weak US data brought dollar down

Yen came down to a low of 83.63 after the disappointing US data last night. The Tankan that was released this morning reported big Japanese manufacturers were looking at the dollar averaging at 89.66 JPY for 2010/2011.

After the UK GDP data, the sterling dealt up to 1.5896. But after BOE member Posen argued a case for further quantitative easing, we saw the pound drop to 1.5718.

Aussie is still pushing up to a high of 0.9687.

Data today

Euro-zone consumer confidence – 9am

UK net consumer/ mortgage credit – 8.30am

Morning Update

I’ve been MIA since Friday because it was an insane weekend with the Singapore F1 night race, which was of course fabulous! I needed some time to recover from the madness of the weekend, but I’m back so let’s see what happened last night on the markets.

It looks like the dollar has weakened further and doesn’t seem like rates will be hiked anytime soon by the feds.

Euro came under pressure after Moody’s downgrade on senior debt of a prominent Irish bank which highlights the uncertainty of banking strength in Ireland. Better keep an eye out on the Euro, I do think it’s slightly on the higher side at the moment.

Sterling rose to a high of 1.5867! I’m not sure whether it will last at these levels, but let’s see how the GDP turns out this evening.

Aussie ran all the way up to 0.9645!  The next high is at 0.9870 which occurred 13^th July 2008. I would be extremely cautious of buying around these levels!

Data today:

German GFK consumer confidence survey – 6am GMT

German CPI – 6am GMT

UK GDP – 8.30am GMT

US consumer confidence – 2pm GMT

US Richmond Fed Manufacturing index

Trade Ideas - 23/9/10

Euro

Looking at the weekly chart we see that the next resistance level is at 1.3491 which is also the Fibonacci level of 50%. We will have to see whether the resistance level holds. If it doesn’t I would look to selling around those levels.

GBP

The resistance of 1.5727 is still holding quite strong and on the bottom the support level 1.5624 is holding up. I would look to sell around 1.5727 if the resistance holds and to look at buying at 1.5624 if the support holds.

Aussie

Looks quite range bound, so I think I would play the range. I would look to sell around 96.00 (if not broken), and buy around 0.9525. 

Yesterday Trade review

Euro

Euro broke the 1.3331 resistance level and ran up above 1.3415. Due to this, I didn’t enter any Euro trades and was waiting for a retracement which didn’t quite happen.

GBP

Sterling didn’t manage to reach 1.5727 yesterday and was pretty much ranging around 1.5646 Fibonacci levels of 50%. I didn’t get any trades on the sterling either, so let’s see if anything works out today.

Aussie

I didn’t get a chance to get into a long position in the Aussie, as it never quite reached 0.9500 levels. It did breach close to 0.9600 but bounced off quickly. It seems like 0.9600 is holding up as a strong resistance.

Tokyo and Hongkong out

So not much action last night apart from the Euro smashing above 1.3400!

Japanese PM Kan comments that intervention is “unavoidable” so looks like there is fear of an intervention. Will keep a close watch, considering Tokyo and Hong Kong are on a break today so looks like Asian session is going to be quiet until Europe comes in.

Euro on the other hand broke 1.3340 levels all the way up to 1.3400. Portugal had a good debt auction yesterday but yields still seem to be widening, so fundamentally Europe still has some sovereign issues to consider. But the Euro looks to be ignoring this at the moment, which I find a little worrisome as Euro could change directions at any point. So I’m a little uncomfortable buying at these high levels. I may just wait it out here until I see that change in direction, or a retracement.

Aussie traded higher last night to 0.9601 on option expires, but came down to a low of 0.9508. I think it’s going to be quiet on this front too during the Asian session.

Data Today:

-         US Initial jobless claims – 12.30pm GMT

-         US leading indicators – 2pm GMT

-         US existing home sales – 2pm GMT

Trade ideas

Euro

Resistance level of 1.3161 has been broken so I would look at this level now a support. The next resistance is around 1.3331 level which was just below the high of August 6^th.

I would watch this level and see whether it breaks or not.

If it doesn’t I’d look to sell here at 1.3330.

GBP

The daily Fibonacci level of 50% at 1.5646 has been broken. The next resistance level is the 61.8% Fibonacci level at 1.5727. On the support side the first support to watch for is at the 38.2% Fibonacci level at 1.5565. As this has been broken I would watch this level. The stronger support is at 1.5504 which is around yesterday’s low.

