Chinook's EUR/USD (E/$)Mumblings
- Thread starter chinook
- Start date
We'll probably see more stop runs like this one - on the downside and upside - unless someone gives up; shaking the boat.
It all builds up to the FOMC meeting.
edit: someone opened a can of whoop-ass on me when it jumped up like that - but luckily the 1.2136-ish area behaved just like the 1.2145-ish area late yesterday. 3 shorts after and I'm back in black with commish and all.
Interesting Bloomberg interview with Peter Thiel, Clarium Capital Management, esp. his view on housing coupled to the economy now like it never has been. He talks about the US, but I think it holds true for most of the western world - only excacerbated in the US because of the wilder credit market.
Nice time for a little break too BTW.
It all builds up to the FOMC meeting.
edit: someone opened a can of whoop-ass on me when it jumped up like that - but luckily the 1.2136-ish area behaved just like the 1.2145-ish area late yesterday. 3 shorts after and I'm back in black with commish and all.
Interesting Bloomberg interview with Peter Thiel, Clarium Capital Management, esp. his view on housing coupled to the economy now like it never has been. He talks about the US, but I think it holds true for most of the western world - only excacerbated in the US because of the wilder credit market.
Nice time for a little break too BTW.
Back in the doldrums around 1.2145-ish on the december future again.
[14:39 EUR/JPY: Fall In Crude Oil Futures Adds To Pressure] San Francisco, September 16th: Yesterday, some of the support seen for EUR/JPY on dips came from the rise in crude futures above $45. However, today oil prices are a negative for the cross with crude futures falling as the market sees a limited impact from Hurricane Ivan on oil markets. October crude has dropped 43 cents to $43.15 per barrel from yesterday"s closing levels of $43.58. Overnight, crude rose to highs of $44.20 with any drop in oil prices a JPY positive. EUR/JPY continues to hover near 133.20 with stops under 133.00.
Here's what was reported earlier just after the break:
[14:07 GMT 16th Sept] With trading sagging on the back of [EUR/GBP] sales and the Asian central bank bids at 1.2140 propping trading caving, [EUR/USD] inched lower. Stops were tripped on the move below 1.2135 and the intraday flat bias became bearish. US investment names have been keen sellers at the lows but will not likely sit still for long if 1.2135 support is not removed. Stops are gathering in the 1.2170 area but these are unlikely to come under pressure as long as 1.2165 offers cap the upside. US data has today erred on unsurprising side with both CPI and TIC data within tolerable margins. Although CPI was slightly worse than expected the USD caught no directional bias from the numbers and the TIC data continued to reflect the view that investors in the USD are beginning to ease their holdings, the Fed is unlikely to hold rates at the FOMC next Tuesday. Fed futs now price in a 95% chance of a 25bps hike in interest rates and dealers are now eyeing 1.2050 as a viable target if trading can move into the 1.2000"s on a concerted push through both the mixture of bids and stops touted at 1.2100.
Hmm, seems that running stops up haven't stopped just yet. We will probably return to the range - unless many jumped on the short-wagon and still are holding on.
Best without any bias right now - it's all god 'ol fun before the FOMC and in a expiration week.
Nice short opportunities above 1.2150 on the december ...
... and a little 1.2150-60+ ping-pong on the spot.
[15:34 USD/JPY: Remains Soft; Japan Purchases Of US Treasuries A Focus] San Francisco, September 16th: USD/JPY remains soft this morning, holding at 109.65 with traders hearing some talk of a think tank report stating that the purchase of US treasuries by the MOF is going to decline. This analysis may have a knee-jerk reaction but no likely long term impact since this has been tipped by some time by market analysts.
Much of the large BOJ intervention proceeds from earlier this year has been held in deposit accounts by the BOJ and has not been invested into US treasuries. The BOJ has slowly metered out the funds at various auctions, helping to keep US rate low. In December last year, the deposit account held $126 bln but by the end of March, those deposit funds had risen to $180 bln. Those deposits fell to $138 bln by July and by August, they have dropped to $126 bln after presumably, strong demand by the Japanese officials was seen in the August treasury auctions. The fall in deposit levels back to December levels may slow Japanese buying of treasuries, but some seen "normal" deposit levels under $100 bln which may still see Japanese treasury purchases feed through over the next couple of months.
The pressure on USD/JPY has not lasted with USD/JPY at 109.75 currently as EUR/JPY rallies sharply to 133.45, breaking above the Ichimoku cloud base.
