Daily Briefing 101011

1.  Review.

I said “I will look for potential further up move for EURUSD to the 1.4 area and a break of the 1.35 level would be a potential for a consolidation”. EURUSD reached the 1.4026 and retraced to 1.3900 after NFP; it looks like a consolidation move around those values. USD was under pressure waiting for a non good <nfp announcing a new QE2. “Price is pricing US QE expectation, then I will be data watching to see Fed reaction for QE and for risk on support. I will look to spread Greek German bonds and US, JGB in general.” Greece bonds spread deceased and JGB and US 10 years are at historical low. “ Unilateral BoJ intervention is expected again. After the 83.6 test I do not expect to be broken if data will be good for risk on.” BoJ announced further policy stimulus but the market did not paid attention to it. ” Friday job report could be a driver event for USD weakness.” After a USD selloff spike prices did not move that much after announcement.
Trades
EURUSD contra trade short at 1.396 and another long <USDLPY at 83.30 (this bet on JPY weakness is costing me a lot of money).

2.  Analysis.

"Fundamental analysis"
Lack of immanent bad new drove the EUR up to 1.4, mostly a lack of risk off derivers. Bad US NFP, last before next FCOM meeting is viewed as a confirm for the next QE2. Good data came from German industrial production; best then expected AUD employment data support risk on environment. USD and JPY rates are at lowest levels. Lack of use of JPY as carry currency is something new to be watched; maybe USD only is enough to do carry trades. Total lack of bad news from risk generator events (PIIGS and China bubble) are driving a risk on, essentially good for currencies versus USD.

"Technical analysis"
EURUSD tested the 1.40 levels; the move could have a correction, because the move was quick and strong, mainly because of lack of risk off data. COT data are below. USD index broke the 80 support area and is trading 77-78; USDJPY traded in the 82-83 area, making a fresh low at 81.75. Probably at this level BoJ would intervene. US futures jumped again in to the 1140, closing above 100 and 200 MA: it look like a break to new highs. GOLD/Oil ratio stable; VIX stable to low levels.
COT JPY up at 45.9k (+15k)
COT USD down at -1.5k (-3k)
COT EUR up to 48.5k (+7k)
COT stable AUD 69.5k
TYN down to 2.39%
JGB down to 0.87%
Bunds down to 2.25%.

German/Greece down to 7.5%
VIX down to 20.71
Gold/Oil down to 16.25

"Market dynamics”
Prices did not move against USD after the NFP, maybe the QE2 expectation is already priced and maybe it will stop the USD weakness temporarily. I will not expect potential further up move for EURUSD to the 1.4 but a trading range around the 1.38 level as a consolidation, waiting for more QE2 confirmation, for the moment (but end of year outlook is 1.45/1.5). I will be data watching to see Fed reaction for confirmation QE and for risk on support. QE2 will be supportive for risk on because it will give money to big guys to invest in risky markets. Maybe it will be less stronger than QE1 because the expectations are like this. I will look to spread Greek German bonds and US, JGB in general. Unilateral BoJ intervention is expected again, especially if prices drops below 82 handle.

Median grid
EURUSD GRID 1.340 - 1.42, (grid change), up bias
USDJPY GRID 84.00-88.00, neutral bias
AUDJPY GRID 73.00-81.00, long bias

Prices
US up at 1160 , (Q1)
GOLD up at 1346 (Q4), all time high
Crude 82.81
EURUSD 1.3933 (Q3)
USDJPY 81.91(Q1--)

3.  Plan
I will try again profit of this risk on sentiment, entering long EURUSD on dips; prudence at these lofty levels. long USDJPY expecting BoJ intervention

EURUSD
I will enter a long B&B on the yob level (1.3730) as retracement after a 1.3900 clear break; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:< >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURNOK
Comment:< >

