Thursday, 31 May 2012

If they do not want to do stimulus, what else can they do?


China state run agency came out to state that China do not need to do another round of stimulus. Since the issue loom on whether China's economy will hit either a soft or hard landing, what else can they do to chalk up their battered economy?

Found an article that show briefly that Chinese Yuan/ Renminbi is falling.
Chinese yuan is falling

After looking at the chart, found the answer to the question? Something for you guys to think about. China is a big deal. Any movement by them will move the global economy indirectly. Remember, they are also the largest trading partner of Australia too.



Wednesday, 30 May 2012

Updates: Possible short term corrective move for Aussie?


Earlier we actually shared that AUD/USD possible showing head and should formation. Zooming in the short term 30 min chart, there is a nice channel with impulse 5 waves in progress. Currently the price has reach wave 3. There is a possibility that wave 4 is in progress now as London is offline soon. Below is the chart

Perhaps by this tomorrow or Friday we shall see the price reaching wave 5 to mark the end of the impulse 5 waves. If the wave 5 terminal price never penetrate the previous low at 0.96898, then the possible head and shoulder formation is still in play.



Possible short term corrective move for Aussie?


As we have seen through the whole of the month of May, only one word to describe it; HeLL. However, no doubt the sentiment now is very bad, most of the risky currencies have beaten down so badly, that only safe haven like US$dollar is the only currency outperform most out there. However, we are approaching June, and traditionally June is the month that many events will shape the second half of the year.

One pair that were identified with potential of a relief correction is AUD USD. Anyway picture tell a thousand words. Below is the possible Head and shoulder formation possibly forming this week.

Possible Head and Shoulder for AUD/USD (1hr Chart)
As i had identified in late April of the possible downfall for Cable (GBP/USD), this AUD/USD is identified to do the opposite after a very bad month of May. Of course there is still high possiblity that it will move lower to the previous low at 0.96898. However, judging from the price action in equities this week, a possible short term relief maybe on the way.

Perhaps fueled again by QE? Nevertheless, if this Head and Shoulder formation is true, this pair may recover back to $1.00 again by short covering or temporary correction before moving lower in the mid and long term forecast.



Wednesday, 25 April 2012

Cable hit new high @ 1.61810

As usual from FED Chairman's statement and Q&A session, 'more easing' is the option on table. After these powerful words, market went crazy and short USD$ against most major, and stock market went higher. As the session is over, we draw to a conclusion.

  1. 'More easing is an option on table' is the virus that keep market going higher
  2. This virus affect only USD$ from progressing
  3. This illusion is the real motivation for the risk to keep going up
  4. People are willing to risk their money on the part that the base currency country is technically in RECCESSION
  5. These all means that data are no longer important when the real virus is "EASING"
So, where do i stand from here after his wonderful speech, i guess i still stand by academic. If a country is in technical recession, i believe those people for make monetary policies will not dare to do more "robust' action like hiking rates soon. Hence, no reason to be happy either if trading the cables.

Your thoughts? I guess time to rethink your bias.



Cable vs GDP (MtM)


Here is a chart comparing the movement of the cable and the GDP% (MtM). Please note that the price data for GBP/USD is the closing price of every first day of the month. Also since april has not ended, we removed the new april GDP for a better comparison between both up till March.

Spot any trend forming if we incorporate today's GDP% (MtM) data into the chart?



UK is officially in Technical Recession

Dear all,

Its official peeps, the latest GDP for UK COMES IN AT -0.2% MtM VS 0.1% MtM EXPECTED. 0.0% for YtY. Which means that now UK is officially in technical recession.

As i have wrote in the article 2 days ago regarding on the pound, it seems like this official data will dampen all the cable bulls out there. As i stated in that article, sentiment is at the extreme end, so caution is needed. Now we shall see how the cable perform till the next event risk coming up later; FOMC decision and statement by FED chairman.



Monday, 23 April 2012


Yes. Its true. Spain is in recession

The Banco de EspaƱa has come out with its first estimate for Q1 2012 GDP, and it has the nation's economy shrinking 0.4% on a sequential basis.

Read more: Spain in Recession
So where will we go from here? As Spain stock index is still getting hammered, together with major index in Europe and United States, all we can say is that this may be the start of another "Debt Problem".
One thing for sure, Euro will be hammered hard. Then i wonder the "invisible support of Euro" by some sovereign fund at the 1.30 level can still hold.

Sunday, 22 April 2012

Pound on the pounce upward?

To whom that are trading the cable,

After last week of good news from the UK, especially mid week BoE (Bank of England) minutes, stating the less dovish and more hawkish stance, cable had rallied significantly pass the 1.6000 level and end the week at 1.61176. Observing from the strong bullish move upward, one could tell you that the next thing traders will look at will be an intention of hiking rates in near future by the BoE, and this will lead to an increase interest in the cable as the economy stablise.

However, i bet to differ on that.


Very simple reasons. If they risk hiking rates so early with their neighbour now facing long term debt problem that will cost alot of money and time to fix, plus a sign of slowdown coming up in the Asia region, deleveraging is the main theme for most Central Banks who are looking to reduce or stop their easing circle, etc. Yes, i can name you a number of reasons and arguments that support the idea of cable may not be charging higher and outperform the rest. But i got one reason that say it all; Sentiment.

Yes, most of you traders may think that cable will rise after last week performance. However, when i take a look on the sentiment for cable, i got a shock to see that there is over 80% of the crowd shorting the cable, which shows an extreme activities which will cause the currency pair to move in one desired zone; UPWARD.

Puzzled? Wondering why suddenly now my stance shifted to say cable to continue be moving upward? Past experience has shown clearly that when sentiment reaches the extreme, it can only mean one possible outcome; REVERSAL may be coming soon.

I know why many will short the cable. Its simple, because most of you traders think that the cable is overbought. But i tell you, cable will move higher to a technical point and price zone which may start to kick most of the short out with a short stop, and support the stand for a reversal when most short are stop.

Believe it or not? However, this is our view and its not a prediction of the future. Since its a view, take it as a reference but not a guide in your trading.

Good luck to cable traders!



Dollar bullish or bearish? Your take?


Here is an article debating whether USD is undervalued and the view about the dollar value now.
Makes you think twice whether to short USD against G-10 currencies in future,
Bullish, Bearish Economy Forecasters Agree on Strong Dollar



Sunday, 5 February 2012

How does dealing desk works?


Have you all wonder how a dealing desk works? Below is a clip to illustrate

                                          (by FXCM)


Tuesday, 3 January 2012

Today's recommended reading - Commodity Currencies

Let me share with you all an interesting article from the Quarterly IMF Magazine. This article is written back in 2003, however i still find the arguments in it is worth for us to learn.

Commodity Currencies