	Greece bailout not done	Yes
5	QE3	Requires: - meaningful rise/(flat) in unemployment rate - sharp fall in inflations (expectations)	No
6	Commodity rise	Falling prices confirming slowdown	Moderate
7	US debt	Debt ceiling	August

Currency	Short term view	Long term view
USD	Bullish, extreme short and risk aversion	Bearish (2, 5, 7)
JPY	Bearish	Bearish
CHF	Bullish	Bullish (until bubble burst)
EUR	Bearish	(4)

"Technical analysis"
EURUSD hold the 1.41/0 the strong support at 1.40; if broken is a clear downtrend, if holds a range 1.40-1.46 A daily close above 1.4710/20 will signal a uptrend (unlikely event). Now 1.4180
USDJPY failed to break above 80.50 and tested again the 80 support, now at 80.42
AUDJPY capped in a 85.3-84.3 range, now at 84.34; 90 resistance looks very far at the moment. Next support is 83. EURJPY tested the solid base is 114, now 114.1
COT data suggest that is time for a reversal for the dollar. This can take many weeks and should be considered a medium term view. Commercials are again short.
COT AUD up 54k (-11k), OI 100k (-15k)
COT USD at 4.9k (-1k), OI 46k (-8k)
COT EUR at 29k (-31k), OI 190k (-0k)
COT JPY at 32k (+8k), OI 99k (+5k)
COT CHF at 11k (-2k), OI 51k (-3k)
German/Greece at 13.9% (-0.5%)
German/Spain at to 2.85% (+0.15%)
Bunds at 2.82%. (-0.1%)
JGB at 1.11% (-0.01%)

"Market dynamics”
The Greek saga is closed to a critical phase: the 30 will vote the 78 billion austerity package; if pass, it will probably trigger a EURUSD rally to 1.4450/45 area. I will use this rally to enter short EURUSD at 1.4450/50 area; a daily close above. 1.4710/20 will invalidate this bearish view. Key level to watch is the 1.41
Closely watching CRB index to confirm risk aversion on positive EZ news.
I will look at recent lows in stocks, commodities and JPY crosses to trigger further weakness.
I will use this USD weakness as a buying opportunity, looking if technical levels hold. That means short AUD, CAD and NZD against USD and JPY, from just above currents levels that offer attractive opportunities.
USDJPY flat; I think that 80.00 support holds.
Reverse CADJPY at 83, sell AUDJPY at 86
Key events:
Tuesday: US CB Consumer confidence
Wednesday: CAD Core CPI, US existing homes sales
Thursday: German retail sales, Unemployment claims, CAD GDP
Friday: JPY Tankan, CNY Manufacturing PMI, US ISM Manufacturing PMI

Median grid
EURUSD GRID 1.400 - 1.460, down bias
USDJPY GRID 80.00-84.00, neutral bias
AUDJPY GRID 82.00-90.00, neutral bias
USDCHF GRID 0.8225-0.8725, down bias

Prices and Risk on/off view

Risk Indicator(+/-)	Status	Comments
AUDJPY (off) EURJPY EURUSD USDCHF (off) USDJPY	84.3 (-0.7) 114.1 (-0.4) 1.4318 (-012) 0.833 (-0.0150) 80.42 (0.00)	Q2 Q1 Q1 Q1 Q1
US TYN (off)	2.86% (-0.10%)	Recent highs
Dollar Index (off)	76.21 (-0.01$)	Near May 76.44 top
US futures	1263 (-2$)	Q2
Gold Silver Oil	1501 (-38$) 34.2 (-1.5$) 91.1 (-1.2$)	Q4
VIX Gold/Oil Gold/Silver (off)	21.1 (+2.1) 16.4 (+1.0) 43.8 (+1.2)

Risk view is off:
- US 10YN at higher levels
- US index at 76
- Gold /Silver ratio strong
- most JPY crosses again around recent lows
- CHF close to historical highs versus EUR and USD

3.  Plan
Exit long CADJPY and USDJPY long with even a small profit.

EURUSD
Comment:< >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURJPY
Comment:< >

USDCHF
Comment:< >

CADJPY
Comment:< >

4.  Trades

Positions
USDJPY +2
EURUSD 0
USDCHF 0
AUDJPY +0
EURJPY 0
CADJPY +1

Weekly Briefing 110620

1.  Review.

I said “Because of the risk off sentiment, where the dollar is late to get stronger, I will use this USD weakness as a buying opportunity, looking if technical levels hold. That means short AUD, CAD and NZD against USD and JPY, from just above currents levels that offer attractive opportunities.
Very confused on; sell EURUSD at 1.445, if the double top there holds.” Good hint, but I was not able to do it. “No buying for USDJPY, I think that 80.00 support holds.” It did. “Reverse CADJPY at 83,” CADJPY was at 83 and I again did not respect my plan. Now is 81.66… “sell AUDJPY at 86” Shit, the same: AUDJPY was at 86 and I again did not respect my plan. Now is 85.00…
Trades
None. But I should have done…