4.  Trades
4.1 open trades, their type & their value:
3 Open 07-ott-10 EURUSD S 1.3970 1.3820 Q2 0.2 Contra 1.3933 37.0000 3.7000 2.66
1 Open 05-set-10 USDJPY L 84.2600 83.2600 Q1 0.2 B&B 81.92 -252.0000 -25.2000 -16.7

2 Open 07-ott-10 USDJPY L 82.3600 83.2600 Q1 0.2 B&B 81.91 -45.0000 -4.5000 -3.21
4.2 Leverage

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

Total positions per currency:
USDJPY +2
EURUSD +1
AUDJPY 0
Position
USDJPY -16.0, -3.2
EURUSD +2.66
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.  (9985=-0.15%)
2.  Account equity (Including open positions) .  (9978= -0.25%)
3.  Account equity if planned trades go wrong: 9973
4.  Pip distance to line in the sand level.  2475, with gear (0.2) 12000

Daily Briefing 101004

1.  Review.

I was away from markets for a couple of weeks. I need to reenter and get the feeling of what is going on
Trades
No new trades this week.

2.  Analysis.

"Fundamental analysis"
Data confirmed a reverse in short term market sentiment to risk on, even with bad US data. Tuesday bad US consumer confidence index acted as catalyst for USD selling. Markets gave to Ireland a rest but Spain economy is getting worse and if it will be the next target it will put lot of pressure on EUR; Greece spread decreased, but sovereign default are not imminent to send EUR to zero. Good data should be risk on positive until the US is out of double dip risk, then USD differential should play in favor of the USD.

"Technical analysis"
EURUSD trended quickly to the 1.37 levels; the move could be have a correction, even with no real data to support. COT data are below. USD index broke the 80 support area and is trading 81-82; USDJPY traded in the 78 area, making a fresh low at 78.22. Probably is staying down here in these dips. US futures jumped again in to the 1140, closing above 100 and 200 MA: it look like a break to new highs. GOLD/Oil ratio stable; VIX stable to low levels.
COT JPY down at 28.9k
COT USD down at 1.3k
COT EUR up to 35.5k
COT AUD 69.5k
TYN down to 2.5%
JGB down to 0.96%
Bunds down to 2.28%.

German/Greece down to 7.85%
VIX stable to 22.5
Gold/Oil down to 16.1

"Market dynamics”
I will look for potential further up move for EURUSD to the 1.4 area and a break of the 1.35 level would be a potential for a consolidation. Price is pricing US QE expectation, then I will be data watching to see Fed reaction for QE and for risk on support. I will look to spread Greek German bonds and US, JGB in general. Unilateral BoJ intervention is expected again. After the 83.6 test I do not expect to be broken if data will be good for risk on. Friday job report could be a driver event for USD weakness.

Median grid
EURUSD GRID 1.320 - 1.380, (grid change), up bias
USDJPY GRID 84.00-88.00, neutral bias
AUDJPY GRID 73.00-81.00, short bias

Prices
US up at 1140, (Q4)
GOLD up at 1308 (Q4+), all time high
Crude 81.27
EURUSD 1.2375 (Q4)
USDJPY 83.28(Q1)

3.  Plan
I will try again profit of this risk on sentiment, entering long EURUSD on dips and log USDJPY expecting BoJ intervention

EURUSD
I will enter a long B&B on the yob level (1.3658) as retracement after a 1.3800 clear break; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:<No retracement >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURNOK
Comment:< >

4.  Trades
4.1 open trades, their type & their value:
2 Open 13-ago-10 EURUSD L 1.2873 1.1673 Q3 0.2 B&B 1.2724 -149.0000 -14.9000 -11.71
1 Open 05-set-10 USDJPY L 84.2600 83.2600 Q1 0.2 B&B 83.32 -92.0000 -9.2000 0.00

4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 4:1)

