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

Daily Briefing 110502

1.  Review.

I said “Short term is to keep USD biased on the downside (FED hold, budget problems, S&P downgrade and the heavy sell). 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 1.44/2 as support ; USD resell area for a dip can be only for some risk off, even if it would affect more CHF. 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.” EUR dipped very short at 1.449 and then rallied to 1.487, where is a short term double top. “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 entered a dip at 81.5, now at 81.2 level.
“I will buy JPY crosses, like AUDJPY and CADJPY that are now retracing. I will buy dips. AUDJPY has 90 level to break and USDJPY 85.5 that holds. “ Dips are forming, but still higher levels.
“Anyway we can be in a “final rally and sell off” mode. 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.” Very volatile sessions for silver, but after a huge dip at 44.6 pullback was at highest 49.1, now 47.9
Trades
USDJPY long at 81.5. Closed with profit AUDJPY and EURJOPY

2.  Analysis.

"Fundamental analysis data"
Core Orders 1.3% 1.7% 0.6%
USD GDP 1.8% 1.9% 3.1%
Unemployment Claims 429k
German Consumer Climate 5.7 5.9 5.9
EZ CPI y/y 2.8% 2.7% 2.7%
"Fundamental analysis"
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..
I maintain this big picture view, where there is:
- an on-going global recovery, EZ positive, US less moderate positive, China under control
- commodities and risk asset positive
- divergence in FED and BCE monetary policy; US growth is slowing and QE2 is ongoing and the FED will be on hold for this year; 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..
ECB in a tough position for rate hikes because of surging inflation at 2.8%; if in the next ECB Trichet will use “strong vigilance” we will expect a rate hike in the next June meeting.
China growth is not in discussion; they government will make it work at the right pace.
AUDUSD broke the 1.1 level and as a risk on proxy risk should be on for the next week.
Silver and Gold at highs, because of USD weakness but also for EZ debts, looking for safety. Anyway a gold and silver are still not bought by institutional; a strong fundamental move would need large institutional buying and a strong dollar.
Silver demand is supported by its industrial usage, expecting to rise because of Australia, New Zealand and Japan reconstruction. We can consider Silver as the new indicator of risk-ok and buying real stuff (instead of fiat currencies);
"Technical analysis"
The Dollar index now 3 at to 73.83 and it is at historical low versus AUD, Gold and CHF, close at all times low at 70.70 .
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.

EURUSD ranged around the 1.43 and the resistance at 1.45, COT data are below. Dollar index tested the76 support . EUR long are very high and increasing. USDJPY at 85. GOLD/Oil ratio stable to 13.6; VIX down at 15.3 (risk on).
COT USD up to -9k (-1k)
COT JPY up at -36k (+14k)
COT EUR at 68k (+4k)
COT AUD up 80k (-11k)

COT CHF up 18k (+4k)
TYN to 3.4% (-0.17%)
JGB at 1.29% (-0.03%)
Bunds at 3.36%. (-0.1%)

German/Greece up to 10.4% (+1.1%)
VIX to 14.7 (-0.5)
Gold/Oil to 13.6 (+0.0)

"Market dynamics”
Long term view:
- EUR going up (EZ and global economic growth and interest rate hikes), and this is going on now. All anti dollar will stay strong or increase in the next couple of months
- 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, and G20 could intervene to support the USD to avoid a commodities rally
- 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 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.
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).
JPY crosses failed this week to extend gains: I will buy AUDJPY and CADJPY that are now retracingat these low levels, hoping for a pullback to higher levels (AUDJPY has 90 level to break and USDJPY 85).
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.
Key events:
Wednesday: USD ADP, ISM
Thursday: ECB rate and press conference
Friday: NFP

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 1544, (+60, Q4+)
Crude 113.0 (+4.0$)
EURUSD 1.4830 (+0.04, Q4)
USDJPY 81.11 (-0.0, Q1)
AUDJPY 88.81 (+1.0 Q4)
EURJPY 120.5 (-1.0 Q4)

3.  Plan

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

USDJPY
No trades
Comment:< >

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

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

USDCHF
No trades planned
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4.  Trades

