Daily Briefing 110321

1.  Review.

I said “Probably stay in the sideline watching positions how evolve. EUR going up and USD going UP. I still maintain bullish view on EURUSD till 1.40/1, probably we will stay in the current grid for a month or two and I am not expecting a 1.4 imminent breakout at this moment, but there is anyway a potential upside to 1.425, because the 1.38 area holds”. Again, I did not act as I planned. Euro is 1.418 and I did not added any long on the 1.388 dip. “ Probably we will have a dip on ESM expectation for a couple of weeks; I should look to marker reaction after EU agreement and see bond spread for sovereign debt. It looks market is not focused now. Any EZ long term dips are still going to be bought.” That’s true, but again, I did not. I have to solve these psychological problems …”I will buy USDJPY if back in the 81 area, at 81.66, if the 81 level hold.” What a 77.03 dip! I did not profit from BOJ intervention, when it was quite clear to try a JPY short at 78.7
Risk aversion for Middle East events should be considered.”
Trades
Entered a long USDJPY @ 77.98 and AUDJPY @ 76.64. I missed the EURUSD dip, again.
Closed JPY shorts. Edged USDCHF

2.  Analysis.

"Fundamental analysis data"
German ZEW down (14.1% 16.2% 15.7%)
US Building permits down (0.52M 0.58M 0.56M)
US PPI up (1.6% 0.7% 0.8%)

US CPI up m/m (0.5% 0.5% 0.4%)
Phil Fed Man. Index (43 29 35)
"Fundamental analysis"
Main event was BOJ and G7 intervention. Further intervenes are foreseen to defend the 80 level. JPY will probably weaken in the coming months due a slow growth, BOJ easing and government borrowing.
After this furious week, I have to maintain a big picture view, where there is:
- an on-going global recovery
- commodities and risk asset positive
- divergence in FED (Q3) and BCE monetary policy
Risk off events in Libya and MENA could rise oil prices and commodities.
Long term outlook remains USD bullish, JPY and CHF bearish.
China growth is not in discussion; they government will make it work at the right pace.
EU meeting reached a deal on competitiveness pact. Some question from German government about the bailout fund. I take the side it will be solved. Peripheral spread are still high. Only a falter in the German economy would change this. There is a huge dips buying and this is EUR bullish.
EUR is now beneficiary for risk off, with JPY and CHF. Probably a temporary set, but it is lasting since weeks.
Issue is if speculator will focus on EUR now that BOJ is defending JPY crosses.
"Technical analysis"
The Dollar index going ahead to the November low 75.3 at to 75.76
EURUSD broke the 1.40 resistance. Next resistance one is 1.42, October high. COT data are below. EUR long are very high and increasing. USDJPY 80.6, see comment on BOJ intervention. COT had a big reversal versus JPY long. GOLD/Oil ratio declined to 13.7; VIX is 24 after 31 highs.
COT USD up to -15k (-9k)
COT JPY up at +30k (+15k)
COT EUR at 45k (-12k)
COT AUD up 47k (-25k)
TYN to 3.26% (-0.15%)
JGB at 1.21% (-0.04%)
Bunds at 3.18%. (-0.03%)

German/Greece up to9.1% (-0.6%)
VIX to 24.1 (+4)
Gold/Oil to 14.1 (+0.4)

"Market dynamics”
EUR going up and USD going UP. I still maintain bullish view on EURUSD. Probably we adjust the grid with a 1.40 floor to go ahead to 1.44/45 level. Probably we will stay in the new grid for a month or two and I am expecting the 1.4 as support and a USD resell area for a dip. Any EZ long term dips are still going to be bought. Dips in USDJPY are a buying opportunity. I will buy USDJPY if back in the 79 area.
Risk aversion for Middle East events should be considered.

Median grid
EURUSD GRID 1.340 - 1.400
USDJPY GRID 80.00-84.00, up bias
AUDJPY GRID 73.00-81.00, up bias
USDCHF GRID 0.925-0.975, up bias

Prices
US at 1274, (-30, Q4),
GOLD to at 1419, (+2, Q4+)
Crude 101.4 (+1.0$)
EURUSD 1.4181 (+0.18, Q4+)
USDJPY 80.59 (-1.5, Q2)
AUDJPY 80.23 (-3.5 Q4)

3.  Plan

EURUSD
Long on a huge dip
Comment:< >

USDJPY
Long at 80.17
Comment:< >

AUDJPY
Comment:< >

USDCHF
Comment:< >

4.  Trades
4.1 open trades, their type & their value:
12 Open17-gen-11 EURUSD S 1.3270 1.3420 Q2 0.2 B&B 1.4181 -911.0000 -64.6000

3 Open 18-feb-11 EURUSD S 1.3624 1.3774 Q2 1 B&B 1.4181 -556.0000 -196.0000
1 Open 10-mar-11 USDCHF L 0.9321 0.9171 Q2 1 B&B 0.9017 -25.0000 -134.5000
Leverage

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

Total positions per currency:
USDJPY 0
EURUSD -2
USDCHF +1, -1
AUDJPY 0
Position
USDJPY -22, -14
EURUSD -45, -99
USDCHF -10
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.  (9802=-1.96%)
2.  Account equity (Including open positions) .  (9542= -4.5%)
3.  Account equity if planned trades go wrong: 1011
4.  Pip distance to line in the sand level.  2151, with gear (2) 1075