Total positions per currency:
USDJPY +1
EURUSD 0
AUDJPY 0
Position
USDJPY -9.0
EURUSD 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.  (9985=-0.15%)
2.  Account equity (Including open positions) .  (9975= -0.25%)
3.  Account equity if planned trades go wrong: 9973
4.  Pip distance to line in the sand level.  2475, with gear (0.2) 12000

Daily Briefing 100913

1.  Review.

I wrote “I will expect action should move from intraday related moves”. It was a quiet and small ranging week. ” I will be data watching to see Fed reaction for QE and for risk on support”. Data showed positive sign for the risk on theme. I will look to spread Greek German bonds and US, JGB in general. Regarding JPY and BoJ intervention I will monitor USDJPY price action during any risk off & risk on events. Unilateral BoJ intervention will be unlikely. Probably we can see a 83.6 test but I do not expect to be broken if data will be good for risk on.” New fresh low for JPY crosses. Rumors of BoJ intervention are at 82 level
Trades
No new trades this week.

2.  Analysis.

"Fundamental analysis"
Data confirmed a reverse in short term market sentiment to risk on. AUD employment more than expected, BoC hiked interest rates. China should be buying AUD, that is good for risk positive. They are diversifying between crosses. Rumors about PIIGS put pressure on EUR; Greece is the only real issue, CDs and Bund spread increased (to May levels), but sovereign default are not imminent to send EUR to zero. Good data should be risk on positive until the US is out of double dip risk, then USD differentioal should play in favor of the USD.

"Technical analysis"
EURUSD traded around the 1.26 levels, in a 200 pips range; no further downside or the next stop is 1.24. COT data are below. USD index hold in the 80 support area but upside was limited and is trading 81-82; USDJPY traded in the 84 area, making a fresh low at 83.34. Probably is staying down here in these dips. US futures jumped in three days to the 1140, closing above 100 and 200 MA: need to see if only a range bound move or will break to new highs. GOLD/Oil ratio raised; VIX fell to lowest levels.
COT JPY stable at 49.9k
COT USD stable at 14.3k
COT EUR down to -23.5k
COT AUD 57k
TYN up to 2.8%
JGB up to 1.16%
Bunds up to 2.4%.

German/Greece up to 9.33%
VIX down to 21.99
Gold/Oil down to 16.3

"Market dynamics”
September is historically an underperforming month for stock; consider this if anything new, but only stock prices will determine market sentiment drive. I expect again that price moves will be more significant and should move from intraday related moves. I will expect that on further good data USD and JPY will be under pressure because of the risk on drive. I will be data watching to see Fed reaction for QE and for risk on support. I will look to spread Greek German bonds and US, JGB in general. USDJPY price action was quite stable at 84-83 while yield felt from 2.90 to 2.42, now back to 2.70 during the risk off events. Unilateral BoJ intervention will be unlikely. After the 83.6 test I do not expect to be broken if data will be good for risk on.

Median grid
EURUSD GRID 1.240 - 1.310, (grid change), up bias
USDJPY GRID 84.00-88.00, neutral bias
AUDJPY GRID 73.00-81.00, short bias

Basically still a risk-off bias by the end of week

Prices
US up at 1140, (Q4)
GOLD up at 1249 (Q3)
Crude 74.27
EURUSD 1.2708 (Q3)
USDJPY 84.28(Q1)

3.  Plan
I will try again profit of this risk on sentiment, even if uncertain entering long EURUSD and USDJPY

EURUSD
I will enter a long B&B on the yob level (1.2888) as retracement after a 1.2900 clear break; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:<No retracement >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURNOK
Comment:< >

4.  Trades
4.1 open trades, their type & their value:
2 Open 13-ago-10 EURUSD L 1.2873 1.1673 Q3 0.2 B&B 1.2724 -149.0000 -14.9000 -11.71
1 Open 05-set-10 USDJPY L 84.2600 83.2600 Q1 0.2 B&B 84.28 2.0000 0.2000 0.00

4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 4:1)

