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Bored while scalping so lets share some Ideas (m1 mostly) 19 replies

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$ For The week of 10/23-With Some Trade Ideas

  • #21
  • Oct 23, 2006 7:18am Oct 23, 2006 7:18am
Quote
Indeed, with other data this week including existing and new home sales, which should continue to reflect the slowing of the US housing market, the dollar may well take a hawkish Fed more negatively.
mmm, looks like the stagflationist mindset continues to reside in the heads of some analysts. Given the economic data, I struggle to see how analysts can come to this conclusion. Still, each analyst to their own.
"Always bet on black"
  • #22
  • Oct 23, 2006 7:50am Oct 23, 2006 7:50am
Can anyone explain why the USD strengthen today?

What I heard is that GREG IP on a WSJ article saying FED may even hike rates (not this week) in the coming months.

So why did USD strengthen on that?

Its a big "uncertainty" for the future and its a big certainty that we wont have a rate hike this wed.

I dont understand this Hawkishness....
  • #23
  • Oct 23, 2006 7:56am Oct 23, 2006 7:56am
http://www.fxstreet.com/news/forex-n...5-6596862545fa


i think the answer is there...MuslimEid holiday...
  • #24
  • Oct 23, 2006 8:10am Oct 23, 2006 8:10am
Whenever I see linear price action like we saw on the dollar crosses in europe, I am assuiming we have large player feeding in a major postion slowly (on the clock). You will primarily see these linear moves around the major data releases.
Profit is where readiness meets Opportunity
  • #25
  • Oct 23, 2006 8:18am Oct 23, 2006 8:18am
take your pick:

position squaring ahead of Fed, lower oil prices, lower liquidity due to Eid (Middle East USD sellers away from the market), interest rate differentials, expectations of a hawkish Fed, there were more USD buyers than sellers, balance is being restored to the market, Gregg Ipp provided the trigger for the rally, profit taking following the recent sharp run-up in EUR/USD.


...of course, nobody really knows...it's just one of those days.
"Always bet on black"
  • #26
  • Oct 23, 2006 9:09am Oct 23, 2006 9:09am
Sometimes These Trades Come Like Thieves in the Night
You've seen the big $ gains and if you're wondering why they happened-well here's my take:

Traders have bought into the hawkish statement on Wed. Don't take my word for it though; it was all over BB TV this morning. They interviewed a trader at the CME who was talking about this exact thing. Check back a couple of posts and read that BB article I linked to.

As someone who is trying to trade the fundamentals, what happened over night has the potential to be very frustrating. What I was hoping for was to see this kind of move in the Wed London session. Now that it's happened, I'm not sure what will be left to trade off of it-probably just a few crumbs. After the hawkish statement, the $ will probably gain another 15-25 pips, then start to go the other way as traders take profits from today, cover positions and get set for the GBP rate increase, which seems like a sure thing at this point.

Yeah i'm pissed that I missed this trade in my real account. On my demo, in which I was long the GBP from 8780, I set the position to close @ 8800 and to short the pound @ 8785. Big deal right? It isn't real money. However, there is something from this that I've just realized that I feel very strongly about so I want to share it.

I now fully understand the benefit of demo trading. Demo trading is like back when you were in little league, the school play or played in a band like I did (yeah i'm a former rock god...lololol). If you want to get really good you got to practice your ass off so that when that real game, performance or trade comes your READY!

Demo trading keeps your mind in the game. It keeps you focused and ready. You should never stop demo trading; there are always new things to learn and there's always room for improvement. None of us here are pros; we should be doing as many demo trades as possible, developing ideas and strategies, doing everything we can to better ourselves for when the real trades come.

Now, i'm not ready to do on my live account what I did with my demo last night (place orders and go to sleep), BUT, i'm practicing for when that day comes (and I know it will come). It's like back when I was a bass player; eventually I got good enough to be a pro because I practiced my ass off with the band I was in and by myself. I was totally devoted to it. I developed a love for it and probably to be a trader, you gotta have that kind of love too...

