1. Review.
A risk off week with USD and JPY gaining and AUD and EUR loosing.
Trades
Short AUDUSD, AUDCAD, NZDUSD
2. Analysis.
"Fundamental analysis"
For a big EUR south move you need EU trouble and US economic growth and normality. If you don't have both, no big euro south side and potential for euro upside due to the structural improvements and the long term USD diversification
Unless there is something substantially and tragically new it is wholly unlikely that EURUSD will move below the January lows (1.26)
Things are going to stay risk off until the Greeks decide on a unity government
Demand for safety as European politics raises uncertainty has resulted in lower US Treasury yields and a stronger buck. Despite softer U.S. data, Fed officials have indicated their reluctance to engage in further QE.
GBP: we believe the focus will be on the downward revision to growth, however we expect the report to reaffirm the sticky inflation problem in the UK, which may stop the Bank from re-starting its QE program.
| Id | Driver | Comments | Immanency |
| 1 | On-going global recovery | Germany is in good economic shape. EZ growth low. US growth uncertain | Yes |
| 2 | Divergence in FED and BCE monetary policy | FED will be on hold for until 2015; | No |
| 3 | EZ break up | EU dynamic is a longer term dynamic of "putting the structures in place” | Yes |
| 4 | PIIGS | Greece government and Spain banks in focus | Yes |
| 5 | QE3 | Not off the table; PIMCO says yes | Yes |
| 6 | Commodity rise | Falling prices are confirming slowdown | Yes |
"Technical analysis"
Morgan Stanley says, at least 1.2700 for now, but in case its EURO to HERO eat your losses at 1.3100 (as reported by fxlive.)
EURUSD broke the key support level of 1.300
Constructive for the dollar as the dollar index is trading above the 80.00 level
Median grid
EURUSD GRID 1.2800-1.3400, neutral bias (grid change)
USDJPY GRID 76.00-80.00, neutral bias
AUDJPY GRID 76.00-80.00, down bias (grid change)
USDCHF GRID 0.9250-0.8750, up bias (grid change)
| Currency | Short term view(technical) | Long term view (fundamentals) |
| USD | ||
| JPY | ||
| CHF | ||
| EUR |
"Market dynamics”
At this stage the USD reacts positive / negative in the very short term (intraday to intra week) mainly versus JPY on US based events / data.
We expect the yen to be range bound.
GBPUSD looks well supported above 1.6060, however we are more wary of potential strength in this pair due to 1, the sharp rejection of 1.6300 – a key resistance level , - last month, and 2, the safe haven status of the dollar.
We continue to see EURUSD move lower, but we think it will be an incremental decline rather than a prolonged downtrend
Key events:
Monday: US pending home sales
Tuesday: US CB Consumer Confidence
Wednesday: US ADP, CAD GDP m/m
Thursday: US Unemployment Claims, ISM PMI
Friday: US NFP, Unemployment rate
Prices and Risk on/off view
RORO (30): -1.05
3. Plan
4. Trades
Positions
USDJPY +2
EURUSD 0
USDCHF 0
AUDJPY +0
EURJPY 0
CADJPY 0
EURAUD 0
4.1 open trades, their type & their value:
Leverage
4.3 Effect of planned trades
Account summary:
Starting capital: 1000
Line in the sand level: 7500
1. Account balance (Settled trades) and growth as a percentage. (10186=+2%)
2. Account equity (Including open positions) . (9951=-1%)
3. Account equity if planned trades go wrong: 0
4. Pip distance to line in the sand level.
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