Oil prices surge up. mixed dollar session and Poor UK GDP from friday

Dollar had a mixed session on Friday, as it benefited against the Euro but fell against the Aussie. Oil and commodities seem to be the cause of this, as supply concerns are in the markets, even though oil prices have retreated from Thursday’s high.

ECB VP Constancio has said that central bankers need to be extremely vigilant with respect to inflation expectations and ECB member Draghi has said that central banks are trying to assess whether the spike in oil prices wil have a permanent effect on inflation.

Cable pushed lower on Friday after UK GDP came lower at -0.6% from previous estimated of -0.5%

USDJPY remains in the range of 80-85. Seems like carry traders are not using the yen as a funding currency for carry-trade, when they can receive reasonable pick up by borrowing short and lending long within the single currency. This is because the yield curve is steeply sloped.

Data Today

Eurozone CPI – 10am GMT

US Personal Spending – 1.30pm GMT

Chicago Purchasing Manager - 2.45pm GMT

US Pending Home Sales – 3pm GMT

Stopped out on Euro trade and Aussie and Cable option trades

Euro Stopped Out
Unfortunately i got stopped out on my Euro trade. I guess the upward trend is still in motion. But i'm still not very convinced with the Euro strengthening and i would like to enter another short trade on the Euro. This time, i'll wait for a confirmation on the technicals such as a moving average crossover, before entering a short trade. (trade URL: EUR trade )

I didn't really enter into any spot trades today, was a little busy at work with other stuff, but i did enter into 2 option trades.

 
Aussie Strangle Option
I noticed with the Aussie that it's been in a range for the past few weeks. A strong resistance seems to be holding at 1.0199 and a strong support at 0.9957. I decided to do a 20-day strangle option, where i sold an AUD/USD call at 1.0200 and an AUD/USD put at 0.9900. The premium i received was 0.6% which isn't too bad.

Cable Strangle Option

  I also entered into a GBP/USD option trade where i again sold a strangle. Looking at the 4-hour chart we can see that the cable too has been in a bit of a range as well where 1.6297 has held up as a resistance and 1.5346 has held up as a support. I sold a GBP/USD call at 1.6400 and a GBP/USD put at 1.5300. I managed to pick up 0.5% in premium for a tenor of 1 month.

Lets see how these trades work out!

Euro higher after hawkish comments. Can it last?

Again we’ve seen a mixed dollar performance with a few major releases. The yen performed well with another down session in equities.

USDJPY continues to trade heavily as exporters step up their sales and longs established in the last week are getting unwound, with a lower US curve also weighing on the USD, as well as safe-haven flows.

Euro again ran up higher yesterday following hawkish comments by policymakers. I’m honestly not very convinced with this Euro movement, and I do feel it’s extremely speculative.

Sterling rose from 1.6220 to high of 1.6275 after BoE minute before trading to low of 1.6180 in NY with real money accounts selling. Bank of England minutes showed one more policymaker voting for an interest rate hike this month

Data today

German GDP – 7am GMT

Eurozone consumer confidence – 10am GMT

Eurozone economic, industrial and services confidence – 10am GMT

US initial jobless claims is due today -1.30pm GMT

US Durable goods orders – 1.30pm GMT

US new home sales – 3pm GMT

US house price index – 3pm GMT

Euro hitting a resistance level

The 4-hour chart shows the Euro coming quite close to the resistance level at 1.3735.

The previous uptrend, the Euro wasn’t able to break this resistance.

To clarify this, I’m going to zoom into the 1-hour chart. The 1.3711 level seems to be holding up quite well!

I’m going to play this a little differently where I’m going to place an order to sell Euro instead of waiting for a moving average crossover to occur.

Here’s the order I’m going to place.

Sell EUR/USD at 1.3710. Stop loss 1.3750 (40 pips). Target 1.3630 (80 pips).

When spot moves to 1.3670 (40 pips), I will move my stop loss to breakeven at 1.3710.

Update on the Yen!

Ok so this strategy didn’t quite pull through as the yen pulled lower instead so I ended up not receiving a buy confirmation and let this trade go.

strategy link: yen strategy 

Update on Cable short trade!

