Sunday, April 3, 2011

Daily Briefing 110404

1.  Review.

I said “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.” 1.4 acted as support, anyway EURUSD failed to break the 1.42 resistance. “ Next ECB meeting in April and rate hike is fully priced in and there are risk for the down side.” ECB Rate hikes are fully priced and it would need some news to add more fuel to break the 1.42 level. “US Friday employment data are expected positive and then supporting risk-on environment.” It was and moved risk currencies versus JPY. “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.” It didn’t dipped and I missed the 82 to 84 move. “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.” Resistances where clearly broken and I will look to buy next dip. “Risk aversion for Middle East events should be considered.” Not really this week.
Trades
Closed EURUSD short at 1.36; I missed the USDJPY boat. Missed again the 1.4050 dip in EURUSD.

2.  Analysis.

"Fundamental analysis data"
EZ CPI higher (2.6% 2.4% 2.4%)
EZ Unemployment 9.9% 9.9% 10.0% (revised up)
US Unemployment 8.8% 8.9% 8.9%
US NFP better than expected 216K 191K 194K (whisper number 205K)
ISM Index at historical highs 61.2 61.1 61.4
CNY PMI supporting global growth (53.4 54.6 52.2)
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"Fundamental analysis"
Lot of hawkish statements from the FED that: economy is strong enough, inflation is threatening enough and accommodation measures should be removed. QE will be completed in schedule and it is soon to consider tighten measures. Investors maintain a risk on view based on that the recovery is on-going . Stock (US and Japan) raised again, as Commodities and TYN stable as last week decrease, 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; QE3 is not on the table, but the FED will be on hold for this year;
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.
"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 1.425, October high and is 1.423. COT data are below. Dollar index hold at 76 support . EUR long are very high and increasing. USDJPY had a huge week from 81 to 84. GOLD/Oil ratio declined to 13.5; VIX is 17.4 after 31 highs.
COT USD up to -13.9k (+1k)
COT JPY up at +7k (-28k)
COT EUR at 56k (+8k)
COT AUD up 85k (+34k)

COT CHF up 18k (-3k)
TYN to 3.44% (+0.01%)
JGB at 1.28% (+0.06%)
Bunds at 3.37%. (+0.1%)

German/Greece up to9.3% (+0.1%)
VIX to 17.4 (-0.6)
Gold/Oil to 13.3 (-0.2)

"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 future 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)
Next week view:
Short term is to keep USD biased on the downside, because of FED hold, despite the hawkish comments.
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, based on the “FED is changing its rate stance” theme. 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. Selling highs could be an opportunity after hawkish FED comments, anticipating the following dip. Thursday afternoon there will be Trichet comments, that will be decisive for further gains.
US Friday employment data ware 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 81 area.
I JPY crosses, like AUDJPY and CADJPY are a bit overshoot. There were breaks of current resistances levels. I will buy dips.

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 1327, (+60, Q4),
GOLD to at 1428, (+1, Q4+)
Crude 108.4 (+3.0$)
EURUSD 1.4234 (+0.15, Q3)
USDJPY 84.05 (+2.7, Q4)
AUDJPY 87.28 (+3.5 Q4+)

3.  Plan

EURUSD
I will buy long dips, as long at 1.4050 or sell at high after FED comments.
Comment:< >

USDJPY
I will buy a deep dip, like 82.10
Comment:< >

AUDJPY
I will buy a deep dip, like 83.30
Comment:< >

USDCHF
Same as last week; resistance at 0.93 holds. If yes, short at 0.912
Comment:< >

4.  Trades
4.1 open trades, their type & their value:
Leverage

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

Total positions per currency:
USDJPY 0
EURUSD 0
USDCHF 0
AUDJPY 0
Position
USDJPY 0
EURUSD 0
USDCHF 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.  (9828=-1.7%)
2.  Account equity (Including open positions) .  (9828=-1.7%)
3.  Account equity if planned trades go wrong: 0
4.  Pip distance to line in the sand level.