I would look to sell at 1.5727 if it doesn’t break.

Aussie

Upward trend is still intact so I would only look at starting my position with a buy. The resistance level of 0.9500 has been broken so I would look at this as a support level. If 0.9500 holds, I would look to buy here.

JPY

I’m still going to keep quiet here, until I figure out which direction yen is going in.

Trade Review

Unfortunately I did not get any trades in, as I was a little worried about what would happen at the FOMC.

Euro never did quite reach 1.3035 levels last night but on the other hand it did break the 1.3161 levels. Several stop losses were triggered above 1.3200 levels. It looks like a new strategy has to be placed on the Euro as it has broken the range.

Sterling on the other hand did manage to push down to 1.5538 and below. At that point of time though, cable looked extremely bearish, so I decided to not buy at that level. Looks like a missed trade, as I would be in profit at the moment. The level of 1.5675 still holds, but I’m going to watch that level and see if it gets broken, as sterling looks bullish.

The Aussie never reached 0.9328 levels and instead broke the resistance level of 0.9489. I didn’t get a trade in here either; I guess I’ll have to pull up a new strategy here to.

Down went the dollar

Wow down went the USD and up went everything else!!

 So the FOMC statement came out yesterday: 

“the committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

Seems like there are still issues the US needs to face.

We saw the yen strengthen down to a low of 84.84, and seems like Minister Kan could possible intervene again in the markets. But don’t think it’s going to happen before his meeting with Obama. So be cautious on the yen.

Euro took out stops all the way up to 1.3285 this morning Asian time. The next strong resistance looks to be 1.3334 which was the high on August 6^th.

Data Today

Australia Westpac leading indicators

Eurozone industrial new orders – 9am GMT

Eurozone consumer confidence – 2pm GMT

US house price index – 2pm GMT

Intra-day Trade Ideas

Euro

The 1 hour chart shows a strong resistance at 1.3161 and a strong support at 1.3033.

I would play this range by selling at 1.3160 and buying at 1.3035.

GBP

The 1 hour chart shows a strong resistance at 1.5727, which is also the daily chart Fibonacci level 61.8. Before that, 1.5677 seems to be holding up and on the downside 1.5536 looks like a strong support. I would start with a sell position as sterling seems a little weaker.

I would look to sell at 1.5675 and buy at 1.5538.

Aussie

The Aussie has a strong uptrend on the 4 hour chart, so I would look to start my position with a buy. There seems to be a strong resistance at 0.9489 and a strong support at 0.9328.

I would look to buy Aussie at 0.9330.

USDJPY, I’m a little cautious of, as it’s not moving much and there is still fear of BOJ intervening again. I’d rather keep quiet on this pair until I see a clear direction.

Waiting for FOMC

Very quiet market yesterday. Japan was closed yesterday and seems like everyone is anticipating the FOMC before they enter into a new trade.

Dollar yen was extremely quiet because of the holiday in Japan.

Portugal and Irish spreads have been widening, so we saw Euro come off a little.

Sterling traded weaker with some M&A selling happening. UK times report also stated “Mortgage lending shrank to its weakest August level for a decade last month, triggering fresh predictions that house prices are heading downward this autumn.”  We may just see sterling head lower if prices remain low.

Aussie – RBA September minutes suggest that “likely higher rates will be needed at some point to contain inflation.” Looks like we’ll be seeing Aussie race higher.

Data today

RBA board September minutes – 1.30am GMT

UK public sector net borrowing – 8.30am GMT

US housing start – 12.30pm GMT

US FOMC rate decision – 6.15pm GMT

Another week of FX madness

We’re back for another week of FX madness.

Last Friday we saw a little bit of a mixed session for the dollar, but looks like we may find a direction this week with the FOMC coming in.

Euro fell as low as 1.3020 and then pushed back up during the U.S trading to 1.3140/60.

Yen was quiet and range-bound, but we may find some movement after Kan meets Obama on the 23^rd.

Sterling ran all the way up to 1.5730 clearing all the stops.

Aussie pulled back Friday night after not being able to take out the barrier at 0.9475.

