Short EUR/USD trade (From 16-Oct to 30-Oct)
Real-Time AmpGFX – bought EUR/USD to close short (Mon 10/30/2017 9:39 AM MDT)
I bought half unit EUR/USD at 1.1624 to close short position.
Comment
Eurozone peripheral bonds are stronger around news from Spain
US yields have slipped on a combination of factors that are hard to assess; including charges in Muller led investigation, expected selection of Powell as Fed chair, and fall in Trump’s approval rating.
Congress tax plans expected to be announced this week may generate mixed reviews and evoke fears over how they will be passed. The Muller distractions and low Trump approval rating will not help confidence that Congress can pass tax reform.
The smile theory of the USD is a risk, moderate low inflation growth in the US may generate a weaker USD by driving capital towards EM currencies.
I was not looking for too much more in EUR downside. I can see a choppy path ahead, and want to lock in gains and reduce risk.
Positions
Short half unit NZD/USD at 0.7009; s/l 0.7013; t/p 0.6680
Short half unit AUD/USD at 0.7712; s/l 0.7813; t/p 0.7525
Real-Time AmpGFX – s/l order for EUR lowered (Fri 10/27/2017 8:59 AM)
Leaving the s/ls in AUD and NZD as is, taking a more medium-term approach on these pairs.
Positions
Short half unit EUR/USD at 1.1798; s/l 1.1723; t/p 1.1525 (s/l lowered)
Short half unit NZD/USD at 0.7009; s/l 0.7013; t/p 0.6680
Short half unit AUD/USD at 0.7712; s/l 0.7813; t/p 0.7525
We were stopped out of half the EUR, and half the CAD positions on 18/19-Oct.
Real-Time AmpGFX – sold EUR/USD to add to short position (Tue 10/17/2017 9:42 AM)
Sold half unit of EUR/USD at 1.1755
Positions
Long half unit USD/CAD at 1.2485; s/l 1.2393; t/p 1.2660
Long half unit USD/CAD at 1.2573; s/l 1.2513; t/p 1.2770
Short half unit EUR/USD at 1.1798; s/l 1.1923; t/p 1.1525
Short half unit EUR/USD at 1.1755; s/l 1.1813; t/p 1.1525
Real-Time AmpGFX – sold EUR/USD (Mon 10/16/2017 9:30 AM MDT)
sold half unit on EUR/USD at 1.1798
Comment
EUR appears to have lost its upward momentum, and perhaps the market has developed long positions, leaving it vulnerable to a correction.
The EUR/USD yield disadvantage remains large, and arguably EUR/USD has moved well ahead of this spread. No one seems to focus on this anymore, but perhaps it could come back as a reason to explain a shift in sentiment.
I see more upside risk for US yields on a solid trend in US economic reports. The market has built in a low inflation outlook for the USA, but we may be coming into a period of firmer US inflation indicators with short-term pressure related to hurricanes and a weaker USD this year. Wage pressures may also start to creep in. The choice of Fed Governor may have some upside risk for yields. And there appears to be little built-in to the USD or yields for possible tax reform.
ECB taper is largely built-in, and the ECB is likely to emphasize its plans to keep rates negative for some time. There may be some downside risk related to Spanish separatist moves and Italian election early next year coming into focus.
We are long USD against EUR and CAD, both these currencies have extended CFTC net long positions, and option risk-reversals at around extremes pointing to bullish positioning for both currencies; and thus creating a greater risk of a positioning squeeze and fall.
Positions
Long half unit USD/CAD at 1.2485; s/l 1.2393; t/p 1.2660
Short EUR/USD at 1.1798; s/l 1.1923; t/p 1.1525