2.  Analysis.

"Fundamental analysis data"
CNY CPI y/y 5.5% 5.5% 5.3%
US PPI m/m 0.2% 0.1% 0.8%
US CPI m/m 0.2% 0.2% 0.4%
US Capacity Utilization Rate 76.7% 77.1% 76.7%
US Industrial Production m/m 0.1% 0.3% 0.0%
Unemployment Claims 414k 421k 430k
Philly Fed -7.7 7.1 3.9
"Fundamental analysis"
The expected resolution of the Greek sage over the weekend with the approval of new cut by Greek Parliament will allow IMF to release the founding . German would not push for a voluntary 7-year debt extensions, that would have triggered a default. Wen Jiabao next week visit to EZ could give some support to EUR, pushing towards 1.4500 area.
Anyway long term outlook is that Greece, with debt load increasing and negative growth, will be not able to repay its debt. Moody’s has placed Italy under review.
With EZ growth peaked before, EZ debt will burden EUR.
Data show again slowdown in the US economy with US and all the developed economies. Political stalemate are also weight on the buck.
Big money is shifting from Greece concerns and focusing on worrying about global growth slowing. This is O’Neil, Goldman Sachs chairman:
1. Asset manager are seriously negative on global growth
2. Japan is rebuilding after tsunami
3. The market underestimate the slowdown in China, to a 7% growth to contain inflation issues
4. Greece risk, including the problem for the banks, is small.
Risk assets (stock and commodities) continue to slide lower.
Rising commodities prices could have slowed down the demand, suggesting that the slowdown is only temporary, but high unemployment, austerity measures and exit of fiscal stimulus point to a major slowdown.
Commodities weakness at the end of the week, even with positive Greece news, is another indicator about concerns over global growth. Next week action will be exceptionally telling about risk aversion and downside ahead if commodities will not rise on positive news out of Greece and Europe.
Silver and Gold were mixed this week.
My big picture view is:
- commodities and risk asset are turning negative
- US growth is slowing
- global growth is slowing
Long term outlook:
There could be a shift in the classical paradigm “risk-off: buy USD” if the US remains decoupled from global growth (assuming that global growth will regain pace)
The actual extreme in the bearish USD sentiment can be a reversal sign, and it is starting to apply now.

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ slowing, US slowing, China slowing (risk aversion)	Next driver
2	Divergence in FED and BCE monetary policy	FED will be on hold for this year; BOE hikes in July	No, wait for July
3	EZ break up	France and Germany supporting EUR	No
4	PIIGS	Greece bailout not done Germany divergence with ECB	Yes
5	QE3	Requires: - meaningful rise/(flat) in unemployment rate and - sharp fall in inflations (expectations)	No
6	Commodity rise	Falling prices confirming slowdown	Moderate
7	US debt	Debt ceiling	August

Currency	Short term view	Long term view
USD	Bullish, extreme short and risk aversion	Bearish (2, 5, 7)
JPY	Bearish	Bearish
CHF	Bullish	Bullish (until bubble burst)
EUR	Bearish	(4)

"Technical analysis"
EURUSD hold the 1.40 the strong support at 1.40; if broken is a clear downtrend, if holds a range 1.40-1.46
A daily close above 1.4710/20 will signal a uptrend (unlikely event)
USDJPY failed to break above 81.00 and tested again the 80 support, now at 80.04
AUDJPY hold the 84.6 support, now at 85; 90 resistance looks very far at the moment. Next support is 83. EURJPY tested the solid base is 114, now 114.5
COT data suggest that is time for a reversal for the dollar. This can take many weeks and should be considered a medium term view. Commercials are again short.
COT AUD up 62k (+2k), OI 45k (+27k)
COT USD at 5.9k (+3k), OI 54k (-8k)
COT EUR at 50k (-1k), OI 190k (-100k)
COT JPY at 24k (+20k), OI 94k (+0k)
COT CHF at 13k (-3k), OI 54k (-20k)
German/Greece at 14.4% (+0.5%)
German/Spain at to 2.7% (+0.1%)
Bunds at 2.92%. (-0.04%)
JGB at 1.12% (-0.00%)

"Market dynamics”
Long term view:
- EUR staying up, depends how Greece will end up plus the stress test for banks. If nothing worse, I see 1.40
- USD is going down. We will have a rebound for risk off appetite (until the summer end)
- CHF, is going exponentially up because of picking up the JPY lost safe heaven status (new all times high versus the USD this week too); if risk on buy CHF, if risk off buy more CHF. CHF bubble will burst not immediate
- JPY, is going to go down (bad economic slump and lost safe heaven status); US bond bubble is not yet coming and this does not will favor this play; a non hike policy can slow down the play.
Next week view:
The expected resolution of the Greek saga will probably trigger a EURUSD rally. I will use this rally to enter short EURUSD at 1.4450/60 area; a daily close above 1.4710/20 will invalidate this bearish view.
Closely watching CRB index to confirm risk aversion on positive EZ news.
I will look at recent lows in stocks, commodities and JPY crosses to trigger further weakness.
Because of the risk off sentiment, where the dollar is late to get stronger, I will use this USD weakness as a buying opportunity, looking if technical levels hold. That means short AUD, CAD and NZD against USD and JPY, from just above currents levels that offer attractive opportunities.
No buying for USDJPY, I think that 80.00 support holds.

Reverse CADJPY at 83, sell AUDJPY at 86
Key events:
Tuesday: German and EZ ZEW
Wednesday: FCOM
Thursday: EZ PMI
Friday: German Ifo

Median grid
EURUSD GRID 1.400 - 1.460, up bias, grid change
USDJPY GRID 80.00-84.00, neutral bias
AUDJPY GRID 82.00-90.00, neutral bias
USDCHF GRID 0.8225-0.8725, down bias

Prices and Risk on/off view

Risk Indicator(+/-)	Status	Comments
AUDJPY (off) EURJPY EURUSD USDCHF (off)	85.0 (-1.4) 114.5 (-0.8) 1.430 (-005) 0.8484 (+0.006)	Q2 Q2 Q2
US TYN (off)	2.96% (-0.02%)	Recent highs
Dollar Index (off)	76.22 (+1.0$)	Near May 76.44 top
US futures	1265 (-3$)	Q2
Gold Silver Oil	1539.1 (+8$) 35.8 (+2$) 92.5 (-3.3$)	Q4
VIX Gold/Oil Gold/Silver (off)	18.85 (+1.0) 15.4 (+0.1) 42.7 (+0.2)

Risk view is off:
- US 10YN at higher levels
- US index rebounded at 76
- Gold /Silver ratio strong
- most JPY crosses again around recent lows
- CHF at new fresh historical highs versus EUR and USD

3.  Plan
Exit long CADJPY and USDJPY long with possible with a small profit or small losses.
Enter short EURUSD at 1.45 level
Enter short AUDJPY at 86.00
EURUSD
Comment:< >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURJPY
Comment:< >

USDCHF
Comment:< >

CADJPY
Comment:< >

4.  Trades

Positions
USDJPY +2
EURUSD 0
USDCHF 0
AUDJPY +0
EURJPY 0
CADJPY +1

A Pfennig for Your Thoughts 6/16/2011

* Dollar rallies. BIG TIME!

