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Auslanco - GBP/JPY and GBP/USD (newstrade)

  • #76,941
  • Apr 30, 2008 12:00pm Apr 30, 2008 12:00pm
Quoting Clouds
Last time it was in the 80s , it brought Japan into a decade long depression, with intervention followed, to fix their intervention prior. You think they wouldn't do that again.
I think they have learned a lesson from it. Thus, BOJ must prevent it to happen again .. imo.
  • #76,942
  • Apr 30, 2008 12:00pm Apr 30, 2008 12:00pm
Quoting DutchTrader
UJ is overvalued, that's for damn sure. 96 at least.
with intervention BOJ ??
  • #76,943
  • Apr 30, 2008 12:03pm Apr 30, 2008 12:03pm
again repeat story 1992 ??
  • #76,944
  • Apr 30, 2008 12:06pm Apr 30, 2008 12:06pm
let see
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  • #76,945
  • Apr 30, 2008 12:08pm Apr 30, 2008 12:08pm
Quoting DutchTrader
UJ is overvalued, that's for damn sure. 96 at least.
Agreed. . .
  • #76,946
  • Apr 30, 2008 12:18pm Apr 30, 2008 12:18pm
According to a recent research by hardvard economists, The yen would have to strengthen to 73/$ to reach its inflation adjustesd value since 1995, and GY may go to 2000 low, near 145.

Thats HUGE, so its Up to YOU
  • #76,947
  • Apr 30, 2008 12:18pm Apr 30, 2008 12:18pm
i think price will move upside upto 209 and then may be free fall after interest rates statement..
  • #76,948
  • Apr 30, 2008 12:18pm Apr 30, 2008 12:18pm
Interesting quick read. . .



. . .However, I believe the most significant element of the FOMC statement will be the Fed's updated assessment of the economy and their outlook, both of which are very likely to have deteriorated further since the March 18 statement, given ongoing increases in energy and food prices, rising unemployment, falling home values, and restricted credit. In particular, be alert should the Fed explicitly alter its expectation for an improvement in the economy in the second half of 2008.

Over the past two weeks, markets have moved to "price-out" further Fed rate cuts and have begun to build in expectations for rate hikes as early as late 2008. US Treasury yields and the USD have both moved higher over this time period, and stocks have generally recovered as well on the basis that such a Fed shift suggests the downturn is likely to be mild and relatively brief. Should the Fed deliver the market's preferred scenario of "one more rate cut and then a pause," there should not be significant further price adjustments, as current rates largely reflect this outcome.
On the other hand, should the FOMC deliver a bleaker economic assessment and outlook, as I expect, there is significant scope for prices to re-adjust to the prospect of a deeper and more protracted US downturn necessitating further easing. Treasury yields would plunge across the curve, likely taking the USD sharply lower. US stocks are also likely to react negatively, even though they may be initially buoyed by the prospect of an ongoing Fed commitment to cut rates further if necessary.

I expect a relatively volatile reaction immediately following the Fed announcement with two likely phases of price action. The first phase would involve the market reaction to any rate cut and language signaling a pause in easing. If the Fed cuts 25 bps, the USD would first dip, but then rebound quickly if language indicating a pause is included. Should the Fed hold rates steady, the USD would most likely move directly higher, especially if Pause language is included. The second phase would be the reaction based on the economic assessment, which I expect to dominate at the end of the day. If the outlook is downgraded as I expect, any USD positive impact from a pause is likely to be short-lived as markets move to "price back in" expectations for additional easing amid a deeper US downturn.

To complicate matters further, the stock market reaction is likely to lead to uneven movements for the dollar against other currencies. Again, if the Fed's outlook is downgraded further, I would ultimately expect stocks to turn south on the weaker US outlook and this will tend to see heavier selling of JPY-crosses. USD/JPY is most likely to bear the brunt of any USD selling, while EUR/USD and other pairs (e.g. GBP/USD, AUD/USD, NZD/USD) would likely see any gains (from USD selling) pared and possibly reversed as JPY-cross selling overwhelms and dominates.

