ECB rate decision tonight!

The Fed’s latest beige book and the ADP employment data came out a little bit more optimistic. Fed Chairman Bernanke’s made a statement saying he would not rule of the possibility of a QE3 if conditions deteriorate though that is clearly not his expectation.

Euro rose to a high of 1.3890 last night on growing expectations on a rise in interest rates in the Eurozone before the United States. There’s talk of option related selling ahead of 1.3900. Eurozone PPI came out stronger and will add to the ECB’s inflation concerns. S&P has also said its ratings on Greece and Portugal remain on credit-watch negative.

Sterling rose to a 13-month high versus a weaker dollar on again interest rate rise expectations. The cable was helped by above forecast data from the UK construction sector as well.

This week has been a data-intensive week for the Aussie. It was a mixed bag this morning with the trade balance coming out better than expected but the building approvals came out worse.

Lots of data tonight! Keep a close watch on your trades!

Data Today

German Retail Sales – 7am GMT

German PMI services – 8.48am GMT

Eurozone Services PMI – 9am GMT

Eurozone GDP  - 10am GMT

ECB rate decision – 1.00pm GMT

ECB Trichet's speech – 1.30pm GMT

UK Services PMI -9.30am GMT

US Initial Jobless Claims - 1.30pm GMT

US Non-manufacturing ISM – 3pm GMT

EUR/JPY - cross trade strategy

I see an opportunity on the EUR/JPY cross today!

if i look at the daily chart, there is a strong resistance at 114 level.

when i zoom into the 4-hour chart we can see the EUR/JPY ranging between 114 - 112.

Here's what i plan to do:
I've placed a market order to sell EUR/JPY at 114.
Once that order gets triggered i'll place my stoploss and Take profit order.

lets see how this works out!

Cable and Euro climbing upwards!

Another mixed session for the dollar as it was weaker versus the cable and euro but strong against the yen. The Chicago PMI surprised to the upside yesterday whereas the pending home sales dropped more than consensus. Personal income increased for January, while personal spending decreased.

Euro moved higher towards 1.3860, but formed a double top around the 1.3850 level. Eurozone CPI came down slightly to -0.7 m/m and 2.3% y/y.

The Aussie followed the euro last night as equities made a comeback after profit-taking last week. RBA rate decision can in line with consensus with no changes in the rate.

Sterling too closed yesterday’s session at a high of 1.7279 and has been ranging between the 1.6270 and 1.6300 region (looks like a strong resistance here).

Data Today

UK Nationwide houseprice – 7am GMT

UK manufacturing PMI – 9.30 am GMT

Eurozone Manufacturing PMI – 9 am GMT

German Unemployment – 8.55am GMT

Eurozone CPI estimate – 10am GMT

US ISM Manufacturing PMI – 3pm GMT

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