“For I told you that the markets wouldn't wait until the "actual end of June". And if you want to take advantage of the much cheaper prices of currencies and metals, then the next couple of months should be your cup o' tea. Because that's certainly what we have going on today, and most likely for the next couple of months, like I said.

And, you'll recall that I said this dollar strength would last until the Fed can't stand to see the stock market losses mounting like they will be, yields rising again on Treasuries, and of course Unemployment remaining a real pain in the neck for them. I know, I know, the Fed members have all said over and over again, that there will be no more stimulus. But, I'm sure they said the same thing after QE1. Once more stimulus is discovered, and I say "discovered", because I'm of the belief that the there's no way that the Fed wants to admit (when it happens that is) that they were wrong about not needing more stimulus. So, we could see more back door buying from the Primary Dealers of Treasuries. But, when it's discovered, I feel that the markets will reverse the dollar buying.”

Bootm line: dollar strong until there will be:
- stock market losses mounting
- yields rising again on Treasuries,
- Unemployment remaining high

Daily Briefing 110613

1.  Review.

I said “Because of the risk off sentiment, where the dollar is late to get stronger, I will use this USD weakness as a buying opportunity, looking if technical levels hold. EURUSD at 1.433, if the double top there holds.
USDJPY at 80.30, if 80.00 support holds. CADJPY should be a buy at these level because of expected rate increase, if 82.35 support holds” Pretty wrong analysis: USD stayed very week and JPY strengthened. USD had a rally to 1.467, but fell on 1.435 on Greece concerns.
Trades
None.

2.  Analysis.

"Fundamental analysis data"
German factory orders m/m 2.8% 2.1% -2.7%
CNY Trade Balance 13.1b 19.8b 11.4b
Unemployment Claims 427k 414k 426k
"Fundamental analysis"
Data show again slowdown in the US economy with US and all the developed economies. Political stalemate are also weight on the buck. There are two views:
1. PIMCO leading the view that the FED will be on hold for much longer, shorting the long bond.
2. Others thinking that sometime this year the economy will improve and FED will hike; Bernanke showed data pointing a recovery in H2.
Risk assets (stock and commodities) continue to slide lower.
Rising commodities prices could have slowed down the demand, suggesting that the slowdown is only temporary, but high unemployment, austerity measures and exit of fiscal stimulus point to a major slowdown.
Discussion about QE3 continues; Chuck is forecasting a QE3 in Q4.
JCT said “vigilant” meaning a hike in July (even if he said we will see next month), but Greece sovereign debt issues not settled down and revised inflation forecast for 2011/2012 weighted on EUR. Spain bonds yield spreads. ECB meeting on Thursday could signal a July rate hike.
Silver and Gold were mixed this week.
Some indicators are showing a risk off view:
- US 10YN at higher levels
- US index rebounded at 75
- Gold and Silver still strong
- most JPY crosses again around recent lows
- CHF at new fresh historical highs versus EUR and USD
I maintain this big picture view, where there is:
- commodities and risk asset less positive; but we should consider this sell off as assets repositioning and therefore a short term negative
- US growth is slowing; I believe that the USD will relief in the coming weeks because of the QE2 end, but it will be on pressure in the next months.
Long term outlook:
EUR depending on PIGS resolution, USD bearish, JPY bearish and CHF bullish.
There could be a shift in the classical paradigm “risk-off: buy USD” if the US remains decoupled from global growth (assuming that global growth will regain pace)
The actual extreme in the bearish USD sentiment can be a reversal sign, and it is starting to apply now.

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ slowing, US slowing, China slowing (risk aversion)	Yes
2	Divergence in FED and BCE monetary policy	FED will be on hold for this year; BOE hikes in July	No, wait for July
3	EZ break up	France and Germany supporting EUR	No
4	PIIGS	Greece bailout not done Germany divergence with ECB	Yes
5	QE3	Requires: - meaningful rise/(flat) in unemployment rate and - sharp fall in inflations (expectations)	No
6	Commodity rise	Falling prices confirming slowdown	Moderate
7	US debt	Debt ceiling	August

Currency	Short term view	Long term view
USD	Bullish, extreme short and repositioning from risk aversion	Bearish (5, 7)
JPY	Bearish	Bearish
CHF	Bullish	Bullish (until bubble burst)
EUR	Hold	Neutral (around 1.37 mean)

"Technical analysis"
EURUSD stopped at the resistance is 1.47 area, now at 1.33. 1.46 support was easily broken; next support is 1.43. Strong support at 1.40; if broken is a clear downtrend, if holds a range 1.40-1.46
USDJPY tested again the 80 support, now at 80.31
AUDJPY testing 84.6 support, 85 support area; 90 resistance looks very farat the moment. Next support is 83. EURJPY has a solid base is 114, 116 support broken.
The Dollar index to 75.3
COT data suggest that is time for a reversal for the dollar. This can take many weeks and should be considered a medium term view. Commercials are again short.
COT AUD up 62k (+2k), OI 45k (+27k)
COT USD at 2.7k (-2k), OI 62k (+6k)
COT EUR at 51k (+29k), OI 296k (+25k)
COT JPY at 17k (+18k), OI 106k (+9k)
COT CHF at 16k (-6k), OI 74k (+9k)
German/Greece up to 13.7% (+0.9%)
German/Spain up to 2.5% (+0.4%)
Bunds at 2.96%. (-0.1%)
JGB at 1.14% (+0.00%)
TYN to 2.96% (-0.02%)
VIX to 18.85 (+1.0)
Gold/Oil to 15.4 (+0.1)

