Impending Cascade Down - USD/JPY

[Spectre2007]

I am not sure whether the pair could depreciate to that level. What kind of bad news are you expecting? 108 level is too far away from USDJPY's intrinsic value (well , the pair has mean reverted to 112 today - the intrinsic value) since Japan's economy has been in recession for long time, you must be expecting something from US economy...

Softer FOMC and also Treasury/Trump talking down the dollar.

 

[heavenskrow]

But you should have shorted at trendline resistance

 

[victorycountry]

Softer FOMC and also Treasury/Trump talking down the dollar.

Although I got your point, his opinion about dollar only has temporary impact. Unless he determines to manipulate the currency like chinese yuan, the pair will not likely to depreciate much at the current level. But who knows what could happen in the future? He imposes ban on immigrants but number of his wives are immigrants

 

[victorycountry]

Am not into technicals. But fundamentally I tend to agree that the path of lesser resistance is down in the short to medium term. But big picture remains that still now the US is the most attractive investment location.

Hi zzz. just wonder, hmmm, do you use some sort of PPP/inflation/interest model to work out the intrinsic value of currency pairs in hedge fund?

 

[Zzzz1]

No, I approach the market and valuations from a purely probabilistic approach. I look how much of political event risk/trade numbers/economic figures/and systemic risk is priced into markets and trade when my models detect seemingly mispriced risk.

Hi zzz. just wonder, hmmm, do you use some sort of PPP/inflation/interest model to work out the intrinsic value of currency pairs in hedge fund?

 

[victorycountry]

No, I approach the market and valuations from a purely probabilistic approach. I look how much of political event risk/trade numbers/economic figures/and systemic risk is priced into markets and trade when my models detect seemingly mispriced risk.

Thanks Zzz but I've not heard about the model you have just mentioned.
In academics, we only teach inflation/interest rate and PPP model to work out the intrinsic (aka. mean price) price since price reverts back to its fundamental price eventually.
Just wonder whether you could refer me to any book or article on the model you have just mentioned?

 

[Zzzz1]

There is no book or article on this. There is years of work experience as bank trader, independent trader, fund manager, and algorithmic trader. In summary, years of screen time and a strong passion to learn ever more about pricing dislocations.

Thanks Zzz but I've not heard about the model you have just mentioned.
In academics, we only teach inflation/interest rate and PPP model to work out the intrinsic (aka. mean price) price since price reverts back to its fundamental price eventually.
Just wonder whether you could refer me to any book or article on the model you have just mentioned?

 

[victorycountry]

There is no book or article on this. There is years of work experience as bank trader, independent trader, fund manager, and algorithmic trader. In summary, years of screen time and a strong passion to learn ever more about pricing dislocations.

Then do you trade when there is news like interest rate decisions? I find that unless the central bank actually changes the interest rate or when the central bank leaves the rate unchanged, I see some unpredictable price movement sometimes. Recently, Yen has shown that and I lost money because it had no trend at all. Or when eurusd was supposed to appreciate upon the decision, it depreciated instead - the news media was saying that Draghi made negative speech on it.

As with Brexit verdict at the supreme court, as expected, judges ruled that MP must be given a vote - and Pound was appreciating upto that moment; but when the judged said scottish MPs are excluded, Pound diverted its direction within a second, and depreciated substantially. Seriously, all I could think of was there was collusion among traders since the verdict was already made 15 minute earlier.

Or, do you only trade when there is no news?

 

[Zzzz1]

I do not trade binary event risk.

Then do you trade when there is news like interest rate decisions? I find that unless the central bank actually changes the interest rate or when the central bank leaves the rate unchanged, I see some unpredictable price movement sometimes. Recently, Yen has shown that and I lost money because it had no trend at all. Or when eurusd was supposed to appreciate upon the decision, it depreciated instead - the news media was saying that Draghi made negative speech on it.

As with Brexit verdict at the supreme court, as expected, judges ruled that MP must be given a vote - and Pound was appreciating upto that moment; but when the judged said scottish MPs are excluded, Pound diverted its direction within a second, and depreciated substantially. Seriously, all I could think of was there was collusion among traders since the verdict was already made 15 minute earlier.

Or, do you only trade when there is no news?

 

[Spectre2007]