[15:40 EUR/USD: Short-squeeze Sees EUR/USD Pop Above 1.2150] San Francisco, September 16th: EUR/USD has popped higher to 1.2153 no what traders say is a short-squeeze as Europe goes home and prior to the Philly Fed data. The market is said to be very quiet with the Rosh Hashanah holidays keeping trading desks thin in NY. Japanese dealers also note that an upcoming long weekend in Japan should see trading thin into the weekend in Tokyo. Dealers say that the market was positioned short given the heavy tone in EUR/USD and EUR crosses, and hoping for a break of 1.2100 stops. But, traders all decided to square up and aiding the lift. Offers remain at 1.2160/65 but stops are poised above 1.2175.
[14:39 EUR/JPY: Fall In Crude Oil Futures Adds To Pressure] San Francisco, September 16th: Yesterday, some of the support seen for EUR/JPY on dips came from the rise in crude futures above $45. However, today oil prices are a negative for the cross with crude futures falling as the market sees a limited impact from Hurricane Ivan on oil markets. October crude has dropped 43 cents to $43.15 per barrel from yesterday"s closing levels of $43.58. Overnight, crude rose to highs of $44.20 with any drop in oil prices a JPY positive. EUR/JPY continues to hover near 133.20 with stops under 133.00.
Here's what was reported earlier just after the break:
[14:07 GMT 16th Sept] With trading sagging on the back of [EUR/GBP] sales and the Asian central bank bids at 1.2140 propping trading caving, [EUR/USD] inched lower. Stops were tripped on the move below 1.2135 and the intraday flat bias became bearish. US investment names have been keen sellers at the lows but will not likely sit still for long if 1.2135 support is not removed. Stops are gathering in the 1.2170 area but these are unlikely to come under pressure as long as 1.2165 offers cap the upside. US data has today erred on unsurprising side with both CPI and TIC data within tolerable margins. Although CPI was slightly worse than expected the USD caught no directional bias from the numbers and the TIC data continued to reflect the view that investors in the USD are beginning to ease their holdings, the Fed is unlikely to hold rates at the FOMC next Tuesday. Fed futs now price in a 95% chance of a 25bps hike in interest rates and dealers are now eyeing 1.2050 as a viable target if trading can move into the 1.2000"s on a concerted push through both the mixture of bids and stops touted at 1.2100.
Hmm, seems that running stops up haven't stopped just yet. We will probably return to the range - unless many jumped on the short-wagon and still are holding on.
Best without any bias right now - it's all god 'ol fun before the FOMC and in a expiration week.
Nice short opportunities above 1.2150 on the december ...
... and a little 1.2150-60+ ping-pong on the spot.
[15:34 USD/JPY: Remains Soft; Japan Purchases Of US Treasuries A Focus] San Francisco, September 16th: USD/JPY remains soft this morning, holding at 109.65 with traders hearing some talk of a think tank report stating that the purchase of US treasuries by the MOF is going to decline. This analysis may have a knee-jerk reaction but no likely long term impact since this has been tipped by some time by market analysts.
Much of the large BOJ intervention proceeds from earlier this year has been held in deposit accounts by the BOJ and has not been invested into US treasuries. The BOJ has slowly metered out the funds at various auctions, helping to keep US rate low. In December last year, the deposit account held $126 bln but by the end of March, those deposit funds had risen to $180 bln. Those deposits fell to $138 bln by July and by August, they have dropped to $126 bln after presumably, strong demand by the Japanese officials was seen in the August treasury auctions. The fall in deposit levels back to December levels may slow Japanese buying of treasuries, but some seen "normal" deposit levels under $100 bln which may still see Japanese treasury purchases feed through over the next couple of months.
The pressure on USD/JPY has not lasted with USD/JPY at 109.75 currently as EUR/JPY rallies sharply to 133.45, breaking above the Ichimoku cloud base.
[15:40 EUR/USD: Short-squeeze Sees EUR/USD Pop Above 1.2150] San Francisco, September 16th: EUR/USD has popped higher to 1.2153 no what traders say is a short-squeeze as Europe goes home and prior to the Philly Fed data. The market is said to be very quiet with the Rosh Hashanah holidays keeping trading desks thin in NY. Japanese dealers also note that an upcoming long weekend in Japan should see trading thin into the weekend in Tokyo. Dealers say that the market was positioned short given the heavy tone in EUR/USD and EUR crosses, and hoping for a break of 1.2100 stops. But, traders all decided to square up and aiding the lift. Offers remain at 1.2160/65 but stops are poised above 1.2175.
Philly outlook quite low - but it won't mean much more than noise I think. Nice short-death spike though.
We're kinda in nomans-land right now, though. Probably have others perplexed a little too.
Perhaps nice medium-longs from 1.2160-ish lower areas ?
edit: ok, ok - I guess not ..