Data today

US NAHB Housing Market Index – 2pm GMT

Quiet market last night

On the US data front last night, we saw the US weekly jobless claims come in better than expected at 450K, but we did see the Philadelphia index drop down to -0.7%. So some mixed data coming out of the US. It was a quiet session as it seemed like investors were cautious and were waiting to see what movement comes out of Japan.

EUR – Euro headed higher as all the Euro crosses ran up.
Bids seen at 1.3050 with stops below, and offers at 1.3120-30 with stops above.

JPY – Lots of buying of USDJPY kept the yen supported, as there was also no announcements out of the BOJ after the intervention.
The next resistance looks to be at 86.30. Some bids are seen at 85.10-30 levels.

AUD – held onto the range of 0.9330 – 0.9400

Overall markets seemed to have traded in a range over night.

Data today:
German CPI - 6am GMT
US CPI – 12.30pm GMT
University of Michigan confidence index – 1.55pm GMT

Tokyo Close

So this evening we saw the Euro testing higher taking out stops through 1.3040. There were offers above 1.3080 which also got hit, pushing the Euro higher to 1.3110 levels.

The UK retail sales came out lower than expected at -0.5% vs +0.3%. Last month it was +0.8%. Also, the UK inflation has risen up to 3.4% from 3.3%. We saw the cable initially head lower to below 1.5575. This didn't last very long and we saw the cable push up above 1.5600.

As for me, I left an order to sell Euro at 1.3100, which just got triggered, and I entered into the option seagull trade which i mentioned in my earlier post.

That's the end of the Tokyo session, and also the end of a working day for me!
Do follow me on twitter - Fxtaurian
cheers!

Seagull Sterling option

I did a Seagull sterling option trade today, which consists of buying an option and selling a strangle for the same expiry.

Here’s the trade:

Bought a GBP put / USD call at 1.5500.

Sold a GBP call/ USD put at 1.5950.

Sold a GBP put/ USD call at 1.5200.

Tenor: 2 months.

Why?

Even though cable has been fairly bullish lately, I still think fundamentally cable should be lower. So I decided to play a trade for 2 months, when I do expect cable to come down lower. As cable has rallied a lot, I decided to buy a put and to finance the put I decided to sell a strangle.

Risk?

If sterling hits above 1.5950 on expiry, I’ll risk holding a sell position at that level.

If sterling stays between 1.5500 and 1.5950, nothing happens.

If sterling drops below 1.5500, I’ll hold a sell position at 1.5500.

If sterling drops below 1.5200, I make a profit of 300 pips!

So my risk is really, sterling heading above 1.5950.

I’m pretty confident with this deal, but I’ll have to watch over it.

Heavy Cable

Half time ranges (Asia):

EURUSD – 1.2981 – 1.3020

USDJPY – 85.30 – 85.78

GBPUSD – 1.5595 – 1.5649

AUDUSD – 0.9352 – 0.9394

Aussie goods imports fell by 6% in august after a previous increase of 2%. We saw the Aussie come down to 0.9352.

Looks like there was a lot of selling happening on cable from 1.5630 levels down to 1.5600 area. However, Cable managed to hold it’s ground at 1.5580 and the range going into the data release seems to be 1.5570- 1.5650. There are stops building up above 1.5665. So I would actually wait for the data release, and sell once after the stops are triggered above 1.5650.

Lets see how the afternoon goes, and if I get any trades in.

Japanese Intervention.

Whoa! Did everyone see the Japanese intervention yesterday morning?! So apparently the Japanese sold a total value of over 2 trillion yen! This pushed the USD/JPY all the way up to 85.78. But it does seem like the yen is being tested, as it seems to pushing back down. Look out for the yen! There looks to be a barrier holding up at 86.00.

As for the AUDUSD, looks like there is a barrier at 0.9475 and I do hear of some bids at 0.9330 and stops below.

EURUSD seems to have some bids at 1.2950 and stops below and offers at 1.3030 with stops above.

So we got some not so good data out of the U.S yesterday, with the empire state manufacturing survey coming in below expectation and the industrial production as well. We will have to see how today data is turns up and whether risk aversion seems likely on the horizon

We saw the Cable bull its way up yesterday, even though there has been negative data coming out of the UK. What’s going on? There was a hint by King as well, that rates may have to be raised at the next meeting. Let’s see what happens today!