"Market dynamics”
Long term view:
- EUR staying up (EZ and global economic growth and interest rate hikes), depends how Greece will end up plus the stress test for banks. If nothing worse, I see 1.4 at three month (after QE2 ends)
- USD is going down. We can have a short term rebound for risk off appetite
- CHF, is going exponentially up because of picking up the JPY lost safe heaven status (new all times high versus the USD this week too); if risk on buy CHF, if risk off buy more CHF. CHF bubble will burst not immediate
- JPY, is going to go down (bad economic slump and lost safe heaven status); US bond bubble is not yet coming and this does not will favor this play; a non hike policy can slow down the play.
Next week view:
Because of the risk off sentiment, where the dollar is late to get stronger, I will use this USD weakness as a buying opportunity, looking if technical levels hold. That means short AUD, CAD and NZD against USD and JPY, from just above currents levels that offer attractive opportunities.
Very confused on; sell EURUSD at 1.445, if the double top there holds.
No buying for USDJPY, I think that 80.00 support holds.

Reverse CADJPY at 83, sell AUDJPY at 86
Key events:
Tuesday: CNY CPI y/y, USD PPI m/m, Retail sales m/m
Wednesday: US Core CPI m/m, EZ Industrial production m/m
Thursday: EZ CPI y/y, US Building permits
Friday: UoM

Median grid
EURUSD GRID 1.430 - 1.490, up bias, grid change
USDJPY GRID 80.00-84.00, neutral bias
AUDJPY GRID 82.00-90.00, neutral bias
USDCHF GRID 0.8225-0.8725, down bias

Prices
US at 1268, (-30, Q3),
GOLD to at 1531, (-10, Q4+)
Silver to at 36.1, (+0.1 Q4+)
Crude 98.8 (-2.2$)
EURUSD 1.435 (-0.035, Q1)
USDJPY 80.31 (+0.1, Q2)
AUDJPY 86.4 (+0.5 Q2)
EURJPY 115.2 (-2.0 Q4)

3.  Plan
Exit long CADJPY and USDJPY long with even a small profit, trying to avoid losses.

EURUSD
Comment:< >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURJPY
Comment:< >

USDCHF
Comment:< >

CADJPY
Comment:< >

4.  Trades

Positions
USDJPY +2
EURUSD 0
USDCHF 0
AUDJPY +0
EURJPY 0
CADJPY +1

Daily Briefing 110606

1.  Review.

I said “Because of the risk off sentiment, where the dollar is late to get stronger, I will use this USD weakness as a buying opportunity, looking if technical levels hold. EURUSD at 1.433, if the double top there holds.
USDJPY at 80.30, if 80.00 support holds. CADJPY should be a buy at these level because of expected rate increase, if 82.35 support holds” Despite risk-off sentiment USD remained weak. Selling risk asset in remaining strength did not played well this week.
Trades
Exited AUDJPY and one USDJPY.

2.  Analysis.

"Fundamental analysis data"
EZ CPI y/y 2.7% 2.8% 2.8%
CNY PMI 52.0 51.6 52.9
US ISM PMI 53.5 58.1 60.4
US NFP change 54k 161k 232k

Unemployment rate 9.1% 9.0% 9.0%
Unemployment Claims 422k 416k 428k
"Fundamental analysis"
Data show again an increasing sluggishness especially in the US economy with US poor PMI and employment data. Political stalemate are also weight on the buck. Rumors of QE3
Greece sovereign debt issues is settled down. IMF inspection was positive. Spain bonds yield spreads. ECB meeting on Thursday could signal a July rate hike.
Silver and Gold were mixed this week.
All indicator, expect the USD weakness, are showing a risk off view:
- US 10YN at higher levels
- Gold and Silver strong
- most JPY crosses around recent lows, especially after NFP
- CHF at new fresh historical highs versus EUR and USD
I maintain this big picture view, where there is:
- commodities and risk asset less positive; but we should consider this sell off as assets repositioning and therefore a short term negative
- US growth is slowing; I believe that the USD will relief in the coming weeks because of the QE2 end, but it will be on pressure in the next months, because of a QE3 announcement.
Long term outlook has USD bearish, JPY bearish and CHF bullish.
The actual extreme in the bearish USD sentiment can be a reversal sign, and it is starting to apply now.

Driver	Comments	Immanency
On-going global recovery	EZ slowing, US mire slowing, China slowing: moderating pace	Yes, causing risk aversion
Divergence in FED and BCE monetary policy	FED will be on hold for this year; QE3 fears	Yes
EZ break up	France and Germany still determined to hold on	Moderate
PIIGS	Greece bailout done	Yes
QE2/QE3	QE3 talk; FED speaking	Yes
Commodity rise	No	No

Long term view	Short term view	Long term view
USD	Bullish, extreme short and repositioning from risk aversion	Bearish (QE3, fiscal problems)
JPY	Bearish	Bearish
CHF	Bullish	Bullish (until bubble burst)
EUR	Bullish to 1.5	Neutral (around 1.37 mean)