At least got a 4 pip small long farther down, although I was little early.
[16:11 USD/CNY: Snow - Bush Administration Pressuring China] San Francisco, September 16th: More pressure on widening CNY non-deliverable forwards is expected tonight after fresh comments from Treasury"s Snow that the Bush administration is pressuring China for economic cooperation. NDF"s are at their widest levels since April. A move by China ahead of the G7 meeting has been widely tipped with the meeting of G7 Finance ministers due on Oct. 1st in Washington. Policy moves by China are often made over holidays with the Chinese National Day holiday beginning Oct. 1st as well.
[16:05 EUR/USD: Jumps After Philly Fed Misses Mark] Boston, September 16: A sharp drop in the headline Philly Fed index sparked another round of short-covering, triggering stops above 1.2065/70. Follow-through is likely to be minimal as many of the sub-indexes rose on the month (employment, prices, new orders). 1.2190 is next resistance. USD/CHF tripped a few stops below 1.2690 before steadying.
We're kinda in nomans-land right now, though. Probably have others perplexed a little too.
Perhaps nice medium-longs from 1.2160-ish lower areas ?
edit: ok, ok - I guess not ..
At least got a 4 pip small long farther down, although I was little early.
[16:11 USD/CNY: Snow - Bush Administration Pressuring China] San Francisco, September 16th: More pressure on widening CNY non-deliverable forwards is expected tonight after fresh comments from Treasury"s Snow that the Bush administration is pressuring China for economic cooperation. NDF"s are at their widest levels since April. A move by China ahead of the G7 meeting has been widely tipped with the meeting of G7 Finance ministers due on Oct. 1st in Washington. Policy moves by China are often made over holidays with the Chinese National Day holiday beginning Oct. 1st as well.
[16:05 EUR/USD: Jumps After Philly Fed Misses Mark] Boston, September 16: A sharp drop in the headline Philly Fed index sparked another round of short-covering, triggering stops above 1.2065/70. Follow-through is likely to be minimal as many of the sub-indexes rose on the month (employment, prices, new orders). 1.2190 is next resistance. USD/CHF tripped a few stops below 1.2690 before steadying.
[16:18 USD/JPY: US Yield Spreads Trend Lower; Weighing On USD/JPY] San Francisco, September 16th: USD/JPY is probing the lows of today"s range again, at 109.57/63 with today"s data (including subdued CPI and weak Philly Fed data) sending US bond yields lower from 4.18% to 4.11% and dampening the yield appeal for the USD. Spreads against JGBs in the ten year part of the curve are at 262bp and the lowest since Sept. 9th when USD/JPY was at similar levels. USD spreads over JGBS have basically been in a range around 260-280 bp through July and August. The lower spread is pressuring USD/JPY, though USD/JPY remains in the narrower range of 109-110.50 and broader range of 108-112. Bids remain from importers and Japanese investors ahead of 109.00, while offers from exporters start at 110.20 and are seen staggered higher at 110.40/50 and 111.00, with sell orders between each of these levels as well.
[16:16 EUR/USD: US To Increase Troop Strength in Afghanistan] Boston, September 16: Washington is sending more troops to Afghanistan before the October elections, Fox News reports. With elections scheduled for Iraq in January, this will lead to speculation that more troops will be sent into Iraq as well. EUR/USD trades at 1.2175 after spiking to 1.2200 in a panic after the Philly Fed.
[16:16 EUR/USD TECHS: Short Trade Stopped Out At 1.2175 ] New York, September 16th.
A short trade was established today on the break of the 61.8% Fibo at 1.2135. A little concerned about the intraday bullish divergence, but there is a fair chance for a full retracement back to the Sep 8 low of 1.2030. Daily charts are bearish after Wednesday"s slow stoch reversal. We have an interim Fibo projection target at 1.2080 from which we will cover a bounce.
[16:16 EUR/USD: US To Increase Troop Strength in Afghanistan] Boston, September 16: Washington is sending more troops to Afghanistan before the October elections, Fox News reports. With elections scheduled for Iraq in January, this will lead to speculation that more troops will be sent into Iraq as well. EUR/USD trades at 1.2175 after spiking to 1.2200 in a panic after the Philly Fed.
[16:16 EUR/USD TECHS: Short Trade Stopped Out At 1.2175 ] New York, September 16th.
A short trade was established today on the break of the 61.8% Fibo at 1.2135. A little concerned about the intraday bullish divergence, but there is a fair chance for a full retracement back to the Sep 8 low of 1.2030. Daily charts are bearish after Wednesday"s slow stoch reversal. We have an interim Fibo projection target at 1.2080 from which we will cover a bounce.