Data Today:

UK retail sales – 8.30am GMT

US initial jobless claims – 12.30pm GMT

US TIC flows – 1pm GMT

Euro option

I traded a EUR call/ USD put option today for a period of 1 month. I’m still looking at a more bearish Euro in medium term, so I thought I’d enter an option trade instead.

Here’s what I’ve done:

Sold EUR call/ USD put at 1.3100, with a Knock-in at 1.2800. Tenor: 1 month.

This means if spot goes below 1.2800, this trade gets called back and I win. If spot goes above 1.3100 on date of expiry, than I lose.

Hopefully this works out!!

Day review

Ok so in my Euro trade yesterday, I got stopped out. This has got me thinking as I’ve not done too well on my last two trades. I guess what’s been happening is that, I was playing my trades purely on fundamentals and my view of Euro weakening, which may be profitable if I approached it with a longer term view, which also means an even further stop-loss. I wasn’t able to trade much today, because I’ve been in and out of meetings, but I did do an option trade which I’ll tell you about in a bit.

So here’s the game plan and well more of a reminder to myself for my intra-day trades.

-         Watch the trend

-         Watch the news

-         Follow your trading plan!!!

Choppy Market!

Clearly there is a lack of direction on some of the pairs in the market. Things have not been going to well with my last two trades. Extremely choppy and volatile market!

We saw US retail sales came out better than expected which softened the dollar a little. Also there was a rumor out that the FED would announce its next round of quantitative easing.

The yen just got intervened by Kan, and we just saw Yen bounce right up to above 84.

Euro took out the 1.2930 resistance level and ran straight to 1.3034.

Sterling rose up after the stronger CPI figures up to 1.5500.

Aussie ran all the way up to 0.9457, after all the news that came out yesterday favoring risk taking.  There is a definite strong bullish trend on the Aussie, so look to buy dips. There are some Aussie bids coming in at 0.9250 – 0.9300.

Data today:

Eurozone CPI – 9am GMT

UK ILO employment rate – 8.30am GMT

BOE’s King speaks – 10.30am GMT

US industrial production – 1.15pm GMT

Entered a Euro trade

Sold EUR/USD at 1.2863

SL : 1.2905

TP : 1.2797

Why?

Looking at the 4-hour chart, I noticed a definite range on the EUR/USD, where a strong resistance seems to be holding at 1.2903 and a strong support seems to be holding at 1.2609.  As I’m bearish Euro, I was definitely looking at entering a sell position around 1.2900 region.

Entry strategy?

Looking at the 15-minutes chart, I saw the moving averages crossed downwards below 1.2900 and MACD and Stochastic look bearish as well. This gave me a good reason to sell at spot.

Exit strategy?

Again looking at the 15- minute chart, today’s high seems to be holding up as a strong resistance, so if this breaks, a breakout could be possible. So I’m placing a stoploss just above that level. The initial take profit level I’m looking at is near yesterday’s low, that looks like a strong support level.

Hope this trade goes well!!

FxTaurian

Up and Up went the Euro.

Euro saw a nice rally yesterday. Being boosted by the Basel III and strong equities.

Cable on the other hand dropped due to the poor UK house price data which is the worst since May 2009.

Yen drifted back to the mid 83 levels with lower US yields. We have today the DPJ elections, which can affect the yen. If Ozawa gets the majority, we could see the yen pushing higher.

Aussie did well over night as well, trading to a high of 0.9263.  Not much data on the Aussie front, so keep a watch on tonight’s US retail sales.

Data Today

DPJ Election results

Japan industrial production

Euro zone ZEW – 9am GMT

German ZEW – 9am GMT

UK CPI – 8.30am GMT

US retail sales – 12.30pm GMT

Quick and Short news update.

Ok this quite a short news update, but it does seem like it’s going to be a busy week.

US equities bounced higher on Friday, which brought the USD up.

On the yen front, focus will be on the Japanese elections tomorrow the 14^th of September.

Euro is on a bid tone this morning. I would look to sell on a trend turn. Tomorrow Greece is scheduled to auction 6 month T-bills worth 9 billion EUR.

Down under, AUD strengthened further after the better Chinese economic data that came out this weekend.