"Technical analysis"
EURUSD broke the resistance is 1.44 area, now at 1.465. If 1.46 is supported, next resistance is May high at 1.49
USDJPY after tested again the 80 support, now at 80.26
AUDJPY same level 86, has 85 as support to the 90 resistance. Next support is 83.
EURJPY has a solid base is 114, 116 test failed, basically flat week to week.
The Dollar index back to 73.8, support at 73.0.
COT data suggest that is time for a reversal for the dollar. This can take many weeks and should be considered a medium term view. We have to wait for a clear sign of rebound and commercial go again to negative.
COT AUD up 60k (+7k), OI 117k (+7k)
COT USD up to 4.7k (+2k), OI 55k (-6k)
COT EUR at 22k (+2k), OI 270k (+12k)
COT JPY at -1.6k (-10k), OI 95k (-5k)
COT CHF up 21k (+6k), OI 67k (+1k)
German/Greece up to 12.9.4% (-0.5%)
German/Spain up to 2.1% (-0.2%)
Bunds at 3.08%. (+0.2%)
JGB at 1.14% (+0.01%)
TYN to 2.98% (-0.02%)
VIX to 17.95 (+2.0)
Gold/Oil to 15.3 (+0.2)

"Market dynamics”
Long term view:
- EUR staying up (EZ and global economic growth and interest rate hikes), depends how Greece will end up plus the stress test for banks. If nothing worse, I see 1.4 at three month (after QE2 ends)
- USD is going down. We can have a short term rebound for risk off appetite
- CHF, is going exponentially up because of picking up the JPY lost safe heaven status (new all times high versus the USD this week too); if risk on buy CHF, if risk off buy more CHF. CHF bubble will burst not immediate
- JPY, is going to go down (bad economic slump and lost safe heaven status); US bond bubble is not yet coming and this does not will favor this play; a non hike policy can slow down the play.
Next week view:
Because of the risk off sentiment, where the dollar is late to get stronger, I will use this USD weakness as a buying opportunity, looking if technical levels hold.
EURUSD at 1.433, if the double top there holds.
USDJPY at 80.30, if 80.00 support holds.

CADJPY should be a buy at these level because of expected rate increase, if 82.35 support holds
Key events:
Tuesday: Chicago Consumer confidence
Wednesday: CNY manufacturing, US ADP
Thursday: CAD interest rate statement, US unemployment claims
Friday: NF Employment change, unemployment rate

Median grid
EURUSD GRID 1.410 - 1.460, up bias, grid change
USDJPY GRID 80.00-84.00, up bias
AUDJPY GRID 82.00-90.00, up bias
USDCHF GRID 0.8725-0.925, neutral bias

Prices
US at 1295, (-35, Q4),
GOLD to at 1541, (+15, Q4+)
Silver to at 36, (-2, Q4+)
Crude 100.4 (-0.2$)
EURUSD 1.465 (+0.035, Q1)
USDJPY 80.26 (-0.45, Q2)
AUDJPY 86.0 -0.5 Q2)
EURJPY 117.4 (+2.0 Q4)

3.  Plan
Review...

EURUSD
Comment:< >

USDJPY
Add a long at 80
Comment:< >

AUDJPY
Comment:< >

EURJPY
Comment:< >

USDCHF
Comment:< >

CADJPY
Add long at 82.25
Comment:< >

4.  Trades

Positions
USDJPY +1
EURUSD 0
USDCHF 0
AUDJPY +0
EURJPY 0
CADJPY +1

Daily Briefing 110529

1.  Review.

I said “…we think that there will be a tendency towards risk aversion;” It was an exhausting week, risk on, off, on, off... “ then commodities, stocks and JPY crosses would resume their decline, propelling the USD higher in this process. “ Wrong call: USD lose ground toward all pairs and commodities rebounded.” No enough data in the week ahead to provoke a surge in risk aversion and probably we will have another choppy trading week.” US disappointing data (GDP, unemployment, orders, home sales) “I will use high range values to exit JPY short positions, in anticipation of the coming risk aversion.” Done. “Dips in USDJPY are a buying opportunity only for range bound trading; I will watch closely is 80.00 is probably the line in the sand (even if BoJ will not defend it if it is crossed smoothly) . No BoJ intervention is expected in this environment. I expect a range bound trading here (80-84)” JPY back to 80.80 from 82.10 “Silver (like the canary in a coal mine) and now is telling that we are like at the end of this risk on period.“ Quite volatile, back to 38$
Trades
No trades this week.

2.  Analysis.

"Fundamental analysis data"
German PMI 58 61 62
German ifo 114.2 113.9 114.2
US New home sales 323k 305k 301k
US pending home sales -11% -1% 3.5%
Core durable orders m/m -1.5% 0.7% 2.5%
US GDP q/q 1.8% 2.2% 1.8%
Unemployment Claims 424k 403k 414k
"Fundamental analysis"
Data show again an increasing sluggishness in the major economies growth pace with US poor house data. Next week watch employment data release.
EURUSD sovereign debt issues is continuing and there is not yet a solution on the IMF loan extension to Greece. We will look closely to Spain bonds yield spreads.
Silver and Gold rallied this week.
All indicator, expect the USD weakness, are showing a risk off view:
- US 10YN at higher levels
- Gold and Silver strong
- most JPY crosses consolidating around recent lows
- CHF at historical highs
I maintain this big picture view, where there is:
- commodities and risk asset less positive; but we should consider this sell off as assets repositioning and therefore a short term negative
- US growth is slowing; I believe that the USD will relief in the coming weeks because of the QE2 end, but it will be on pressure in the next months, because of a QE3 announcement.
Long term outlook has USD bearish, JPY bearish and definitely CHF bullish.
The actual extreme in the bearish USD sentiment can be a reversal sign, and it is starting to apply now.