Seems the range is being set now. I imagine it has been difficult with a larger timeframe than 1-minute or ticks even, but we've had a few numbers too. Scalping at least have kept me mostly out of trouble, although there have been several runs that I've not chased. I'm more of a "counter-trend" scalper - which many times mean I get in a little early. I have some trouble jumping on the runs, although I'm starting to risk them too.
I've only traded EuroFX for little less than 2 months, but I think that my reading the orderbook has improved, and I can spot some of the imminent runs. Without the open orderbook I would feel totally helpless, because my chart predictions are not that good.
My software helps a little, but need some adjustments to the different patterns in the orderbook when compared to the ES. Luckily I adopted the BeanShell fully Java-language scripting into my Java-application from the start. Actually my application was prototyped using the BeanShell and was just a collection of scripts at first.
Having the flexibility of loading and rapidly adjusting, experimenting with flexible scripts is really a great feature - with the backend into IB feeds the main platform. I've also got experimental FX streams, and it would be nice to incorporate them into patterns too. Especially the varying distance in price levels and variations into delays between spot and futures moves with orderbook changes - or even more important - the lack of orderbook changing.
I've only traded EuroFX for little less than 2 months, but I think that my reading the orderbook has improved, and I can spot some of the imminent runs. Without the open orderbook I would feel totally helpless, because my chart predictions are not that good.
My software helps a little, but need some adjustments to the different patterns in the orderbook when compared to the ES. Luckily I adopted the BeanShell fully Java-language scripting into my Java-application from the start. Actually my application was prototyped using the BeanShell and was just a collection of scripts at first.
Having the flexibility of loading and rapidly adjusting, experimenting with flexible scripts is really a great feature - with the backend into IB feeds the main platform. I've also got experimental FX streams, and it would be nice to incorporate them into patterns too. Especially the varying distance in price levels and variations into delays between spot and futures moves with orderbook changes - or even more important - the lack of orderbook changing.
How do you guys handle spikes? Do you scale out of your position, or do you watch for the momentum to die? (someone here does that, forgot who it was).
I find scaling out tricky, as it requires many mouse clicks. Especially when prices move fast, this will be hard.
Concerning momentum, you can watch the rate move, but that is not really objective and errors will soon occur. An indicator might help, on what timeframe should I use for example a momentum indicator, and at which indicator level would you exit?
Any advice as where to exit in the spike would be nice.
I find scaling out tricky, as it requires many mouse clicks. Especially when prices move fast, this will be hard.
Concerning momentum, you can watch the rate move, but that is not really objective and errors will soon occur. An indicator might help, on what timeframe should I use for example a momentum indicator, and at which indicator level would you exit?
Any advice as where to exit in the spike would be nice.
In my trading, scaling in and out is preplanned with limit orders.
I first define my set up and set up my stop(s) and target(s) which need to make sense.
Now, in the event of a spike netting a large profit quickly without hitting my longer term targets then it is an "all out" complete exit to capture the quick money. (you can always re-enter on the retrace if you are a real pro)
You requested input, but this is NOT the only way....
Michael B.
P.S. Another way is a trailing methodology to capture BE and then to ride the wave...
I first define my set up and set up my stop(s) and target(s) which need to make sense.
Now, in the event of a spike netting a large profit quickly without hitting my longer term targets then it is an "all out" complete exit to capture the quick money. (you can always re-enter on the retrace if you are a real pro
)You requested input, but this is NOT the only way....
Michael B.
P.S. Another way is a trailing methodology to capture BE and then to ride the wave...
I trade spikes as follows: I wait for the spike to run, and when it starts stalling or shaking at what I think is the extreme, I try to get a limit in well before the previous range and my exit is also quite a big level before the previous range. I.e I trade spikes quite cautiously - and if I see it gaining momentum against me I stop it immediately. Big runs where there is considerable follow-through I'm not so good at for the moment, and have stayed away from them.
Many times I wait for the spikes to settle, and rather trade the vacuum behind them where we often see good swings that are very good for scalping.
I do not try scaling when spikes occur, because I find it too risky. I do scaling when doing quick scalps - mostly scaling with 20% increments (20% of what I will risk total in a trade).
Quite impressive with the last run up to the old 1.2195 on the spot- but I'm still biased into believing we're ranging tightly with just added noise from the numbers.