Data today:

US monthly budget statement – 6pm GMT     

Dollar took a snooze pill last night

It was the Beige book that dropped off someone the dollar steam and weakened the dollar.

The beige book suggested that there has been some slowdown in economic activity. But I think it was a temporary retracement situation.

USD/JPY dealt down to 83.34 which is the lowest since 1995! However it didn’t stay down there for long and rebounded back up to 84.05. There is talk of potential intervention, so let’s see whether that happens or not.

We did see Euro recover a little last night after the Portuguese auction went well, but I still think markets are looking down though with Euro overall.

Sterling rose up after the Halifax house price index increased to +0.2% and also the better than expected production data. But today is another story, sterling is back at the levels it was yesterday. The question is, should I enter a sell position again at these levels?

Aussie rallied to it might and popped above 0.9200 after home loans increased by 1.7% and the unemployment rate data which come out better at 5.1%. We do see it ranging today, I’d look to buy at any retracements lower.

Data Today

German CPI – 6am GMT                  

UK trade balance – 8.30am GMT                             

BOE rate decision and asset purchase target - 11am GMT

US trade balance – 12.30pm GMT

US initial jobless claims – 12.30pm GMT              

Wednesday = Ladies night!

It’s Wednesday today, which also translate to Ladies night in many cities around Asia as well.

Sometimes after a super long day at work, all you really want to do is meet your girlfriends for a delicious cocktail to chill out on. You can either go to the bar and do that or call your girlfriends over to your place and splash up some cocktails yourself.

Here’s a link I found which has top 10 ladies cocktails and their recipes as well.

One of my favorite cocktails is the Mojito, because it’s so refreshing with the minty lime flavors with a touch of sweetness to it.

Here’s the recipe for making Mojitos in your very own home.

Ingredients
3 fresh mint sprigs
2 tsp sugar
3 tbsp fresh lime juice
1 1/2 oz light rum (3 tbsp) 
club soda

In a tall thin glass, crush part of the mint with a fork to coat the inside. Add the sugar and lime juice and stir thoroughly. Top with ice. Add rum and mix. Top off with *chilled* club soda (or seltzer). Add a lime slice and the remaining mint, and serve. 

102 pips galore!

Woohoo, I made a 102 pips profit on my Euro position from yesterday. I decided to close my position this morning at 1.2698, as I wanted to take in all those wonderful pips, and figured I could always enter another position if market races up or down.

I see a Sterling trade 

Sterling hit my upper trend line on my channel on the 4 hour chart.

So I decided to sell on spot at 1.5421, and I’m looking downwards. 

Here’s my strategy:

Stop loss: 1.5500 – Just above the high of today.

Take profit: 1.5300 – Around yesterday lows.

I will push the stop loss lower once spot pushes below 1.5375

Chart Attack!

Ok I see some potential in the Euro!

If I look at the 1 hour chart, I see the moving averages have crossed up towards the upside. Now I’m still quite bearish on the Euro, so I would look at selling in the white rectangle region which is between the 23.6 and 38.2 Fibonacci levels.

Let’s go Intra-day on the Sterling!

The 15 minutes chart shows an upward trending line occurring. Here’s what I’m thinking, I could play the trend until just before the economic data, and buy closer to the yellow trend line. Or I could play a momentum game, and sell when a candle runs below the yellow trend line.

I’m honestly not sure where the Aussie is going to go, as I really see it ranging with no real trend short term. The 4 hour chart still looks the same as yesterday.

Same goes for the Yen, I’m tempted to sell, but I just feel it’s too low, so I might just wait for some retracement before I enter a Yen position.

The dollar is smiling its way up!

Wow looks like all the currencies against the dollar were singing the Jay Sean song “down”! The Euro zone stress tests results really did the trick!

The yen dropped to its 15 years low last night and still no sign of government intervention. Also looks like data coming out of Japan this morning was pretty darn good.

Japan July machine orders went up to +8.8 m/m, +15.9 y/y and so did the current account at JPY 1675.9bn. Looks like we just may see the yen strengthen further today.

We also saw the Euro weaken tremendously after the stress tests results came out, particularly with trouble occurring within Portuguese and Irish banks.

The Sterling on the other hand seems to ranging! It came down as the Euro weakened, but managed to hold its ground and bounced back up. The same goes for the Aussie as well.