Driver	Comments	Immanency
On-going global recovery	EZ slowing, US less positive, China slowing: moderating pace	Yes, causing risk aversion
Divergence in FED and BCE monetary policy	QE2 is ongoing and the FED will be on hold for this year	Moderate
EZ break up	France and Germany still determined to hold on	Moderate
PIIGS	Greece bailout, Spain adding	Yes
QE2/QE3	QE2 priced in	Mid June
Commodity rise	No	No

Long term view	Short term view	Long term view
USD	Bullish, extreme short and repositioning from risk aversion	Bearish (QE3, fiscal problems)
JPY	Bearish	Bearish
CHF	Bullish	Bullish (until bubble burst)
EUR	Bearish to 1.37	Neutral (around 1.37 mean)

"Technical analysis"
EURUSD is holding the 1.40 support, regaining to 1.43. Resistance is 1.44 area
USDJPY after testing the 80 support reached the 82.00, back to 80.8
AUDJPY has 85 as support to the 90 resistance. Next support is 83.
EURJPY has a solid base is 114, 116 test failed, basically flat week to week.
The Dollar index still at the rebound level 75.78 from historical low versus AUD, Gold and CHF.
COT data suggest that is time for a reversal for the dollar. This can take many weeks and should be considered a medium term view. We have to wait for a clear sign of rebound and commercial go again to negative.
COT AUD up 53k (+3k), OI 110k (-5k)
COT USD up to 2.4k (+3k), OI 61k (+6k)
COT EUR at 19k (-20k), OI 258k (+8k)
COT JPY up at 8k (-6k), OI 100k (-4k)
COT CHF up 15k (0k), OI 66k (-2k)
German/Greece up to 13.4% (-0.1%)
German/Spain up to 2.3% (-0.1%)
Bunds at 2.94%. (-0.4%)
JGB at 1.13% (+0.00%)
TYN to 3.0% (-0.13%)
VIX to 16.0 (+-1.3)
Gold/Oil to 15.1 (+0.0)

"Market dynamics”
Long term view:
- EUR staying up (EZ and global economic growth and interest rate hikes), depends how Greece will end up plus the stress test for banks. If nothing worse, I see 1.4 at three month (after QE2 ends)
- USD is going down. We can have a short term rebound for risk off appetite
- CHF, is going exponentially up because of picking up the JPY lost safe heaven status (new all times high versus the USD this week too); if risk on buy CHF, if risk off buy more CHF. CHF bubble will burst not immediate
- JPY, is going to go down (bad economic slump and lost safe heaven status); US bond bubble is not yet coming and this does not will favor this play; a non hike policy can slow down the play.
Next week view:
Because of the risk off sentiment, where the dollar is late to get stronger, I will use this USD weakness as a buying opportunity, looking if technical levels hold.
EURUSD at 1.433, if the double top there holds.
USDJPY at 80.30, if 80.00 support holds.

CADJPY should be a buy at these level because of expected rate increase, if 82.35 support holds
Key events:
Tuesday: Chicago Consumer confidence
Wednesday: CNY manufacturing, US ADP
Thursday: CAD interest rate statement, US unemployment claims
Friday: NF Employment change, unemployment rate

Median grid
EURUSD GRID 1.410 - 1.460, up bias, grid change
USDJPY GRID 80.00-84.00, up bias
AUDJPY GRID 82.00-90.00, up bias
USDCHF GRID 0.8725-0.925, neutral bias

Prices
US at 1329, (+2, Q4),
GOLD to at 1526, (+24, Q4+)
Silver to at 38, (+3, Q4+)
Crude 100.6 (+1.0$)
EURUSD 1.431 (+0.015, Q1)
USDJPY 80.71 (-1.00, Q2)
AUDJPY 86.4 -0.6 Q2)
EURJPY 115.6 (+0.0 Q4)

3.  Plan
Exit long EURJPY and USDJPY long with even a small profit, trying to avoid losses.

EURUSD
Comment:< >

USDJPY
Add a long at 80
Comment:< >

AUDJPY
Comment:< >

EURJPY
Comment:< >

USDCHF
Comment:< >

CADJPY
Add long at 82.25
Comment:< >

4.  Trades

Positions
USDJPY +2
EURUSD 0
USDCHF 0
AUDJPY +0
EURJPY +1
CADJPY +1

Daily Briefing 110522

1.  Review.

No DB last week. Most assets (gold, silver and oil) and risk currencies consolidates around recent lows followed the sell-off in beginning of May. Basically a choppy week with JPY crosses that gained last week highs, but failed to hold them, now back in the middle of the week range. EURUSD sold off late on Friday on ECB comments about Greece.
Trades
No trades this week.

2.  Analysis.

"Fundamental analysis data"
German ZEW 3.1 4.8 7.6
EZ ZEW 13.6 17.9 19.7
US housing starts 0.52M 0.58M 0.57M

Unemployment Claims 409k 421k 438k
Phil Index 3.9 20.2 18.5
JPY GDP Q1 -0.9% -0.5% -0.8%
CAD retail sales 0.0% 0.9% 0.5%
"Fundamental analysis"
Data show an increasing sluggishness in the major economies growth pace:
- EZ austerity measures that curbs consumptions, low ZEW index
- decelerating Asia growth, Japan in recession
- US poor house data end low sentiment.
German growth would moderate after the strong surge at the beginning of the year
JPY GDP Q1 declined more than expected.
FED confirmed policy is on hold, with some comments about.
EURUSD sovereign debt issues are regaining strength, spreads and CDs are at higher values this week too, and EUR weakened on ECB comments about Greece loan collaterals. FX traders treats Greece crisis as manageable, but Spain crisis could be trigger further EUR downside. We will look closely to Spain bonds yield spreads.
Silver and Gold stable this week, they should begin to sell off again after they have reached a pause.
I maintain this big picture view, where there is:
- commodities and risk asset less positive; but we should consider this sell off as assets repositioning and therefore a short term negative
- US growth is slowing; then I believe that the USD will relief in the coming weeks but it will be on pressure in the next months.
Long term outlook has USD bearish, JPY bearish and definitely CHF bullish (until CHF bubble will burst).
The actual extreme in the bearish USD sentiment can be a reversal sign, and it is starting to apply now.