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

Daily Briefing 110502

1.  Review.

I said “Short term is to keep USD biased on the downside (FED hold, budget problems, S&P downgrade and the heavy sell). 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 1.44/2 as support ; USD resell area for a dip can be only for some risk off, even if it would affect more CHF. 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.” EUR dipped very short at 1.449 and then rallied to 1.487, where is a short term double top. “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 entered a dip at 81.5, now at 81.2 level.
“I will buy JPY crosses, like AUDJPY and CADJPY that are now retracing. I will buy dips. AUDJPY has 90 level to break and USDJPY 85.5 that holds. “ Dips are forming, but still higher levels.
“Anyway we can be in a “final rally and sell off” mode. 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.” Very volatile sessions for silver, but after a huge dip at 44.6 pullback was at highest 49.1, now 47.9
Trades
USDJPY long at 81.5. Closed with profit AUDJPY and EURJOPY

2.  Analysis.

"Fundamental analysis data"
Core Orders 1.3% 1.7% 0.6%
USD GDP 1.8% 1.9% 3.1%
Unemployment Claims 429k
German Consumer Climate 5.7 5.9 5.9
EZ CPI y/y 2.8% 2.7% 2.7%
"Fundamental analysis"
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..
I maintain this big picture view, where there is:
- an on-going global recovery, EZ positive, US less moderate positive, China under control
- commodities and risk asset positive
- divergence in FED and BCE monetary policy; US growth is slowing and QE2 is ongoing and the FED will be on hold for this year; 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..
ECB in a tough position for rate hikes because of surging inflation at 2.8%; if in the next ECB Trichet will use “strong vigilance” we will expect a rate hike in the next June meeting.
China growth is not in discussion; they government will make it work at the right pace.
AUDUSD broke the 1.1 level and as a risk on proxy risk should be on for the next week.
Silver and Gold at highs, because of USD weakness but also for EZ debts, looking for safety. Anyway a gold and silver are still not bought by institutional; a strong fundamental move would need large institutional buying and a strong dollar.
Silver demand is supported by its industrial usage, expecting to rise because of Australia, New Zealand and Japan reconstruction. We can consider Silver as the new indicator of risk-ok and buying real stuff (instead of fiat currencies);
"Technical analysis"
The Dollar index now 3 at to 73.83 and it is at historical low versus AUD, Gold and CHF, close at all times low at 70.70 .
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.

EURUSD ranged around the 1.43 and the resistance at 1.45, COT data are below. Dollar index tested the76 support . EUR long are very high and increasing. USDJPY at 85. GOLD/Oil ratio stable to 13.6; VIX down at 15.3 (risk on).
COT USD up to -9k (-1k)
COT JPY up at -36k (+14k)
COT EUR at 68k (+4k)
COT AUD up 80k (-11k)

COT CHF up 18k (+4k)
TYN to 3.4% (-0.17%)
JGB at 1.29% (-0.03%)
Bunds at 3.36%. (-0.1%)

German/Greece up to 10.4% (+1.1%)
VIX to 14.7 (-0.5)
Gold/Oil to 13.6 (+0.0)

"Market dynamics”
Long term view:
- EUR going up (EZ and global economic growth and interest rate hikes), and this is going on now. All anti dollar will stay strong or increase in the next couple of months
- 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, and G20 could intervene to support the USD to avoid a commodities rally
- 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 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.
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).
JPY crosses failed this week to extend gains: I will buy AUDJPY and CADJPY that are now retracingat these low levels, hoping for a pullback to higher levels (AUDJPY has 90 level to break and USDJPY 85).
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.
Key events:
Wednesday: USD ADP, ISM
Thursday: ECB rate and press conference
Friday: NFP

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 1544, (+60, Q4+)
Crude 113.0 (+4.0$)
EURUSD 1.4830 (+0.04, Q4)
USDJPY 81.11 (-0.0, Q1)
AUDJPY 88.81 (+1.0 Q4)
EURJPY 120.5 (-1.0 Q4)

3.  Plan

EURUSD
I will buy long dips, like longs at 1.44.
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USDJPY
No trades
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AUDJPY
I will buy a big dip, like longs at 87.5/7
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AUDJPY
I will buy a big dip, like longs at 119.3/5
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USDCHF
No trades planned
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4.  Trades

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