Anyways, I think we’re going to be seeing quite a bit of movement today considering the amount of data coming out. 

Here’s the data to watch out for today:

German trade balance – 6am GMT

German industrial production – 6am GMT

UK Industrial production – 8.30am GMT 

UK Manufacturing production – 8.30am GMT

US Fed Beige Book Economic report – 6pm GMT  

US consumer credit – 6pm GMT

Euro Option Triggered

As I live in Asia, I tend to do options that are Tokyo cut 2pm. This means that on the expiry date of the option at 2pm Tokyo time, they will look at the spot price and depending on the type of option, will decide whether it gets exercised.

This specific option I had traded on the 7^th July, and it was a strangle vanilla option that I sold.

What is a strangle vanilla option?

This is a type of option trade where you play on a currency range that you are comfortable with. So you sell a call option on the top side, and a put option on the lower side.

Here’s my trade as an example.

2 months back in July, spot was around the 1.2500 levels in EUR/USD.

So I decided I’d put up a EUR/USD strangle trade.

I sold a EUR call / USD put at 1.2800

And I sold a EUR put / USD call at 1.2150

This meant that I was playing the range of 1.2150 and 1.2800.

 If spot on date of expiry was above 1.2800, I would have to take delivery of a sell EUR/USD position at 1.2800.

If spot on date of expiry was below 1.2150, I would have to take delivery of a buy EUR/USD position at 1.2150.

If spot remains in between 1.2800 and 1.2150, nothing happens and I just made a profit in terms of the premium I received.

So what happened today at expiry?

At 2pm Tokyo time, my option got triggered as spot was above 1.2800. Luckily for me, EUR/USD has been bearish, and is below 1.2800. I now have a profitable position, and I’m going to look at this position now as an intraday position.

Here’s my strategy:

I’m looking at Euro to drop further once the U.S session starts and I am expecting quite a bit of volatility tonight. I’m going to leave a stoploss order just above the pivot point at 1.2850, and will bring it lower as spot drops.

So let’s see how this works out! 

Now that we got the news all sorted out, let’s see what the charts are saying.

Looking at the Euro 4 hour chart, it looks like there is a bit of a range going on. As for me, I’m still not very convinced about Euro strengthening a lot, so I would look into starting my position with a sell.

Looking at the sterling 4 hour chart, it looks like there is a range and a downward channel trend going on as well. As with the Euro, I would look into starting my position with a sell as well.

The Aussie 4 hour chart shows an upward trend channel happening, so looks quite bullish. I think the levels are high to buy, so I would look at some retracement before I’d enter a buy position, and I would only enter a position after the rate decision.

Looks like we have different forms of channels going on here! The dollar-yen too has a downward trend channel occurring on the 4 hour chart.  But I would wait until after the rate decision to enter the yen.

Let's get back to action!!

I’m still trying to get a gist of what’s going on with the market, so still unsure whether I will enter any new positions, but lets see how the day follows through!.

On the Japanese frontier, we do see a policy decision being headed today. The Nikkei this morning reported that Ozawa is willing to consider an extra budget to finance a stimulus package if he gets elected. Today’s support is at 83.60 and then 81.80. Today’s resistance is at 85.20 and then 86.40.

On the Euro frontier, it seems this morning there’s been news that some of Germany’s biggest lenders may need about EUR 105blns in capital because of new regulation. Today’s support is at 1.2770 and then 1.2630. Today’s resistances are at 1.2940 and then 1.3180.

Not much news out this morning on the sterling front. Today’s support is at 1.5320 and then 1.5120. Today’s resistances are at 1.5480 and then 1.5600.

This afternoon is the RBA rate decision, where the RBA is expected to keep the rate on hold at 4.5%. Today’s support is at 0.9060 and then 0.8960. Today’s resistances is at 0.9180 and then 0.9220.

Data today

RBA cash rate decision - 4.30am GMT

BOJ rate decision

Germany factory orders – 10am GMT

Back from a loooong vacation

I have been M.I.A for the past two weeks because i was off on vacation and just honestly didn't have time to play on the market or even write up blog posts.

I am back now and will start posting again.

keep a lookout of this space. Also if you do use twitter, Follow me on fxtaurian!! either through twitter or by clicking on the follow me bird on the right hand margin.