Driver	Comments	Immanency
On-going global recovery	EZ slowing, US less positive, China slowing: moderating pace	Yes, causing risk aversion
Divergence in FED and BCE monetary policy	QE2 is ongoing and the FED will be on hold for this year	Moderate
EZ break up	France and Germany still determined to hold on	No
PIIGS	Greece bailout, Spain adding	Yes
QE2/QE3	QE2 priced in	Mid June
Commodity rise	Settled in this week	No

Long term view	Short term view	Long term view
USD	Bullish, extreme short and repositioning from risk aversion	Bearish (QE3, fiscal problems)
JPY	Bearish	Bearish, 80 is line in the sand, but capped at 84
CHF	Bullish	Bullish (until bubble burst)
EUR	Bearish to 1.37	Neutral (around 1.37 mean)

"Technical analysis"
EURUSD is holding the 1.40 support.
USDJPY after testing the 80 support reached the 82.00.
AUDJPY has 85 as support to the 90 resistance. Next support is 83.
EURJPY stopped at 122; mid support at 116 is regained, a solid base is 114, 116 is now under test.
The Dollar index still at the rebound level 75.78 from historical low versus AUD, Gold and CHF.
COT data suggest that is time for a reversal for the dollar. This can take many weeks and should be considered a medium term view. We have to wait for a clear sign of rebound and commercial go again to negative.
COT AUD up 50k (-10k), OI 115k (-8k)
COT USD up to -1.0k (+3k), OI 55.7k (+3k)
COT EUR at 41k (-20k), OI 250k (+8k)
COT JPY up at 15k (+3k), OI 103k (+1k)
COT CHF up 15k (-3k), OI 68k (-4k)
German/Greece up to 13.5% (+1.1%)
German/Spain up to 2.4% (-0.0%)
Bunds at 3.00%. (-0.0%)
JGB at 1.13% (+0.01%)
TYN to 3.14% (-0.03%)
VIX to 17.4 (+0.3)
Gold/Oil to 15.1 (+0.0)

"Market dynamics”
Long term view:
- EUR staying up (EZ and global economic growth and interest rate hikes), and then back to medium levels. All anti dollar will stay strong or increase in the next couple of months; I agree with UBS view, that sees 1.48 at one month view and 1.4 at three month (after QE2 ends)
- USD is definitely going down. Our view that sooner than later US has changed. This will affect the USDJPY long. USD can have a short term pullback due a excessive short squeeze
- CHF, is going exponentially up because of picking up the JPY lost safe heaven status (new all times high versus the USD this week too); if risk on buy CHF, if risk off buy more CHF. But a certain point the CHF bubble will burst
- JPY, is going to go down (bad economic slump and lost safe heaven status); US bond bubble is not yet coming and this does not will favor this play; but a non hike policy can slow down the play.
Next week view:
Because of this we think that there will be a tendency towards risk aversion; then commodities, stocks and JPY crosses would resume their decline, propelling the USD higher in this process. No enough data in the week ahead to provoke a surge in risk aversion and probably we will have another choppy trading week.
I will use high range values to exit JPY short positions, in anticipation of the coming risk aversion.
Dips in USDJPY are a buying opportunity only for range bound trading; I will watch closely is 80.00 is probably the line in the sand (even if BoJ will not defend it if it is crossed smoothly) . No BoJ intervention is expected in this environment. I expect a range bound trading here (80-84)
Silver (like the canary in a coal mine) and now is telling that we are like at the end of this risk on period.
Key events:
Tuesday: German ifo, US new home sales
Wednesday: USD Core durable good orders
Thursday: US preliminary GDP q/q, Unemployment claims
Friday: US pending home sales

Median grid
EURUSD GRID 1.410 - 1.460, up bias, grid change
USDJPY GRID 80.00-84.00, up bias
AUDJPY GRID 82.00-90.00, up bias
USDCHF GRID 0.8725-0.925, neutral bias

Prices
US at 1327, (-5, Q4),
GOLD to at 1512, (+16, Q4+)
Crude 99.6 (+0.2$)
EURUSD 1.4158 (-0.04, Q1)
USDJPY 81.71 (+1.00, Q2)
AUDJPY 87.09 (+2.1 Q2)
EURJPY 115.6 (+1.5 Q4)

3.  Plan
Exit long AUDJPY, CADJPY, EURJPY and USDJPY long with even a small profit, trying to avoid losses.

EURUSD
Comment:< >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURJPY
Comment:< >

USDCHF
Comment:< >

4.  Trades

Positions
USDJPY +3
EURUSD 0
USDCHF 0
AUDJPY +1
EURJPY +1
CADJPY +1

Daily Briefing 110509

1.  Review.

I said “USD is biased on the downside after FCOM meeting a GDP data I still maintain bullish view on EURUSD with ECB and FED on divergence, probably we will stay in the new grid for a month or two and I am expecting the 1.44/45 as support ; I will buy a dip in the 1.44 area in search of a break of recent highs, looking for a move to 1.5 level.” No rush to enter; now at 1.315. See if these levels hold. “We have not rush to sell USD at these levels and we will wait for dips at these levels:
EURUSD 1.4450/1.450, AUDUSD 1.045/1.050, USDCHF 0.8950/0.990, USDCAD 0.980/0.985
Dips in USDJPY are a buying opportunity. I will buy USDJPY if back in the 81 area (FED stance will probably make USDJPY under perform in respect of other JPY crosses).” I did this time.
JPY crosses failed this week to extend gains: I will buy AUDJPY and CADJPY that are now retracing at these low levels, hoping for a pullback to higher levels (AUDJPY has 90 level to break and USDJPY 85). “ I bought AUDJPY and EURJPY. “This “final rally and sell off” mode can have a rally that could last this June. We should carefully watch silver (like the canary in a coal mine) and now is telling that we are like at the end of this risk on period.
Trades
USDJPY long at 81.5. AUDJPY, EURJPY Closed USDJPY hedged