So yeah, in the real world i'm not short the GBP this A.M. That trade is gone. I don't believe we'll see much more movement from here till Wed, absent any significant fundamentals. Yeah, my demo account looks good, but what's much more important is the experience i got from this.
  • #27
  • Oct 23, 2006 9:24am Oct 23, 2006 9:24am
Quoting BurgerKing
Can anyone explain why the USD strengthen today?
im not exactly sure, but i was sure happy when i woke up this morning

the USD is just plain ole' strong right now. today's price action confirms this. im long for the simple fact that the dollar is strong for no apparent reason. when you see strength (or weakness) and noone seems to understand why, this is a good time to jump on board. this sounds reckless i know, but its really a solid strategy. to me, everything points to a weak dollar right now (fed is holding, inflation is coming down, housing is in the shitter), yet the dollar is strong. this screams BUY DOLLARS! its only after a few months that we will look back and say "ah, now i see why the dollar was strong". but unfortunately, in a few months it will be too late to make money from this move.
Relax and be happy.
  • #28
  • Edited 9:42am Oct 23, 2006 9:30am | Edited 9:42am
Quoting merlin
im not exactly sure, but i was sure happy when i woke up this morning

the USD is just plain ole' strong right now. today's price action confirms this. im long for the simple fact that the dollar is strong for no apparent reason. when you see strength (or weakness) and noone seems to understand why, this is a good time to jump on board. this sounds reckless i know, but its really a solid strategy. to me, everything points to a weak dollar right now (fed is holding, inflation is coming down, housing is in the shitter), yet the dollar is strong. this screams BUY DOLLARS! its only after a few months that we will look back and say "ah, now i see why the dollar was strong". but unfortunately, in a few months it will be too late to make money from this move.
Like I've posted, I really think it has to do with traders buyin into a hawkish statement and that many of these numbers point to higher inflation then the fed wants along with signs that growth may not be slowing as much as they want...

Ian Stannard, currency strategist at BNP Paribas

Mon, Oct 23 2006, 14:26 GMT
AFX News - "The dollar is likely to stay reasonably well supported in the first part of the week with the Fed expected to maintain a hawkish bias and tone in its statement on Wednesday, although rates are expected to remain on hold."
  • #29
  • Oct 23, 2006 10:09am Oct 23, 2006 10:09am
I read a report on Bloomberg early this morning that the sentiment may be shifting from a rate reduction in 2007 to a possible rate increase once or twice in the next year.

It said that inflation worries outweighed growth concerns and that that would encourage another look at the FOMC policy.

Meaning: Strong Dollar sentiment right now

DC
"There is MORE Happiness in giving than receiving"
  • #30
  • Oct 23, 2006 10:17am Oct 23, 2006 10:17am
Quoting NewstraderFX
Like I've posted, I really think it has to do with traders buyin into a hawkish statement and that many of these numbers point to higher inflation then the fed wants along with signs that growth may not be slowing as much as they want...
yeah i read this in your post, and its a pretty good reason for dollar strength. but if i sit down and list the arguments on paper it seems the case for dollar weakness overshadows the case for strength. esepecially housing and oil prices.
Relax and be happy.
  • #31
  • Oct 23, 2006 10:27am Oct 23, 2006 10:27am
Here's another interesting BB article:

http://www.bloomberg.com/apps/news?p...0sA&refer=home

I just don't know how much further the $ will gain off of this...it's alreday gained about 120 pips against the GBP, which has come back a bit...my thinking is that the hawkish statement has probably been nearly fully bought into...we could see the $ gain a bit more after the statement...then reverse as an actual BoE rate increase comes into play...

Temporing that is a certainty that I have about the core PCE number (which is not listed in the FF calender for Fri but is listed on other calenders). I have a strong suspicion that the Fed knows what this number is and that a hawkish statement indicates a higher reading then the consensus and a higher number then the Fed wants...

The Bond market also seems to be pricing in the data we've seen that indicates housing may have bottomed, inflation isn't slowing nearly enough for the Fed and possible rate increases in 2007...the core PCE will realy be crucial...
  • #32
  • Edited 5:40pm Oct 23, 2006 5:26pm | Edited 5:40pm
It's Important to Know When to Trade and When Not to Trade
Once the cat was out of the bag and the $ made it's big gain vs the GBP on suspicion of a hawkish statement Wed, there was nothing left to do. No fundamental announcements to move the markets means no trades in my opinion. You can't force this; if there's nothing to trade just accept that and wait for the right time-which today obviously wasn't.

We do have some numbers coming out of NZ tomorrow. The rate increase that had been expected (and priced in) by traders has taken quite a few hits. This link from BB is interesting:

http://bloomberg.com/apps/news?pid=2...knc&refer=asia

If this number comes out lower then consensus, we could see a big sell off triggered in the NZD, since a rate increase has been priced into the currency to the tune of a 6.5% appreciation vs. the $ in the past 3 months. One thing to definately be aware of is that the gov't of NZ would love to see the currency devalued, as this would be a boost to exports.
  • #33
  • Oct 23, 2006 8:26pm Oct 23, 2006 8:26pm
So, the dollar is up on hopes of a hawkish fed huh? Then why in the hell is the Dow Jones up 115 points?
  • #34
  • Edited 5:53am Oct 24, 2006 3:45am | Edited 5:53am
August 8
Quote
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent. Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.