[17:47 FX Options: EUR Vols Continue To Tumble] San Francisco, September 16th: Yesterday"s decline in EUR/USD took the spot price firmly back into the range that has contained dealings in recent weeks. As a result, EUR vols tumbled with the decline in the spot with vols breaking under support at 9.0% to trade to 8.6% today. This has vols trading at the lowest levels for the last year according to volatility rankings on page See 2378 . One month risk reversals trade at 0.1/0.2 around par, favoring EUR calls, compared to a mid rate of 0.1% yesterday, favoring EUR calls. EUR strikes are due Friday at 1.2222, 1.2230 and 1.2400. USD/CHF vols have followed the EUR vols lower, with one month dropping to 9.3% from 9.75% yesterday, and similarly on the volatility ranking, vols are at the lowest levels they have seen for the year. One month vols have only traded below this level 0.38% over the last year. GBP/USD vols are almost near the year"s lows as well, dropping to 7.65% today from 8.10% yesterday with the risk reversal at 0.1/0.5 favoring GBP puts, against levels of -0.25% yesterday for GBP puts.
[17:15 EUR/USD: US Yields Sinking Slowly in the West] Boston, September 16: EUR/USD is edging higher, back toward the 1.2200 panic-driven highs in the wake of the weaker than expected Philly Fed data. US yields continue to edge lower in early afternoon, with 10-year Treasuries now yielding 4.09%. They yield only 11 bp more than equivalent German bunds, not much of an incentive for European investors. 1.2220/25 is further resistance on rallies while 1.2155/60 now provides support on dips.
[17:02 US FED: Gramlich- Higher Oil Prices Will Weigh on Economy ] Boston, Sept 16--Speaking at an annual economic luncheon at the Kansas City Fed, Fed Governor Edward Gramlich (voter, moderate) discussed the challenges of assessing the impacts of oil price shocks. A good portion of his address was dedicated to the past and he said that while the question of how to respond to price shocks was better understood, the potential outcome remained the same. Price shocks result in some combination of higher inflation and higher unemployment which weighed on the economy. Gramlich said that higher oil prices will register on the US economy but suggested that the Fed would adjust rates higher. He indicated that one of the worst possible outcomes was for policymakers "to let inflation come loose from its moorings."
Many times I wait for the spikes to settle, and rather trade the vacuum behind them where we often see good swings that are very good for scalping.
I do not try scaling when spikes occur, because I find it too risky. I do scaling when doing quick scalps - mostly scaling with 20% increments (20% of what I will risk total in a trade).
Quite impressive with the last run up to the old 1.2195 on the spot- but I'm still biased into believing we're ranging tightly with just added noise from the numbers.
[17:47 FX Options: EUR Vols Continue To Tumble] San Francisco, September 16th: Yesterday"s decline in EUR/USD took the spot price firmly back into the range that has contained dealings in recent weeks. As a result, EUR vols tumbled with the decline in the spot with vols breaking under support at 9.0% to trade to 8.6% today. This has vols trading at the lowest levels for the last year according to volatility rankings on page See 2378 . One month risk reversals trade at 0.1/0.2 around par, favoring EUR calls, compared to a mid rate of 0.1% yesterday, favoring EUR calls. EUR strikes are due Friday at 1.2222, 1.2230 and 1.2400. USD/CHF vols have followed the EUR vols lower, with one month dropping to 9.3% from 9.75% yesterday, and similarly on the volatility ranking, vols are at the lowest levels they have seen for the year. One month vols have only traded below this level 0.38% over the last year. GBP/USD vols are almost near the year"s lows as well, dropping to 7.65% today from 8.10% yesterday with the risk reversal at 0.1/0.5 favoring GBP puts, against levels of -0.25% yesterday for GBP puts.
[17:15 EUR/USD: US Yields Sinking Slowly in the West] Boston, September 16: EUR/USD is edging higher, back toward the 1.2200 panic-driven highs in the wake of the weaker than expected Philly Fed data. US yields continue to edge lower in early afternoon, with 10-year Treasuries now yielding 4.09%. They yield only 11 bp more than equivalent German bunds, not much of an incentive for European investors. 1.2220/25 is further resistance on rallies while 1.2155/60 now provides support on dips.
[17:02 US FED: Gramlich- Higher Oil Prices Will Weigh on Economy ] Boston, Sept 16--Speaking at an annual economic luncheon at the Kansas City Fed, Fed Governor Edward Gramlich (voter, moderate) discussed the challenges of assessing the impacts of oil price shocks. A good portion of his address was dedicated to the past and he said that while the question of how to respond to price shocks was better understood, the potential outcome remained the same. Price shocks result in some combination of higher inflation and higher unemployment which weighed on the economy. Gramlich said that higher oil prices will register on the US economy but suggested that the Fed would adjust rates higher. He indicated that one of the worst possible outcomes was for policymakers "to let inflation come loose from its moorings."