Long USD/JPY trade (from 27 Sep to 2-Oct)
Real-Time AmpGFX – comment on NZD and JPY position closures (Sun 10/1/2017 4:44 PM)
Comment
The USD reaction to the tax plan last week was disappointing, I thought we might see a strong USD reaction. I still tend to think that the USD should rise on this event, but perhaps it will take time, and I am wary of the market shifting focus in the near term.
I thought NZD might see more follow through to the downside last week on the weak NZ business activity survey, political limbo, weak EM markets, and a strong USD.
Its performance has been solid and I am wary of the market reacting to positives; such as: progress on a governing coalition with National still leading government; building permits last week were very strong; China PMI strong and China government has cut RRR for some banks; milk price auction this week is likely to be higher given the recent recovery in milk prices; EM markets started to recover late last week.
I sold the rest of the JPY short, the part against GBP. Trumps’ tweets may evoke a response from NKorea. They are likely to be interpreted by the NK regime as a declaration of war.
Trump tweets over the weekend, in general, are likely to stoke fears that Trump is being distracted from tax reform and may undermine the USD.
Developments in Catalonia may stoke some fears for stability in Europe and undermine EUR and European assets. We may see fund managers turn back towards EM markets as a kind of safe haven. But at the same time boost demand for JPY and gold.
Higher US yields are providing support for the USD so far in Asia this morning. But I don’t feel confident that that will be the dominant theme.
In general, I just feel better getting back to closer square to start the week. I retain a long GBP/CAD position.
The GBP may be down a bit ahead of the UK Tory party conference this week, fearing evidence of disunity and pressure on May’s position. However, if she manages to navigate this event, GBP may recover. CAD economic data appears to be giving back strength earlier in the year, and BoC implied it would not be hiking til it sees clearer evidence of the outlook maintaining above-trend growth and or upward surprises in inflation indicators.
Positions
Long half unit GBP/CAD at 1.6707; s/l 1.6593; t/p 1.6945
Real-Time AmpGFX – closed NZD and GBP/JPY positions (Sun 10/1/2017 4:21 PM MDT)
Bought NZD/USD 1 unit at 0.7216 to close short position
Sold GBP/JPY half unit at 150.80 to close long position
Note our stop loss on long USD/JPY was triggered on Friday in the dip after the weaker than expected US PCE deflator
Comment to follow.
Real Time AmpGFX – comment and orders (Wed 9/27/2017 8:14 AM)
Positions
Short half unit EUR/USD at 1.1846; s/l 1.1778; t/p 1.1683 (s/l lowered)
Short one unit NZD/USD at 0.7227, s/l 0.7263; t/p 0.7005 (t/p lowered)
Long half unit GBP/JPY at 150.81; s/l 149.67; t/p 159.55
Long half unit USD/JPY at 113.08; s/l 112.23; t/p 117.45
Comment
US yields may have only started to recover. Rising oil prices, Fed QT, ECB taper coming, strong global growth, US tax reform momentum, market coming from low inflation outlook for the USA. US bond market shook off dovish leaning Yellen comments. US core capital goods order recovery builds momentum
Higher US yields are likely to feed through to weaker JPY, and potentially also to weaker NZD. Political uncertainty in NZ to continue, recent confidence data soft, RBNZ to remain on hold. EM currencies decline continued on Tuesday and may also drag down NZD
Tightened stop on EUR/USD, I want to let it run, but not as sure on its downside, the key may be the CPI data on Friday.
NKorea risks may generate rebounds in JPY, but these may be getting shallower and shorter.
Real Time AmpGFX – Sold NZD/USD and bought USD/JPY (Wed 9/27/2017 6:39 AM MDT)
Sold half unit NZD/USD at 0.7188
Bought half unit USD/JPY at 113.08
AUD/USD short closed at take-profit level at 0.7840