2.  Analysis.

"Fundamental analysis data"
ISM declined 53 58 57

NFP 244k 185k 221
Unemployment claims 474k 415k 431k
Unemployment Rate 9.o% 8,8% 8.8%
EZ rate unchanged, message dovish than expected.
"Fundamental analysis"
ISM decline was interpreted as a danger for the US recovery, but it is usually a volatile number . Other data points instead to an apace recovery, even if fragile. Key event FED speech was QE2 will continue till the end of June, no sooner than later rate hikes and “extended period” words remained. Remembering again PIMCO people is suggesting that US is going back to a lower growth, but not recession. FED confirmed this and policy is on hold.
EURUSD sovereign debt issues are regaining strength, spreads and CDs are at higher values this week too, but EUR is gaining strength..
ECB leaved rate as now. Trichet did not used “strong vigilance” terms, we will expect a rate hike not earlier than next July meeting. This caused a heavy EURUSD sell off.
Silver and Gold still very sold this week, they should have reached a pause. This sell off shows that gold and silver are still not bought by institutional; a strong fundamental move would need for large institutional buying and a strong dollar. Silver drop is a asset repositioning, due a excessive speculation. We can consider Silver as the new indicator of risk-ok and buying real stuff (instead of fiat currencies);
I maintain this big picture view, where there is:
- commodities and risk asset positive
- US growth is slowing and; then I believe that the USD will be under pressure in the coming weeks and months.
Long term outlook changes to USD bearish, JPY bearish and definitely CHF bullish. The actual extreme in the bearish USD sentiment can be a reversal sign, but it does not apply for now.

Driver	Comments	Immanency
On-going global recovery	EZ positive, US less moderate positive, China under control	Yes
Divergence in FED and BCE monetary policy	QE2 is ongoing and the FED will be on hold for this year	Yes
EZ break up	France and Germany still determined to hold on	Not
PIIGS	Greece bailout	Tbd next week
QE2/QE3	QE2 priced in	Mid June
Commodity rise

Long term view	Bias	Comments
USD	Bearish	Bullish after QE2 end, then still bearish
JPY	Bearish	80 is lone in the sand
CHF	Bullish	Safe heaven
EUR	Bullish	Depends on PIIGS immanency

"Technical analysis"
EURUSD failed to break the 1.49 resistance and 1.44 is tested.
USDJPY tested the 80 support but it looks it holds. AUDJPY has 86 as support to the 90 resistance.
EURJPY stopped at 122; mid support at 116 looks broken, a solid base is 114.
The Dollar index rebound at 75 from historical low versus AUD, Gold and CHF.
COT data suggest that is time for a reversal for the dollar. This can take many weeks and should be considered a medium term view. We have to wait for a clear sign of rebound and commercial go again to negative.
COT AUD up 73k (-7k)

COT USD up to -7k (-2k)
COT EUR at 99k (+33k)
COT JPY up at -18k (+18k)
COT CHF up 18k (+0k)
TYN to 3.14% (-0.3%)
JGB at 1.14% (-0.1%)
Bunds at 3.16%. (-0.2%)

German/Greece up to 12.4% (+0.1%)
VIX to 18.3 (+4.5)
Gold/Oil to 15.3 (+2.0)

"Market dynamics”
Long term view:
- EUR going up (EZ and global economic growth and interest rate hikes), and then back to medium levels. All anti dollar will stay strong or increase in the next couple of months; I agree with UBS view, that sees 14.8 at one month view and 1.4 at three month (after QE2 ends)
- USD is definitely going down. Our view that sooner than later US has changed. This will affect the USDJPY long. USD can have a short term pullback due a excessive short squeeze
- CHF, is going exponentially up because of picking up the JPY lost safe heaven status (new all times high versus the USD this week too); if risk on buy CHF, if risk off buy more CHF
- JPY, is going to go down (bad economic slump and lost safe heaven status); US bond bubble is not yet coming and this does not will favor this play; but a non hike policy can slow down the play.
Next week view:
USD is recovering because of the heavy commodities selling and a risk-off sentiment
We have not rush to sell USD at these levels and we will wait for dips at these levels:
EURUSD 1.4450/1.450, AUDUSD 1.045/1.050, USDCHF 0.8950/0.990, USDCAD 0.980/0.985
Spiegel article about Greece restructuring can cause EUR dips. Dips in USDJPY are a buying opportunity; I will watch closely is 80.00 is still the line in the sand, waiting for a BoJ intervention. I will wait to buy other AUDJPY and CADJPY to see if these low levels hold, hoping for a pullback to higher levels (AUDJPY has 90 level to break and USDJPY 85).
Silver (like the canary in a coal mine) and now is telling that we re like at the end of this risk on period.
Key events:
Wednesday: CNY CPI
Thursday: US PPI, Unemployment claims
Friday: German GDP, US CPI and UoM Sentiment

Median grid
EURUSD GRID 1.440 - 1.500, up bias, grid change
USDJPY GRID 80.00-84.00, up bias
AUDJPY GRID 82.00-90.00, up bias
USDCHF GRID 0.8725-0.925, neutral bias

Prices
US at 13577, (+40, Q4),
GOLD to at 1495, (-40, Q4+)
Crude 95.2 (-15.0$)
EURUSD 1.4315 (-0.30, Q1)
USDJPY 80.61 (-0.0, Q1)
AUDJPY 86.21 (-2.4 Q2)
EURJPY 115.5 (-5.0 Q4)

3.  Plan
Determine if current levels are dips opportunity or a rocky fall.

EURUSD
I will buy long dips, like longs at 1.44, if levels hold.
Comment:< >

USDJPY
No trades, wait BoJ
Comment:< >

AUDJPY
I will buy a big dip, like longs at 87.5/7
Comment:< >

EURJPY
I will buy a big dip, like longs at 119.3/5
Comment:< >

USDCHF
No trades planned
Comment:< >

4.  Trades

Positions
USDJPY +2
EURUSD 0
USDCHF 0
AUDJPY +1
EURJPY +1