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Daily GBP/JPY analysis

  • #5,681
  • Jun 7, 2007 4:08pm Jun 7, 2007 4:08pm
Quoting BaasHarm!
Not to trade is a trading decision too!
Don't try too hard to find reasons for market movements, just stick with what the charts tell you. Today isn't exceptional for this cross. The past 2 months of low volatility were more exceptional. Sometimes it helps to zoom out of the M15/H1 charts and check the daily and monthly for a better perspective. Check the daily charts and you notice that last year this puppy used to have very regular corrections of 400-600 pips in 3-5 days, just to resume it's trend.
What has changed since than?
The interest rate differential is bigger than ever, japanese economy is still struggling to shrug off deflation (or BOJ/MOF is still manipulation the hell out of their inflation/consumption data : ) and the BOE is struggling with historic high inflation. So not much change on the fundamentals with last year.
What has changed is that the february correction (result of jap end of year repatriation, tankan report, japanese rate hike and soaring global equities partially funded with cheap yen) reminded us that the carry trade is not a free ride to unlimited cash and with the historic highs in global markets (EUR,AUD,NZD, GBP, Gold, stock markets) the carry is attracting loads of attention and markets get nervous. So expect more volatility, but the main trend is up up up. Where it ends 248, 260 , 286.... only god knows and no doubt about it, it will be voilent. But I only know that I'm a buyer above 226 for sure and perhaps even down to 212 as long as the IRD remains this sweet. Shorting this monster is just suicide, at least for me.

Good luck to you all it'll be interesting to watch the coming days and I hope to build some nice longs to hold for dear life.

Thanks for sharing your opinion, which is mine also. I am just not patient enough to sit and wait for the present down-move to unfold and then entering long. So I am on the short side, at least for tomorrow. When the long term trend (which is definetely UP UP UP ) clicks in again I will be long as well and then with a longer perspective, as the runs last longer.
Rgds
t.
always expect the unexpected!
  • #5,682
  • Jun 7, 2007 4:15pm Jun 7, 2007 4:15pm
Quoting cesarnc
Now that's bold... What SL?
pending. it is pretty bold isn't it.
BAM BAM BOOM! -bravado
  • #5,683
  • Jun 7, 2007 4:17pm Jun 7, 2007 4:17pm
Quoting bravado
short gj @ 239.23
Have a few shorts loaded myself, avg price is 239.23 also. Most are in profit already, will probably tp on those soon and wait.
  • #5,684
  • Jun 7, 2007 4:23pm Jun 7, 2007 4:23pm
Quoting dedhed
Have a few shorts loaded myself, avg price is 239.23 also. Most are in profit already, will probably tp on those soon and wait.
Wait... there's one damn thing I have to incorporate to my trades...
  • #5,685
  • Jun 7, 2007 4:33pm Jun 7, 2007 4:33pm
so what do we think will happen when japan opens ?
  • #5,686
  • Jun 7, 2007 4:38pm Jun 7, 2007 4:38pm
Quoting dedhed
Have a few shorts loaded myself, avg price is 239.23 also. Most are in profit already, will probably tp on those soon and wait.
risking confirmation for 50+ extra pips.
pretty early entry.

time will tell.
BAM BAM BOOM! -bravado
  • #5,687
  • Jun 7, 2007 4:46pm Jun 7, 2007 4:46pm
Quoting dirtymonkey79
so what do we think will happen when japan opens ?
if you have no clue:

limit buy @ 239.90
limit sell @ 238.70

just an idea for you.
BAM BAM BOOM! -bravado
  • #5,688
  • Jun 7, 2007 4:52pm Jun 7, 2007 4:52pm
Quoting cesarnc
I would agree, was the market carry trades / swap only. Although EUR had its rate raised, EJ went down... It is this 10yr treasury hitting the market above 5% as today...

We have to bear in mind that interest rates are among the biggest market movers here and the 10yr above 5% is signaling a possible hike from FED. And we also know that it is not about FED raising or not. It is about what the market feels about it. And right now, USD bullish is likely to become a reality in the near term.