Total positions per currency:
USDJPY +1
EURUSD +1
AUDJPY 0
Position
USDJPY -0
EURUSD -11.7
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.  (9985=-0.15%)
2.  Account equity (Including open positions) .  (9975= -0.25%)
3.  Account equity if planned trades go wrong: 9973
4.  Pip distance to line in the sand level.  2475, with gear (0.2) 12000

Daily Briefing 100906

1.  Review.

I wrote “EUR felled very quickly; 1.28 first support area looks like broken, next will be 1.24.” 1.26 level hold and now EURUSD is back to 1.2890. “Spread Greek German bonds should be monitored and can sustain negative EUR action.” Spread fall late in the week. “ Short term financial data look like not supportive for EUR. I will watch closely the 1.28 support to confirm the EUR bullish sentiment.” German data are still supporting EURUSD “Regarding JPY and BoJ intervention I will monitor again JGB yields, US 10 yr yields, German bund yields and USDJPY price action during any risk off & risk on events. Those data will help to determine if JPY has bottomed.” BoJ supported some QE but the market ignored. USDJPY spiked on risk on event on Friday, but retraced as usual. Yields in safe haven increased confirming the risk on sentiment on Friday data. Prices and volatility were still in a tiny market.
Trades
I switched to my Saxo account. I opened EURUSD and USDJPY longs after Friday NFP.

2.  Analysis.

"Fundamental analysis"
Last week was characterized by Friday good employment NFP US data that confirmed a reverse in short term market sentiment to risk on. Better than expected AUD Q2 GDP, CNY data that confirmed a not too fast growth; but some bad data from German PMI, that is a serious not good for interest differential in favor of EUR. Large portion of the EZ is doing ok. All these weeks were in a tiny market action. Normal liquidity should return next week. Still valid that BoJ intervention is linked to US growth; if positive data JPY would weaken without need of intervention, but strong JPY could stay for a long time. Important from Fed meeting: Fed will be data watching; QE will be implemented only if data will be bad.

"Technical analysis"
EURUSD felled at the 1.26 levels, and then back to 1.28; no further downside to the next stop is 1.24. COT data are below. USD index hold in the 80 support area but upside was limited; USDJPY traded in the 84 area. Probably is staying down here in these dips. US futures jumped in three days to the 1100, closing above 100 and 200 MA: need to see if only a range bound move or will break to new highs. GOLD/Oil ratio raised; VIX fell to lowest levels.
COT JPY stable at 49.9k
COT USD stable at 14.9k
COT EUR down to -25.5k
COT AUD 43k
TYN up to 2.69%
JGB up to 1.14%
Bunds up to 2.35%.

German/Greece down to 8.86%
VIX down to 21.31
Gold/Oil up to 16.7

"Market dynamics”
Again I say that these days are more oriented for a short term approach based on risk-on/off. I expect that price moves will be more significant and probably we should not see any more data spike and retracement. I will expect action should move from intraday related moves. I will be data watching to see Fed reaction for QE and for risk on support. I will look to spread Greek German bonds and US, JGB in general. Regarding JPY and BoJ intervention I will monitor USDJPY price action during any risk off & risk on events. Unilateral BoJ intervention will be unlikely. Probably we can see a 83.6 test but I do not expect to be broken if data will be good for risk on.

Median grid
EURUSD GRID 1.240 - 1.310, (grid change), up bias
USDJPY GRID 84.00-88.00, neutral bias
AUDJPY GRID 73.00-81.00, short bias

Basically still a risk-off bias by the end of week

Prices
US down at 1077, (Q2)
GOLD up at 1246 (Q3)
Crude 74.27
EURUSD 1.2895 (Q3)
USDJPY 84.34(Q1)

3.  Plan
I will try again profit of this risk on sentiment, even if uncertain entering long EURUSD and USDJPY

EURUSD
I will enter a long B&B on the yob level (1.2888) as retracement after a 1.2900 clear break; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:< >