Readers should note that my outlook is largely at odds with broader market expectations for a relatively upbeat, end-of-easing, the worst-is-over type of FOMC statement. But because of that disparity, the reaction is likely to be more volatile than many expect, which itself will fuel additional volatility. If the FOMC outlook is downgraded, I will be looking to sell rallies in USD/JPY (30-80 points above pre-Fed announcement levels) and to buy dips in EUR/USD after similar USD gains. Also, I will be looking to sell JPY-crosses if US stocks turn lower on a weaker Fed economic outlook.
  • #76,949
  • Apr 30, 2008 12:20pm Apr 30, 2008 12:20pm
Thrown in a small short with large SL - don't normally trade news, but just incase this sinks without lookin back...will add lots as we go if I'm right...Lets see what the beast does...Good Luck everyone
  • #76,950
  • Apr 30, 2008 12:22pm Apr 30, 2008 12:22pm
Quoting shakesfx
Thrown in a small short with large SL - don't normally trade news, but just incase this sinks without lookin back...will add lots as we go if I'm right...Lets see what the beast does...Good Luck everyone
LOL, just couldn't resist it ichy fingers =
  • #76,951
  • Apr 30, 2008 12:26pm Apr 30, 2008 12:26pm
Q, you have a link to this article. I'd like to know who the author is. He made one point very clear and that is trading during FOMC can be extremely confusing as there are many outcomes and a lot of different interpretations of these outcomes.
  • #76,952
  • Apr 30, 2008 12:27pm Apr 30, 2008 12:27pm
Quoting $teve
Q, you have a link to this article. I'd like to know who the author is. He made one point very clear and that is trading during FOMC can be extremely confusing as there are many outcomes and a lot of different interpretations of these outcomes.
http://www.forex.com/08-04-29-upcoming-fomc.html
  • #76,953
  • Apr 30, 2008 12:27pm Apr 30, 2008 12:27pm
Quoting shakesfx
Thrown in a small short with large SL - don't normally trade news, but just incase this sinks without lookin back...will add lots as we go if I'm right...Lets see what the beast does...Good Luck everyone
You're thrown in and I just closed it
Let's see what happen after the news .. hope it will work your way. I am still bias short ( But a bit scare of the Fed's outcome )
  • #76,954
  • Apr 30, 2008 12:28pm Apr 30, 2008 12:28pm
Quoting quecee5
LOL, just couldn't resist it ichy fingers =
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  • #76,955
  • Apr 30, 2008 12:28pm Apr 30, 2008 12:28pm
Quoting quecee5
LOL, just couldn't resist it ichy fingers =
Definately, Couldn't help myself

Thing is, when the beast moves, I think we're looking at 1000 pips either way over the next 1-2 days...It's only a small trade, just to keep the itchy fingers happy
  • #76,956
  • Apr 30, 2008 12:29pm Apr 30, 2008 12:29pm
Quoting $teve
Q, you have a link to this article. I'd like to know who the author is. He made one point very clear and that is trading during FOMC can be extremely confusing as there are many outcomes and a lot of different interpretations of these outcomes.

He sure cleared up one thing up for me, why price goes down, then immediately reveres to head back down in the end. . .
  • #76,957
  • Apr 30, 2008 12:30pm Apr 30, 2008 12:30pm
Quoting quecee5
Interesting quick read. . .



. . .However, I believe the most significant element of the FOMC statement will be the Fed's updated assessment of the economy and their outlook, both of which are very likely to have deteriorated further since the March 18 statement, given ongoing increases in energy and food prices, rising unemployment, falling home values, and restricted credit. In particular, be alert should the Fed explicitly alter its expectation for an improvement in the economy in the second half of 2008.