So price hit 1.6110 and I moved my stop to 1.6160 as planned. Unfortunately price hit a low of 1.6100 and then bounced back while I was snoozing away. So my stop got hit and I ended up with a 50 pips profit.

It is sometimes quite hard to make a decision when it comes down to trailing stops. Should we keep the stops closer so that we cut out on the opportunity cost when market bounces back as in the case of this trade?

Or do we keep the stop a little further in case the stop gets and runs back down on the trend again costing you the opportunity of more pips.

Tough decision! 

Trade link: cable trade

ECB Mersch pulls the Euro up

Yesterday during Asian session we saw the safe haven currencies benefit, especially the USD against the Euro and cable. We saw a lot of uncertaintly in the middle east especially out of Libya and the aftermath of the earthquake in New Zealand and Downgrade on Japan.

Euro managed to recover its losses during Asian session when Europe opened on the back of hawkish comments by ECB’s Mersch, despite some ratings warnings on Spain.

BoE's Posen and Tucker were on the newswires. Posen again sounded dovish as he said it would be a mistake to raise the BoE policy rate just "for the sake" of it and he did not rule out the possibility of deflation should the BoE raise rates right now.

RBA Stevens says rise in Australian dollar should help contain inflation.

For today we don’t have much data out today. BOE minutes could push the cable in a direction tonight, so keep a look out on that.

Data today

Eurozone industrial new orders – 10am GMT

Bank of England minutes – 9.30am GMT

US existing home sales – 3pm GMT

Yen on an uphill

Looking at the 4-hour chart, USDJPY seems to be consolidated in the range of 83.05 – 83.41.  If I look at the stochastic and MACD it seems like the USDJPY may head upwards, but the ADX is below 25, which suggests there isn’t a strong trend yet.

If I look at the 1-hour chart, we see the 10 EMA has just crossed over the 20 EMA towards the upside and MACD and stochastic support it. However again the ADX is below 25 which suggest there isn’t a strong trend yet.

At the moment I feel that I would play a breakout long on the yen if it breaks above 83.50 with ADX high than 25 on the 1-hour chart. So I’m going to watch this one out today, and enter once I get a confirmation on my charts.

 Update on Cable short trade!

Yesterday evening I left an order to sell cable at 1.6210 which got hit. I’m currently 43 pips in profit woohoo!

I’m going keep my stop loss at 1.6210 (at break-even). When spot moves to 1.6110, I’m move my stop to 1.6160.

Let’s see how this strategy works out! I’m hoping to cash in on more pips by keeping a trailing stop.

Libya tensions causing some movement this morning

Things were pretty quiet last night. This morning however we’ve seen quite a bit of movement!

USDJPY had a sudden 30 pips spike as asia session started which also coincided with Reuters headlines of Libyan warplanes bombing targets inside the city. Dozens of people have been reported killed in Tripoli. Fitch has also downgraded Libya’s long term ratings to BBB from BBB+.

Euro slipped lower this morning as well due to the tensions occurring in the middle east.

The Aussie too was under pressure on higher risk aversion, falling European equity and Aussie crosses selling.

 Data today

German GFK Consumer confidence survey – 7am GMT

UK public finances – 9.30am GMT

US Consumer confidence – 3pm GMT

Cable looks like its hit its top – potential trade!

Looking at the daily chart of the cable we see spot hitting close to the top of the Fibonacci, which could hold as a resistance. So I’m looking to enter a short position on the cable.

PS. Ignore the buy line on my charts, im currently just testing out the expert advisor function on the metatrader. 

Zooming into the 1-hour chart I notice a little bit of a consolidation occurring between 1.6225 and 1.6250. This looks like a sign of a potential breakout to occur!

Here’s what im going to try out today. I’m going to watch the charts all day and just before I bounce out for the for the evening, I’ll place a sell stop order below the range I’m looking at.

Update on my Euro trade from Last week

An unfortunate way to end a week! But I got stopped out on my trade last week at 1.3638, which pulls in a loss of 68 pips. What a bummer! Well I’m still hopeful for this week, so let’s see how this week works out!