USDJPY
Comment:< >

AUDJPY
Comment:< >

EURNOK
Comment:< >

4.  Trades
4.1 open trades, their type & their value:
2 Open 13-ago-10 EURUSD L 1.2873 1.1673 Q3 0.2 B&B 1.2749 -124.0000 -12.4000 -9.73
1 Open 05-set-10 USDJPY L 84.2600 83.2600 Q1 0.2 B&B 84.1 -16.0000 -1.6000 -0.02

4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 4:1)

Total positions per currency:
USDJPY +1
EURUSD +1
AUDJPY 0
Position
USDJPY -0
EURUSD -9.7
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.  (9985=-0.15%)
2.  Account equity (Including open positions) .  (9975= -0.25%)
3.  Account equity if planned trades go wrong: 9973
4.  Pip distance to line in the sand level.  2475, with gear (0.2) 12000

Daily Briefing 100823

1.  Review.

I wrote “Even if a consider that one should more focused on interest differentials these days are more oriented for a short term approach based on risk-on/off. USD weakness looks like already priced, but further slowdown could be led to EUR strength (WA says after price is bottomed 1.24). EUR felled very quickly; 1.28 is a first support area, next will be 1.24.” Bad US data make the EUR fell to 1.27 breaking the 1.28 support level. “Irish bond auction should be monitored on Tuesday to see risk sentiment against EUR and CDS for Irish bonds. Short term financial data look like not supportive for EUR . I will watch closely the 1.28 support to confirm the EUR bullish sentiment.” The support held during the auctions but failed on bad Thursday employment data. “Tuesday there will be lot of numbers from US, PPI, house data and manufacturing.” Those number were mixed, bad Thursdays bad data switched to a risk off sentiment. “Regarding JPY and BoJ intervention I will monitor 1. JGB yields (I see it on CNBC ticker) its 1.00% now. 2. US 10 yr yields 2.72% now, low 2.67% since Fed. 3. German bund yields. 4. USDJPY price action during any risk off & risk on events. Those data will help to determine if JPY has bottomed”. JGB are 0.94%, TYN 2.62%, Bunds at 2.26%. JPY gained on bad data release at the 85.0, the support hold and recovery to the 86.5. This is the fourth failed test to the 85.0 handle in two weeks.
Trades
Bad drawdown at -630€ at the end of the week , still waiting for the risk-on increase; just a hope after bad US data?

2.  Analysis.

"Fundamental analysis"
Last week was characterized by mixed US data and some bad data on Friday that led to a flight to safety and a risk-off sentiment again. Some good data come again ZEW and German data, but it was offset by bad US data and flight to safety. Long term upside move looks like limited, due to the austerity measures and the growth anyway slow. It is difficult to see a bottom in this risk reversal sentiment, after risk on played for a couple of weeks. Friday data ware totally unexpected, but show that US is not really on a growth path. Anyway the data are considered not that important and maybe could be a tiny market action. Gold jumped above 1200. China is buying EUR and JPY, dumping US bonds. Greece and German spread increased again (www.bloomberg.com/apps/quote?ticker=.GRK:IND). BoJ intervention is linked to US growth; if positive data JPY would weaken without need of intervention, but strong JPY could stay for a long time.

"Technical analysis"
EURUSD felled at the 1.27 levels, and the 1.28 did not hold; if further downside next stop is 1.24. EUR COT short increased after rising since June again (-7k), USD long increased (+18.7k) and USD index hold in the 80 support area; JPY is increasing long positions long (+50k). USDJPY traded in the 86 area. Probably is staying down here in these dips. US futures retraced from the 1100 highs to 1070 (confirming the failure to close above 100 and 200 day MA). AUD are increasing (54k), showing a bias versus risk-on positions, very strange in this risk-off sentiment. GOLD/Oil ratio raised at 16.3, from the 15 level since begin of July, with both oil down and gold surging; but VIX stays at the 25.5: did we saw a double bottom? Gold hit 1237, pointing to the previous high 1260 area.

