Daily Briefing 110328

1.  Review.

I said “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.” Yes, we adjusted the grid. “ 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”. The Portugal downgrade is a 1.4080 buying opportunity. “Dips in USDJPY are a buying opportunity. I will buy USDJPY if back in the 79 area”. It did not all the week long and then I bought at 80.90. “Risk aversion for Middle East events should be considered.” Still protest in Yemen and not a clear Libya resolution.
Trades
I missed the EURUSD dip at 1.4050, again. Bought JPY @ 80.90.

2.  Analysis.

"Fundamental analysis data"
USD New home sales down 250K 291K 301K
German Ifo slightly down (111 110 111)
EZ PMI positive
US Unemployment down 382K 338K 387K
"Fundamental analysis"
Despite events investors maintained a risk on view based on that the recovery is on-going . Stock (US and Japan) raised, as Commodities and TYN fell, showing a reduced safe heaven demand (and suggesting that a QE3 is not on the table).
I maintain last week a big picture view, where there is:
- an on-going global recovery
- commodities and risk asset positive
- divergence in FED and BCE monetary policy, even if for short time because QE3 could be not on the table
Risk off events in Libya and MENA could rise oil prices and commodities.
Long term outlook remains USD bullish, JPY and but CHF bearish is under question.
China growth is not in discussion; they government will make it work at the right pace.
Portugal crisis did not harmed too much EUR strength, because it appears known and compartmentalized.
"Technical analysis"
The Dollar index going ahead to the November low 75.3 at to 75.76
EURUSD after breaking the 1.40 resistance, stopped at the next resistance at 1.42, October high and is back to 1.408. COT data are below. Dollar index hold at 76 support . EUR long are very high and increasing. USDJPY had a flat week BOJ intervention at 81. GOLD/Oil ratio declined to 13.5; VIX is 18 after 31 highs.
COT USD up to -14k (+1k)
COT JPY up at +35k (+5k)
COT EUR at 48k (+3k)
COT AUD up 51k (+4k)
COT CHF up 21k (-7k)
TYN to 3.43% (+0.18%)
JGB at 1.22% (+0.01%)
Bunds at 3.27%. (+0.09%)
German/Greece up to9.2% (+0.1%)
VIX to 18 (-6)
Gold/Oil to 13.5 (-0.4)

"Market dynamics”
Long term view:
- EUR going up (EZ and global economic growth and interest rate hikes), and this is going on now.
- USD going UP (US and global economic growth and interest rate hikes), and this is going to happen as it is clear that there not QE3, maybe in a couple of months.
- CHF, is going exponentially up because of picking up the JPY lost safe heaven status
- JPY, is going to go down (bad economic slump and lost safe heaven status)
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. Next ECB meeting in April and rate hike is fully priced in and there are risk for the down side.
US Friday employment data are expected positive and then supporting risk-on environment.
US higher rates should support a higher USDJPY. Dips in USDJPY are a buying opportunity. I will buy USDJPY if back in the 79 area.
I see JPY cross strength emerge in the weeks ahead, like AUDJPY and CADJPY (end of month activity could result in choppy USD activity, so better stay focused on JPY crosses). I will look for breaks of current resistances.
Risk aversion for Middle East events should be considered.

Median grid
EURUSD GRID 1.380 - 1.440, up bias
USDJPY GRID 80.00-84.00, up bias
AUDJPY GRID 78.00-86.00, up bias
USDCHF GRID 0.8725-0.925, neutral bias

Prices
US at 1274, (-30, Q4),
GOLD to at 1429, (+10, Q4+)
Crude 105.4 (+4.0$)
EURUSD 1.4081 (-0.1, Q3)
USDJPY 81.33 (+0.5, Q2)
AUDJPY 83.44 (+3.5 Q3)

3.  Plan

EURUSD
Long at 1.4080
Comment:< >

USDJPY
Already enough longs
Comment:< >

AUDJPY
Long on a dip at 82.7
Comment:< >

USDCHF
See if resistance at 0.93 holds. If yes, short at 0.912
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 1.4081 -811.0000 -57.6000
3 Open 18-feb-11 EURUSD S 1.3624 1.3774 Q2 1 B&B 1.4081 -456.0000 -162.0000
1 Open 10-mar-11 USDCHF L 0.9321 0.9171 Q2 1 B&B 0.9195 -126.0000 -63.5000
2 Open 10-mar-11 USDCHF S 0.8979 0.9129 Q1 1 Hedge 1 Open 0.9195 -216.0000 -108.0000
2 Open 24-mar-11 USDJPY L 81.0100 80.0100 Q2 1 B&B 81.33 32.0000 15.43
Leverage

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

Total positions per currency:
USDJPY +1
EURUSD -2
USDCHF +1, -1
AUDJPY 0
Position
USDJPY 15
EURUSD -57, -162
USDCHF -126, -63
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.  (9647=-3.96%)
2.  Account equity (Including open positions) .  (9855= -1.4%)
3.  Account equity if planned trades go wrong: 1011
4.  Pip distance to line in the sand level.  2151, with gear (2) 1075