September 20
Quote
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent. The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market.

Readings on core inflation have been elevated, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.


From the above FOMC Statements, are the highlighted paragraphs the ones that indictate Hawkishness? And I should look at such on the forthcoming FOMC as sign to buy USD vs GBP, EUR?

Where can I get the text of the statement when it is released? Do I get it here? http://www.federalreserve.gov/fomc/
  • #35
  • Oct 24, 2006 8:07am Oct 24, 2006 8:07am
Quoting BurgerKing
August 8



September 20



From the above FOMC Statements, are the highlighted paragraphs the ones that indictate Hawkishness? And I should look at such on the forthcoming FOMC as sign to buy USD vs GBP, EUR?

Where can I get the text of the statement when it is released? Do I get it here? http://www.federalreserve.gov/fomc/
Personally, I think this trade has already happened. Traders have already bought into a hawkish statement from the FED. I think there is more of a potential for a reversal-traders got short in the GBP from 8800-90, 80 etc so i think that after the statement some profits could be taken.

I also think that a hawkish statement indicates a somewhat higher reading in the core PCE (the Fed's most important #)-if the $ does get sold off I think there's a good possibility for renewed $ buying so look for that...
  • #36
  • Oct 24, 2006 8:13am Oct 24, 2006 8:13am
Quoting danegg7
So, the dollar is up on hopes of a hawkish fed huh? Then why in the hell is the Dow Jones up 115 points?
It's gone up on earnings and lower energy prices. I'm not sure how much a hawkish statement affects equities-if you notice bond yeilds are up along with the market, which doesn't happen that often. Plus, the rate isn't going up for a while and actually it might not at all if some pass-thru from lower energy prices is eventually seen in core prices. That's yet to be determined...

All in all, the Fed would probably love to do nothing but continue to talk tough...there's tremendous debate in the Fed as to high much the 17 prior rate increases will be affecting things-this kind of situation has never really existed before so it's unknown territory...
  • #37
  • Oct 24, 2006 9:01am Oct 24, 2006 9:01am
Quoting NewstraderFX
Personally, I think this trade has already happened. Traders have already bought into a hawkish statement from the FED. I think there is more of a potential for a reversal-traders got short in the GBP from 8800-90, 80 etc so i think that after the statement some profits could be taken.

I also think that a hawkish statement indicates a somewhat higher reading in the core PCE (the Fed's most important #)-if the $ does get sold off I think there's a good possibility for renewed $ buying so look for that...
SO, if the statement does not live up to expectation (not more hawkish than the last two), it could spell USD sell off?

So what traders were doing is, buying the hawkishness and not the fact (of no rate hike)
I am very confused with all this hawkishness....

Hmmm...

BTW. There is another Double No Touch option for USDJPY @ 120 and 118. 2 weeks ago when JPY should have punctured through 120 with all the Nkorea news and USD bullishness, it was attributed to option protection. SHOULD USDJPY is nearing 120, and the FOMC statement goes hawkish, will this option prevent USD from rallying? Surely this option protectors can short the USD just to prevent USDJPY from going beyond 120.

THIS is giving me a tough nut trade to crack! I wonder if I should stay away?

HMMM... there are Durable Goods and GDP to trade.
  • #38
  • Oct 24, 2006 9:41am Oct 24, 2006 9:41am
As I said-there is a good possibility for a $ sell off due to profit taking and if that happens, another GBP shorting opportunity will occur going into Friday's numbers...

and yes-they bought $'s on a rumored hawkish statement-and the numbers that show infla is not fully under control...
  • #39
  • Oct 24, 2006 10:05am Oct 24, 2006 10:05am
News, what ur opinion on the current support level price tried to test, ie 8670-80 level.. looks pretty strong, personally im biased short on cable but i really dont want to sit thru one of these god awful retracements. I feel price might just bounce hard off this level and then head back down.. any ideas?
  • #40
  • Oct 24, 2006 10:13am Oct 24, 2006 10:13am
ive closed my short pos for small profit and reversed to long based on pos macd div on 1hr and TL break looks like a good temporary support zone for a small retrace back up eyeing 8800 as resistance should price make it that far... could be wrong here but have decided to pull triger based on these signals. let see what happens.
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