"Market dynamics”
Again I say that these days are more oriented for a short term approach based on risk-on/off. USD weakness looks like already priced, but further slowdown could be led to EUR strength (WA says after price is bottomed 1.24). EUR felled very quickly; 1.28 first support area looks like broken, next will be 1.24. Spread Greek German bonds should be monitored and can sustain negative EUR action. Short term financial data look like not supportive for EUR. I will watch closely the 1.28 support to confirm the EUR bullish sentiment. Regarding JPY and BoJ intervention I will monitor again JGB yields, US 10 yr yields, German bund yields and USDJPY price action during any risk off & risk on events. Those data will help to determine if JPY has bottomed. Rumors of BoJ intervention and possible meeting with BoJ and government could cause JPY volatility.

Median grid
EURUSD GRID 1.280 - 1.350, (grid change), neutral bias
USDJPY GRID 84.00-88.00, neutral bias
AUDJPY GRID 73.00-81.00, short bias

Basically still a risk-off bias by the end of week

Prices
US down at 1077, (Q2)
GOLD up at 1237 (Q3)
Crude 72.17
EURUSD 1.2717 (Q1)
USDJPY 85.261(Q2)

3.  Plan
I will try again to work out of the money positions for JPY longs, just sitting on them for now. I will try to book the B&B long EURUSD and reenter position on a dip; I will monitor

EURUSD
I will close the long if further downside at 1.2630. If not I will enter a long B&B on the yob level (1.2795) as retracement; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:< >

USDJPY
Already too many positions (+6)
Comment:< >

AUDJPY
Already too many positions (+3)
Comment:< >

EURNOK
Hold short positions

Comment:< >

4.  Trades
4.1 open trades, their type & their value:
7 Open 13-ago-10 EURUSD L 1.2805 Q1 1:1 B&B 1.2717 -88.0000

2 Open 13-apr-10 USDJPY L 93.2400 Q3 1:1 toe-in 85.79 -713.0000
6 Open 05-mag-10 USDJPY L 94.5900 Q2 1:1 toe-in 85.79 -851.0000
10 Open 06-mag-10 USDJPY L 93.8600 Q3 1:1 Panic 85.79 -776.0000
16 Open 14-mag-10 USDJPY L 92.3000 Q1 1:1 B&B 85.79 -619.0000
18 Open 02-giu-10 USDJPY L 92.2100 Q2 1:1 B&B 85.79 -619.0000
19 Open 30-lug-10 USDJPY L 86.3400 Q2 1:1 B&B 85.79 -64.0000
6 Open 04-mag-10 AUDJPY L 86.0500 Q4 1:1 toe-in 75.83 -1021.0000
7 Open 06-mag-10 AUDJPY L 85.1300 Q4 1:1 toe-in 75.83 -929.0000
17 Open 03-giu-10 AUDJPY L 78.8500 Q1- 1:1 Hedge 75.83 -237.0000

4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 4:1)

Total positions per currency:
USDJPY +6
EURUSD +1
AUDJPY +3
Position
USDJPY -713, -851,-776, -619, -610, -64
EURUSD -88
AUDJPY -1021, -927, -237

4.3  Effect of planned trades

Account summary:
ActivTrades live account
682Starting capital: 1366
Line in the sand level:  750

1.  Account balance (Settled trades) and growth as a percentage.  (1445=5%)
2.  Account equity (Including open positions) .  (8794= -35%)
3.  Account equity if planned trades go wrong: 1000
4.  Pip distance to line in the sand level.  1294, with gear (10) 129