Over the past two weeks, markets have moved to "price-out" further Fed rate cuts and have begun to build in expectations for rate hikes as early as late 2008. US Treasury yields and the USD have both moved higher over this time period, and stocks have generally recovered as well on the basis that such a Fed shift suggests the downturn is likely to be mild and relatively brief. Should the Fed deliver the market's preferred scenario of "one more rate cut and then a pause," there should not be significant further price adjustments, as current rates largely reflect this outcome.
On the other hand, should the FOMC deliver a bleaker economic assessment and outlook, as I expect, there is significant scope for prices to re-adjust to the prospect of a deeper and more protracted US downturn necessitating further easing. Treasury yields would plunge across the curve, likely taking the USD sharply lower. US stocks are also likely to react negatively, even though they may be initially buoyed by the prospect of an ongoing Fed commitment to cut rates further if necessary.

I expect a relatively volatile reaction immediately following the Fed announcement with two likely phases of price action. The first phase would involve the market reaction to any rate cut and language signaling a pause in easing. If the Fed cuts 25 bps, the USD would first dip, but then rebound quickly if language indicating a pause is included. Should the Fed hold rates steady, the USD would most likely move directly higher, especially if Pause language is included. The second phase would be the reaction based on the economic assessment, which I expect to dominate at the end of the day. If the outlook is downgraded as I expect, any USD positive impact from a pause is likely to be short-lived as markets move to "price back in" expectations for additional easing amid a deeper US downturn.

To complicate matters further, the stock market reaction is likely to lead to uneven movements for the dollar against other currencies. Again, if the Fed's outlook is downgraded further, I would ultimately expect stocks to turn south on the weaker US outlook and this will tend to see heavier selling of JPY-crosses. USD/JPY is most likely to bear the brunt of any USD selling, while EUR/USD and other pairs (e.g. GBP/USD, AUD/USD, NZD/USD) would likely see any gains (from USD selling) pared and possibly reversed as JPY-cross selling overwhelms and dominates.

Readers should note that my outlook is largely at odds with broader market expectations for a relatively upbeat, end-of-easing, the worst-is-over type of FOMC statement. But because of that disparity, the reaction is likely to be more volatile than many expect, which itself will fuel additional volatility. If the FOMC outlook is downgraded, I will be looking to sell rallies in USD/JPY (30-80 points above pre-Fed announcement levels) and to buy dips in EUR/USD after similar USD gains. Also, I will be looking to sell JPY-crosses if US stocks turn lower on a weaker Fed economic outlook.
the article is interesting
  • #76,958
  • Apr 30, 2008 12:31pm Apr 30, 2008 12:31pm
Quoting shakesfx
Definately, Couldn't help myself

Thing is, when the beast moves, I think we're looking at 1000 pips either way over the next 1-2 days...It's only a small trade, just to keep the itchy fingers happy

  • #76,959
  • Apr 30, 2008 12:32pm Apr 30, 2008 12:32pm
Quoting hussin naiji
the article is interesting
I think TA goes right out the window today. . . It's more of a gamble and praying to the "Pip Goddess" that you've chosen the right direction!
  • #76,960
  • Apr 30, 2008 12:32pm Apr 30, 2008 12:32pm
Quoting mktjong
Mike,

UJ at 80's .. you gotta be kidding man .. Don't think BOJ would allow that
I didn't necessarily mean the low 80's but I do think it will move to the 80's in general. Hell, we were down at 95 in no time at all and because of that, I think people are worried for worse to come. That'll in turn get them to selling down to it. This is just a correction IMO right now before heading lower, just as the eur/usd is at the moment before heading higher. Would the BOJ intervene- yeah, they probably will but sheer selling pressure will push it lower IMO. That'll be the driving force to see g/j at the 180's too I think. We're just gearing up for it right now.

On the charts, the counts are saying it all and the fifth should be on the way and it has the possibility to produce lower lows than before. On g/j we're on the third abc wave up right now so I'd like to see it get to solid resistance before shorting there for the big ride down and it also looks the same for u/j. With it lining up like that, I have to take that into account. Even if it doesn't get to the 80's, that's a lot of money to be made in between the two pairs here.
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