Euro boosts up Thanks to Bini-Smaghi

Euro benefitted from ECB board member Bini-Smaghi comments that “as the economy gradually recovers and global inflationary pressures arise, the degree of accommodation of monetary policy has to be monitored and, if needed, corrected”. Also keep a watch on Ireland as it holds parliamentary elections on Friday which could be a key stress point for Euro. Opposition parties Fine Gael and Labour have campaigned on negotiating terms on interest rates and senior bank debt.

Sterling continues to be supported by rate hike expectations. We have the BOE minutes out this Wednesday.

Aussie dipped a little after China raised its reserve ratio requirement.

U.S is on holiday today, so we may see a thin market.

Data today

German PMI Manufacturing – 8.30am GMT

German PMI services – 8.30am GMT

German IFO - 9am GMT

Eurozone PMI Manufacturing – 9am GMT

Eurozone PMI services – 9am GMT

Euro Short trade - triggered!

BINGO!!!

looks like my 1 hour moving average cross happened.
I sold EUR/USD at 1.3570.

I'm going to place a stoploss order at 1.3638 which is 10 pips above the 23.6% fib level.

I'm going to target 1.3467.

I will move my stoploss to break-even when spot hits 1.3520 which is 50 pips from my entering position.

The link to the trade strategy is here: trade strategy

Cable trade closed!

Woohoo!! Up went the cable today all the way to 1.6200, where my profit target was hit!

That leaves me with a profit of 120 pips, which isn’t so bad!

The link to the trade is: cable long trade

Euro trade still waiting it out

I’m still waiting it out on the Euro. Looking at the 1 hour chart it seems like we may see a crossover soon. Crossing my fingers it works my way.

the link to the trade strategy is: Euro short trade

it's all about the cable today!

The dollar weakened a little last night despite the better data coming in from the regional manufacturing data and jobless claims. The Middle east also helped keep the yen well-supported.

A Spanish auction was poorly received and moody’s downgrades german banks’ subordinated debt, brought the euro down a little.

The BOE’s Andrew Sentence stated that the BOE’s inflation projections maybe too soft which could lead to the need for aggressive rate hikes in the future.

Today we have the UK retail sales coming out very soon, so keep a watch on the cable. I think there will be some good trades to play today.

Data today

German Producer Prices – 7am GMT

UK Retail Sales – 9.30am GMT

potential Euro short trade

Looking at the 4-hour EUR/USD chart, we see a downtrend line forming. The line intersects the 23.6 level of the daily Fibonacci, and we see the 100 SMA slowly crawling down as well to that line. This area looks like it could hold up as a resistance level.

Looking at the 1 hour chart, we see spot pushed up but the trend line seems to hold as a resistance and spot has come off since then.

I will wait though for the 10 EMA (blue line) to cross over the 20 EMA (red line) before I enter a short trade just in case it’s a fake-out.

Keeping a watch on the Euro today and will update when I enter into the trade.

Cable trade from yesterday

My order of 1.6080 got triggered last night and I wasn’t able to place my stoploss order last night which actually ended up benefiting me because price came up this morning.

Today though, I’ve placed a stoploss order at 1.6030, and will move this up when spot hits 1.6130.

Here’s the cable trade link: cable long position

disappointing BOE inflation report causes a sell-off in cable

Some improvement in the US data yesterday helped bring about some dollar strength before headlines pertaining to the Middle East contributed to price volatility.

Cable got sold off yesterday and a somewhat disappointing BOE inflation report. The general tone was dovish commenting that risk remains to the level of inflation. UK unemployment data was disappointing as well.

Aussie traded weakly in London session as Moody’s placed the 4 major Australian banks on watch for possible downgrade.

Today we have quite a lot of data coming out of the US especially the US CPI.

Data today

Euro zone consumer confidence – 3pm GMT

US CPI – 1.30pm GMT

US Initial Jobless Claims – 1.30pm GMT

US leading indicators - 3pm GMT

US Philadelphia Fed index – 3pm GMT

Cable - long position trade

Looking at the 4-hour chart on the cable, I see my downward trend line has been broken! This looks like there just may be a reversal towards the upside, so I will be looking into entering a buy cable position today.

At the moment price is hovering around 1.6150 which is quite high to be buying, so I’m going to wait for a retracement.