Daily Briefing 100816

1.  Review.

I wrote “EURUSD rally seems to be likely to stay at the 1.32 levels, as median (now 1.28 and 1.35 levels would be the range); EURUSD bias is to be set to neutral.  Interest differential are playing a role now: the spread between EUR and USD 3 month labor is at 0.4 boosting the EUR. Rising EUR labor is not a worry if not accompanied by a falling USD labor. There reason that the spread will weaken in the next weeks signaling a medium top in EURUSD.  For the moment USD is still a sell and I will enter on long on dips below the 1.3 level” EUR was sold off after the Fed meeting stopping the weakening at 1.28 level. “Next week FOMC meeting will be one of the most important of the year. If further QE will be announced bond yields will fall sending the USD lower (good for JPY long). If not, that is Fed will not buy back Treasuries) there is potential risk for a Treasuries sell off, sending  yields and USD higher (good for JPY shorts).”  No QE, but just bad outlook for the economy from the Fed and there was a fight to safety with JPY strength, low US T-Note yields and EUR sell off. Anyway lower yields did not strengthen JY that much, maybe is a JPY bottom here at 85 level.  JPY regained 86 handle at the end of the week. “ German data are good and the ECB bonds buy back is about to close; other parts of EZ do not show any sign of growth, giving not much space for tightening.  There is then some space to the upside but the medium term is still mined from fiscal concerns”. Good German GDP data did not make EUR rise.
Trades
Holding the same drawdown at -560€ at the end of the week , still waiting for the risk-on increase to decrease the drawdown. Entered a EURNOK short the 12/08 at 7.955 and a EURUSD the 13/08 long at 1.2805

2.  Analysis.

"Fundamental analysis"
Last week was characterized by the Fed meeting that led to a flight to safety and a risk-off sentiment. After that,  employment data was a bad data as usual. Good data from inventory and retail sales. Good data come again from GDP German data, but it was offset by bad bond auction in Italy and bad data from the periphery. Gold jumped as fight to safety surged. Yield from EZ periphery surged as German yields felt. CDS for Irish are at the 17 months high. Friday data did not had a big impact on EURUSD, but boosted the USD some pips.

"Technical analysis"
EURUSD felled at the  1.28 levels. Even if long positions could be taken on this dip, there is potential USD strength. Long term upside move looks like limited, due to the austerity measures and the growth anyway slow. EUR COT short decreased again (-7k), USD long are stable (+12.3k), no more divergence and USD index is now in the 80 support area; JPY is increasing long positions long (+48k).  USDJPY traded in the 86 area. Probably is staying down here in these dips. US futures retested the 1100 highs, but there is a failure to close above 100 and 200 day MA. AUD are increasing (49k), showing a bias versus risk-on positions. GOLD/Oil ratio is raised at 16, from the 15 level since begin of July, with both oil down and gold surging;  but VIX jumped at the 26: did we saw a double bottom? Gold hit 1213, pointing to the previous high 1260 area.

"Market dynamics”
Even if a consider that one should  more focused on interest differentials these days are more oriented for a short term approach based on risk-on/off. USD weakness looks like already priced, but further slowdown could be led to EUR strength (WA says after price is bottomed 1.24).  EUR felled very quickly; 1.28 is a first support area, next will be 1.24. Irish bond auction should be monitored on Tuesday to see risk sentiment against EUR and CDS for Irish bonds. Short term financial data look like not supportive  for EUR . I will watch closely the 1.28 support to confirm the EUR bullish sentiment. Tuesday there will be lot of numbers from US, PPI, house data and manufacturing.  Regarding JPY and BoJ intervention I will monitor  1.  JGB yields (I see it on CNBC ticker) its 1.00% now. 2.  US 10 yr yields 2.72% now, low 2.67% since Fed. 3.  German bund yields. 4.  USDJPY price action during any risk off & risk on events.  Those data will help to determine if JPY has bottomed. Long term questions are:
- how bad will be in US or when we will see the bottom (is this bad outlook just a swing in the recovery)?
- will be the global recovery possible without the US?
- what will be the position of EZ (as anti dollar) and China (they carry the flag “the globe can go alone”)
This is the main story but speculative position will be more short term oriented and risk-on/off based.

