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Archive for September, 2012

Basically this… that was when he was a kid.

PGMs look good again… especially XPD at around 620…. post soon…

To the best of good buys.

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ESP35: Challenge Rejected

Quick post – proxy to EURUSD, but very convincing doji last Friday. Still blue, so not really a shooting star for the full confidence level.

Still, is weathered from FOMC on Thursday… but has its own massive event risk of the German ESM decision on Wednesday. Still, a two day drop down to 7150? I believe it (and it’s happened before).

Looking to open a small position at market open, holding for 2 days unless it hits the 8100 invalidation. Switching a short XAUUSD for this so it still fits the risk appetite balance.

To the best of good buys.

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“oh no, major NFP miss… US periph economies are going to be hit hard!” (buy above 13)

“wait, there’s going to be a helicopter drop soon… tuesday perhaps?” (sell back to 12.95)

… where the reaction should have been something more akin to inverse usdjpy…

 

good thing i stayed out… except a small sell entry EURUSD at 1.27655. Reason? Just putting some on red which is probably going to close out against me.

To the best of good buys

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So… it is currently 0600 or so GMT, more than a few hours away from the ECB rate decision at 1145GMT that’s supposed to bring in the new coming of unlimited bond purchases, some new flavor of SMP and additional commentary about easing. However, positioning of EUR crosses have stopped at an interesting junction – technicals of EUR-safe pairs show EUR upside, but EUR-carry have all stopped at important resistances. An OMR cut generally means lower EUR across the board, but other risk-positive decisions mean outperformance of major regional carry counterparts. Thus from EUR-safe/EUR-carry positioning, I think there’s a low chance of a rate cut, but something will give a risk a final run before what happens in Germany as September chugs along. 

Including the fact that German inflation data has been stable and the deterioration of peripheral sovereigns have paused over the summer months (along with a rise in Bund prices), an actual ECB cut seems unlikely. Rate cutting is one of the remaining monetary policy tools that doesn’t anger the Germans that much on the scale of what Draghi can do to piss in their coffee, but there is a zero-bound. And the problem isn’t really deflation (at least in the majority of countries) but borrowing costs faced by the governments of the peripherals. What Draghi is doing, is using a scalpel to attempt to remove the tumor, rather than a pistol. At least he has the right tool.

An ECB cut will most likely mean lower EURUSD and EURJPY. However non-cut, new SMP is risk-on. As both EURUSD and EURJPY has crossed into no-man’s land with upwards momentum, it is most likely that the trend will continue to the next major fib (a wick is enough). However for the more fun EUR crosses, extinguished candles at resistances point to generally a risk-on reaction, ie downward EURxxx.

Or I could be wrong and they clear the cloud in one stodgy go.

Selling 10 USDCHF to cover my exposure especially for 25 EURCAD short and a bit of EURHUF. Stopping USDCHF at .9600. But I shall be scalping… including XAUUSD.

So no rate cut? … surely there’s a way to trade this with Bund, BTP or Oblo calls, right? …

To the best of good buys.

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EURUSD and EURJPY – targets of 1.2720 and 100.50~. Not as good as Stolper’s target but still offers a few hundred pips. Also note the 1:1 positioning for EURUSD. Higher upper reward for EURJPY… but that might be due to yen effects.

EURSEK… of course there are questions of why there’s been a massive run up (look at SE yields, definitely seems to be some Riksbank purchasing here), but it has hit the bottom of a thin cloud. A 1.2% move upwards could take it out. After that, it’s back to the old ranges.

EURPLN… a bit more dangerous as it wicked up to the fib and now sitting at the bottom of the cloud. Expectations for NBP cuts (also today) may be driving this more than the ECB.

EURHUF… I still like this one… it’s sitting at a fib (the first resistance) as well as the bottom of a cloud. Major event risk for Hungary ain’t for a couple of weeks.

EURCAD… the pair that I’m using as an alternative for EURUSD. This has become my LT EUR carry as EURPLN clarity isn’t that good yet.

These positions are still a bit NG for my taste… but they’ve all gotten to a point where I’m absolutely comfortable selling them…

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