Looking at the 1 hour chart on the cable, I see a potential area where I could enter into a buy position. The 200 SMA is hovering just above the 1.6080 line which is yesterday’s R1 on pivot points. It is also just above my trend line, so I would look to enter around here.

I’ve placed an order to buy GBP/USD at 1.6080 which is good till New York close today.

Trade

Buy GBP/USD at 1.6080

Stoploss: 1.6030 (yesterday’s pivot point)

Target: 1.6200

I will add an additional position at 1.6130 (50 pips from entry) and move my stoploss to 1.6080.

GBP pushes higher after CPI prints in higher

The Euro zone GDP came in slightly below consensus at 2% y/y which was offset by the strong ZEW surveys that kept the euro in the green. Any significant developments from the euro zone policymakers will likely drive the market more than these prints up right until the leaders’ summits in March.

The UK shot up after another above inflation target CPI print and the latest letter from Mervyn King to Chancellor George Osborne was also published where he stated that “every member of the Committee is conscious that there are large risks in both directions. And no one should be in any doubt that when the balance of risks requires it, every member of the Committee is determined to act to adjust policy in order to bring the risks back into balance”.

In terms of data we have 3 biggies today; UK jobless claims, BOE inflation report and FOMC meeting minutes.  Watch your cables and dollars today!

Data today

UK Nationwide consumer confidence

UK ILO Unemployment rate – 9.30am GMT

UK Jobless claims change – 9.30am GMT

Bank of England inflation report – 10.30am GMT

US Housing Starts – 1pm GMT

US PPI – 1.30pm GMT

US Industrial production – 2.15pm GMT

Minutes of Jan 25-26 FOMC meeting – 7pm GMT

EUR/JPY option trade - strangle 6 months.

Time to time, when I feel there is a little more volatility in the market; I enter into some quite simple option trades. The trades are not too fancy, and are usually plain vanilla options or strangles.

I entered into one such trade today, which is on a long-term scale. I decided to sell a EUR/JPY strangle option for 6 months at the levels of 117 and 106.

Here’s my reasoning:

If you look at the EUR/JPY weekly chart, you’ll notice that the cross has been ranging for the past 6 months, between 115.46 and 105.31. Therefore, I see the 117 and 106 range as a fairly safe range to play for the next 6 months.

But since it is a long-term view, I will have to keep a close watch on this option, and possibly play the range through spot as well.

I priced in the option, and received a premium of 3.4%. My breakeven levels would therefore be approximately at 121 on the top and 102.40 on the low, which I feel are safe levels to play for the risk I’m taking.

Trade

Sell Eur call/ USD put at 117. Sell Eur put/ USD call at 106. Premium 3.4% of Euro face.

little quiet on valentines day

Seemed like the fx market was on it’s own mini valentines day. Apart from the Euro, we didn’t see to much action yesterday on the markets.

The Euro still remains under pressure after European finance ministers met yesterday and provided very little clarity about solutions to the region’s fiscal problems. Several Eurozone officials spoke, but none of the comments were noteworthy.

We have quite a lot of data coming out this evening, with the UK CPI and US retail sales being the biggies! So keep a watch out on the markets around these data times.

A quick update on my trades:

My Aussie trade (link to aussie trade) from last week got stopped at 1.0020. I gained 76 pips on this trade!

Data today

German GDP – 7am GMT

Eurozone GDP – 10am GMT

German ZEW survey – 10am GMT

Eurozone ZEW survey – 10am GMT

UK CPI – 9.30am GMT

US Empire Manufacturing – 1.30pm GMT

US Net long TIC flows – 2pm GMT

US Retail Sales – 1.30pm GMT

Update on Aussie trade!

Woohoo!!! down went the Aussie as I'd hoped! hitting below my first target price of 1.0020.
I've now moved my stoploss down to 1.0020 and still aiming for 0.9944.

Aussie still looks quite heavy to the downside, so i'm getting a little more confidant now about my trade. Doesn't seem like there are some heavy duty data out tonight too.

Hoping for the best!

Here's the link to the original aussie trade: 4-hour chart Aussie trade

Dollar boosted higher last night!

The dollar is on a roll!! It’s been strengthening as the treasury yields pushed higher on the back of the better jobless claims figures that came out yesterday.