Median grid
EURUSD GRID 1.280 - 1.350, (grid change), neutral bias
USDJPY GRID 84.00-88.00, neutral bias
AUDJPY GRID 73.00-81.00, short bias

Basically still a risk-off bias by the end of week

 Prices
US  down at 1081, (Q2)
GOLD up at 1213 (Q3)
 Crude 75.17
EURUSD 1.2767 (Q1)
USDJPY 86.23 (Q3)

3.  Plan
I will try again to work out of the money positions for JPY longs, just sitting on them for now. I will try to book the B&B long EURUSD and reenter position on a dip; I will monitor

 

EURUSD
I will enter a long B&B on the yob level (1.2958) as retracement; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:< >

USDJPY
Already too many positions (+6)
I will enter a long B&B on the yob level (85.16) as retracement, if the 85 level is hold; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:< >

 

AUDJPY
Already too many positions (+3)
I will enter a short  B&B on the yob level (78.31) as retracement; I will hedge on a couple of level down (-100 pips). I will take profit at 50-100 pips
Comment:< >

 

EURNOK
Hold short positions

Comment:< >

 

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

7 Open 13-ago-10 EURUSD L 1.2805 Q1 1:1 B&B 1.2769 -36.0000

2 Open  13-apr-10   USDJPY  L   93.2400 Q3  1:1 toe-in  86.23 -701.0000  
6 Open  05-mag-10   USDJPY  L   94.5900 Q2  1:1 toe-in  86.23  -836.0000
10 Open 06-mag-10   USDJPY  L   93.8600 Q3  1:1 Panic   86.23 -763.0000
16 Open 14-mag-10   USDJPY  L   92.3000 Q1  1:1 B&B 86.23 -607.0000
18 Open 02-giu-10 USDJPY L 92.2100 Q2 1:1 B&B 86.23 -597.0000
19 Open 30-lug-10 USDJPY L 86.3400 Q2 1:1 B&B 86.23 -11.0000
6 Open  04-mag-10   AUDJPY  L   86.0500 Q4  1:1 toe-in  77.23 -882.0000
7 Open  06-mag-10   AUDJPY  L   85.1300 Q4  1:1 toe-in  77.23 -790.0000
17 Open 03-giu-10   AUDJPY  L   78.8500 Q1- 1:1 Hedge   77.23   -162.0000

4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 4:1)

Total positions per currency:
USDJPY  +6
EURUSD 1
AUDJPY +3
Position
USDJPY -701, -836,-763, -607, -597, -11
EURUSD -36
AUDJPY -882, -790, -162

4.3  Effect of planned trades

 

Account summary:
ActivTrades live account
682Starting capital: 1366
Line in the sand level:  750
 

1.  Account balance (Settled trades) and growth as a percentage.  (1445=5%)
2.  Account equity (Including open positions) .  (9536= -3%)
3.  Account equity if planned trades go wrong: 1000
4.  Pip distance to line in the sand level.   2036, with gear (10) 203

Risk on/off or interests differential approach

“There are now two divergent views in the currency markets. One has traders buying the dollar as a safe haven when the US data is bad, and selling dollars moving into ‘risk trades’ when the economic data in the US is positive. The other view which has recently started to catch on has currency traders selling dollars on bad economic news in the US, and buying the greenbacks when the data is strong. This is a more traditional approach, and focuses on interest rate differentials. When the US data is bad, the thought is that the FOMC will be forced to keep rates low. On the flip side, when the US data shows a stronger recovery, a potential FOMC tightening moves traders to buy the dollar. Choosing which strategy to use is determined by your thoughts on the global recovery. If you believe the global recovery can’t happen without the US consumer, then you choose the ‘safe haven’ approach. But if you feel, as I do, that the rest of the world is going to be able to recover without a strong US consumer, then your focus shifts back to interest rate differentials and the global growth story.”
Form Daily Pfenning 8/6/2010