How would this affect carries? Well, goodbye swaps, market is going after 10yr, like shown today....
Oh I agree, the market is much more than interest rates. However, if you look at larger timeframes, it is remarkable how currencies follow interest rate differentials. But you won't see that trading of the H1 charts .
Short term a possible FED hike (treasury yields over 5%) is bad for stocks and has a negative effect on carries (or the part that is invested in those stocks). However, when the expectation of the hike becomes fact, some of those funds released from the stock markets will go into treasuries, so still yen short vs dollar. The carry trade isn't just about stocks, it is borrowing yens to buy anything that yields more than the interest paid.
  • #5,689
  • Jun 7, 2007 5:06pm Jun 7, 2007 5:06pm
Quoting BaasHarm!
Oh I agree, the market is much more than interest rates. However, if you look at larger timeframes, it is remarkable how currencies follow interest rate differentials. But you won't see that trading of the H1 charts .
Short term a possible FED hike (treasury yields over 5%) is bad for stocks and has a negative effect on carries (or the part that is invested in those stocks). However, when the expectation of the hike becomes fact, some of those funds released from the stock markets will go into treasuries, so still yen short vs dollar. The carry trade isn't just about stocks, it is borrowing yens to buy anything that yields more than the interest paid.
In that sense, it wouldn't be wierd seeing GJ and EJ going down (via strong USD longs) while UJ goes up... Actually, UJ is not loosing too much during those harsh days in NYC (it's only 100&some pips off its highs), 120/121 is a hell of a hight level for UJ..... Now GJ is now 300 pips off its highs and EJ 170...

This 10yr > 5% reality is a line in the sand here, as it appears
  • #5,690
  • Jun 7, 2007 5:07pm Jun 7, 2007 5:07pm
Quoting cesarnc
In that sense, it wouldn't be wierd seeing GJ and EJ going down (via strong USD longs) while UJ goes up... Actually, UJ is not loosing too much during those harsh days in NYC (it's only 100&some pips off its highs), 120/121 is a hell of a hight level for UJ..... Now GJ is now 300 pips off its highs and EJ 170...

This 10yr > 5% reality is a line in the sand here, as it appears
And in THAT SENSE I may have made a stupid mistake closing my UJ longs
  • #5,691
  • Jun 7, 2007 5:17pm Jun 7, 2007 5:17pm
From Bloomberg....

The 10-year Treasury yield rose 17 basis points, or 0.17 percentage point, to 5.13 percent at 5:19 p.m. in New York, the highest since July 19, according to bond broker Cantor Fitzgerald LP. The increase is the biggest since an identical gain on May 7, 2004. Yields move inversely to bond prices. The price of 4 1/2 percent notes maturing in May 2017 fell 1 9/32, or $12.81 per $1,000 face amount, to 95 3/32.


About $529 billion changed hands through ICAP Plc, the world's largest broker of trades between banks, as of 4 p.m. New York time, more than double the three-month daily average of $262 billion. The total was the largest since $588 billion on Feb. 28. (note: the Chinese tumble...)
Stocks also tumbled with the Standard & Poor's 500 Index declining 1.8 percent.




Full story.... (creepy story, btw): http://www.bloomberg.com/apps/news?p...KGE&refer=home
  • #5,692
  • Jun 7, 2007 5:35pm Jun 7, 2007 5:35pm
cesarnc,

hi, this is my first post. I've been following this forum for a while and would like to get your input in something that i've notice... u seem to have a far more than average understanding of this GJ monster.

I'll make it quick...
may 10 BOE raises rates by .25 and cable weakens on gbpjpy and makes a low the next day
then may 26 the minutes come out and show a 9-0 decision and GJ soars
makes a high but not a fresh high
today... they "disappoint" by not doing anything, no hawkish tone.
here's the question...
would the target be somewhere in between the may10 decision "low" and the may26 minutes "high"? isn't this "correcting" because the market priced in a .50 hike?

looking forward to getting your thoughts on this..
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  • #5,693
  • Jun 7, 2007 5:50pm Jun 7, 2007 5:50pm
Quoting mcv-exchange
cesarnc,

hi, this is my first post. I've been following this forum for a while and would like to get your input in something that i've notice... u seem to have a far more than average understanding of this GJ monster.

I'll make it quick...
may 10 BOE raises rates by .25 and cable weakens on gbpjpy and makes a low the next day
then may 26 the minutes come out and show a 9-0 decision and GJ soars
makes a high but not a fresh high
today... they "disappoint" by not doing anything, no hawkish tone.
here's the question...
would the target be somewhere in between the may10 decision "low" and the may26 minutes "high"? isn't this "correcting" because the market priced in a .50 hike?

looking forward to getting your thoughts on this..
Once again I insist... It was the 10yr above 5% that brought the witches to the market today. 10yr > 5% is translated to USD bullish / stock & carry bearish.

I've just read something that made me feel better by "not getting" what's next... Different analysts from Citigroup Inc advised both Buy and Sell stocks today (check on Bloomberg.com)

I prefer going through asia and NYC tomorrow trading by the stock market only. It goes up, I go long. It goes down, I go short...
  • #5,694
  • Jun 7, 2007 5:50pm Jun 7, 2007 5:50pm
Area offers some great support 2 previous highs, 3 weeks of congestion, daily s3, weekly s2, 261 fib from previous move up and a trend line on my chart. Loading up on my longs.
  • #5,695
  • Jun 7, 2007 5:51pm Jun 7, 2007 5:51pm
Quoting cesarnc
From Bloomberg....