The Euro dropped lower after European peripheral bond yields pushed higher.

The BoE left policy unchanged as expected and we saw the cable push up a little. But after the US data, the cable came back down below 1.6100.

The Aussie too joined the crew and traded heavily after the figures, which of course is good for me considering I have my open short Aussie position!!

Data today

German Final CPI – 7am GMT

UK PPI output – 9.30am GMT

US Michigan Sentiments – 2.55pm GMT

4-hour chart Aussie trade!

Last night I saw an opportunity in the AUDUSD 4 hour chart, and entered into a short Aussie position.

Entry trigger:

10 EMA crosses below 20 EMA

Candle also closes below 23.6 fib level in red.

MACD heading lower

Stochastics on its way down

ADX above 20 and heading higher

Entry level: 1.0096

Stoploss: top Bollinger band is around 1.0170 levels, so I’ve placed my stop at 1.0172.

Target: assuming I use a risk ratio of 2:1, my target will then be 0.9944.

I will move my stoploss to break-even when price action reaches 1.0020 which is at a risk ratio of 1:1.

I hope this trade works out!! Keeping my fingers crossed!

Euro pushed higher after lower US treasury yields.

Whatever lows Euro had made earlier in the week was completely wiped out as Euro traded to a high of 1.3745 last night following lower US treasury yields and some what safe comments by Fed Chairman Bernanke over the continuation of its bond buying program.

In terms of data, we have a big day with the BOE rate decision, so expect some big movements on the cable if we hear any surprises.

After a pretty dull data week so far, we may seem some action tonight!

Data today

UK Industrial production – 9.30am GMT

UK Manufacturing production – 9.30am GMT

UK BoE Rate Decision – 12pm GMT

US Initial Jobless Claims – 1.30pm GMT

US Monthly budget statement – 7pm GMT

US Wholesale inventories – 3pm GMT

China hikes rate and Aussie plummets!

We had a quiet session again yesterday, as there wasn’t much data out.

Aussie took a beating on the back of the rate hike by China, as we see it slide down 60 pips. Right now we saw the Aussie push down further to below to 1.0109 as stops were triggered.

German trade balance came out a little lower at 11.9bn vs the consensus of 12bn. Not much of reaction on the Euro as it still looks range-bound in asian session.

What a bummer! Missed out on the Aussie move! It definitely looked like a good sell in the morning, but I was waiting for my entry trigger which happened while I was stuck in a meeting!

Oh well! There’s always a next time.

Data today

German Trade Balance – 7am GMT

UK Trade Balance - 9.30am GMT

US Fed Bernanke testifies – 3pm GMT

quiet market

Gong Xi Fa Cai!!  

To all those who celebrate Chinese New Year!!

I’ve just gotten back from my Chinese New Year break, from Thailand which was very relaxing!

As always after travelling, it takes a while to again get back into the whole trading business, especially if you see some form of movement which you missed while you were holidaying!

Seems like the Euro had a bit of a movement yesterday! Disappointing German December new manufacturing orders pushed the euro lower to below 1.3520. But the Euro seems to have recovered some of it’s lost ground this morning.

The sterling has been well supported considering that the market has fully priced in a rate hike for the May meeting and increasingly for the april meeting as well.

Other than that, it was a quiet market session yesterday.

Data today

German industrial production – 11am GMT

Dollar weakens

The dollar weakened versus most of the currencies due to mixed data coming out last night. Consumer data of personal spending and personal income rose, as well as the Chicago PMI which beat expectations. On the other hand the Dalla fed’s current activity index and the Milwaukee PMI declined.

Euro strengthened on the back of the higher CPI estimate which came in higher at 2.40%.

Sterling too took out stops above 1.6050 this morning hitting a high of 1.6073. there seems to be some offers from here up to 1.6100 and stops above the figure.

Data today

UK PMI Manufacturing – 9.30am GMT

UK Net Consumer Credit – 9.30am GMT

German PMI Manufacturing – 9am GMT

German Unemployment rate – 9am GMT

Eurozone PMI Manufacturing – 9am GMT

Eurozone Unemployment Rate – 9am GMT

US Construction Spending – 3pm GMT

US ISM Manufacturing – 3pm GMT