The 10-year Treasury yield rose 17 basis points, or 0.17 percentage point, to 5.13 percent at 5:19 p.m. in New York, the highest since July 19, according to bond broker Cantor Fitzgerald LP. The increase is the biggest since an identical gain on May 7, 2004. Yields move inversely to bond prices. The price of 4 1/2 percent notes maturing in May 2017 fell 1 9/32, or $12.81 per $1,000 face amount, to 95 3/32.


About $529 billion changed hands through ICAP Plc, the world's largest broker of trades between banks, as of 4 p.m. New York time, more than double the three-month daily average of $262 billion. The total was the largest since $588 billion on Feb. 28. (note: the Chinese tumble...)
Stocks also tumbled with the Standard & Poor's 500 Index declining 1.8 percent.




Full story.... (creepy story, btw): http://www.bloomberg.com/apps/news?p...KGE&refer=home
I believe that this surge in interest rates in the U.S. is a temporary knee jerk reaction to the global rise in rates, i.e. the euro and the kiwi. The fed will not raise rates this year because the housing market is very weak. The National Association of Realtors just lowered their forecast for existing home sales in 2007, people are lowering the price of their homes by $20k-$30k at a time and they are still not selling, foreclosures are at 15 year highs in some locations and the recent rise in 30 year mortgage rates are killing an already very slow market. A raise in rates now by the fed would throw the economy into a full blown recession, something Bernanke would never want on his resume. The steepening of the yield curve is actually a normalization of the yield curve and is a healthy thing for the stock market.
  • #5,696
  • Jun 7, 2007 5:58pm Jun 7, 2007 5:58pm
Quoting mcv-exchange
cesarnc,

hi, this is my first post. I've been following this forum for a while and would like to get your input in something that i've notice... u seem to have a far more than average understanding of this GJ monster.

I'll make it quick...
may 10 BOE raises rates by .25 and cable weakens on gbpjpy and makes a low the next day
then may 26 the minutes come out and show a 9-0 decision and GJ soars
makes a high but not a fresh high
today... they "disappoint" by not doing anything, no hawkish tone.
here's the question...
would the target be somewhere in between the may10 decision "low" and the may26 minutes "high"? isn't this "correcting" because the market priced in a .50 hike?

looking forward to getting your thoughts on this..
i know this question was not directed at me.

but as a true expert and a pro, AKA mastertrader (i mastertrade EVERYDAY), i feel obligated to answer your question.

damn i just re read your question and i don't even know what you are asking.

well i know hawkish means stronger currency for that country and..and rate talk moves the market but i don't know what BOE is.
BAM BAM BOOM! -bravado
  • #5,697
  • Jun 7, 2007 6:18pm Jun 7, 2007 6:18pm
Bravado,

I'm truly not trying to start anything, but why did u even post if u didn't understand the question....
U say "mastertrader...mastertrade everyday" but then u don't know what the BOE is...?
I don't get it... u must be joking, no?
  • #5,698
  • Jun 7, 2007 6:21pm Jun 7, 2007 6:21pm
Quoting mcv-exchange
Bravado,

I'm truly not trying to start anything, but why did u even post if u didn't understand the question....
U say "mastertrader...mastertrade everyday" but then u don't know what the BOE is...?
I don't get it... u must be joking, no?
oh-oh
  • #5,699
  • Jun 7, 2007 6:34pm Jun 7, 2007 6:34pm
Quoting cesarnc
Once again I insist... It was the 10yr above 5% that brought the witches to the market today. 10yr > 5% is translated to USD bullish / stock & carry bearish.

I've just read something that made me feel better by "not getting" what's next... Different analysts from Citigroup Inc advised both Buy and Sell stocks today (check on Bloomberg.com)

I prefer going through asia and NYC tomorrow trading by the stock market only. It goes up, I go long. It goes down, I go short...
thanks, that is something i did not know "about the 10yr > 5%".... now is that the 10yr "treasury yield" I'm not too much of a fundamentalist, but i'm trying to learn more about the fundamentals of trading.
  • #5,700
  • Jun 7, 2007 6:39pm Jun 7, 2007 6:39pm
Quoting mcv-exchange
Bravado,

I'm truly not trying to start anything, but why did u even post if u didn't understand the question....
U say "mastertrader...mastertrade everyday" but then u don't know what the BOE is...?
I don't get it... u must be joking, no?
never mind, just figured it out. BOE=buy out everything (gbpjpy).

you are no help.
BAM BAM BOOM! -bravado
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