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  • #361
  • Aug 2, 2011 8:15am Aug 2, 2011 8:15am
Quoting vicky_ag
Well that is assigning an event after the fact. How to be sure at that exact moment?
It's better to know it after the fact then to know it at all. Of cource ISM contributed to the move but it wasn't the only thing. These times EUR is highly correlated with peripheral/german bond spreads and these were widening again yesterday. Plus last week US GDP - major risk aversion (although perceived as a weak dollar in the beginning), plus ISM. The situation is a little complicated because we don't know if the weak US data will bring us another round of QE. Some Fed officials say they'll have to wait a few months to see how the economy is doing without QE, some say QE3 is inevitable.

Anyway, I don't want to misguide anyone here. If your explanation of forces behind certain market moves make sense to you and help you trade profitably then you better keep it that way.

Good trading to all!
  • #362
  • Aug 2, 2011 8:49am Aug 2, 2011 8:49am
Quoting seagreen
The situation is a little complicated because we don't know if the weak US data will bring us another round of QE. Some Fed officials say they'll have to wait a few months to see how the economy is doing without QE, some say QE3 is inevitable.
Bernanke has done a good job at letting the market know there will be no further asset purchases until inflation levels out and starts falling again. It is something he made sure to stress and all the major banks and analysts have taken that into account. So no, I don't think the market is betting on another round of monetary stimulus.

Other Fed people have spoken up on this issues as well and one of them said the potential risks were far greater with another round of GE3 than the potential positive effects. Can't remember his name, though.
If you don't risk, you don't ever have to lose.
  • #363
  • Edited 9:51am Aug 2, 2011 9:17am | Edited 9:51am
Quoting seagreen
It's better to know it after the fact then to know it at all. Of cource ISM contributed to the move but it wasn't the only thing. These times EUR is highly correlated with peripheral/german bond spreads and these were widening again yesterday. Plus last week US GDP - major risk aversion (although perceived as a weak dollar in the beginning), plus ISM. The situation is a little complicated because we don't know if the weak US data will bring us another round of QE. Some Fed officials say they'll have to wait a few months to see how the economy is...
The point in my original post was I was genuinely surprised by the strong USD movement. Maybe my understanding of risk aversion is incorrect, bad ISM numbers are something worse off than bad GDP??
Surprising.

Then there was talk about ISM causing risk aversion which I found to be a sticker explaination.
Bad ISM = USD strength = Risk aversion
what if
Bad ISM = USD weakness. Then would the explaination be USD weakness due to bad news?
Just to put things to perspective - I am not questioning anyone. Just being curious and would like to know discuss more than one liner explaination..like our friend Trizzle and bug do.
  • #364
  • Aug 2, 2011 10:13am Aug 2, 2011 10:13am
Quoting bug
Bernanke has done a good job at letting the market know there will be no further asset purchases until inflation levels out and starts falling again. It is something he made sure to stress and all the major banks and analysts have taken that into account. So no, I don't think the market is betting on another round of monetary stimulus.

Other Fed people have spoken up on this issues as well and one of them said the potential risks were far greater with another round of GE3 than the potential positive effects. Can't remember his name, though.
I remember that press conference. But at that time we only had soft employment data and now we get growth rate which is way below expectation. It doesn't even matter now what Bernanke thinks. Until he says again there will be no QE3 the market will partly assume QE or at least start asking questions. That's just how I see it though.
  • #365
  • Aug 2, 2011 10:57am Aug 2, 2011 10:57am
Quoting vicky_ag
The point in my original post was I was genuinely surprised by the strong USD movement. Maybe my understanding of risk aversion is incorrect, bad ISM numbers are something worse off than bad GDP??
Surprising.

Then there was talk about ISM causing risk aversion which I found to be a sticker explaination.
Bad ISM = USD strength = Risk aversion
what if
Bad ISM = USD weakness. Then would the explaination be USD weakness due to bad news?
Just to put things to perspective - I am not questioning anyone. Just being curious and would like to know discuss...
Heya vicky_ag, sometimes the bad ISM can result in USD weakness followed by risk aversion, other times it just leads to risk aversion right off the bat, depending on how the market is positionned and what its expectations are. That's why I said it's a counterintuitive trade, but examine what happens a few times and you can build your confidence in interpreting it and trading it in the future.

I decided to take a short position in EUR/USD, which is now risk-free to play the recent peripheral issues which have come to the fore, especially with the spreads widening as seagreen observed. There's some bidding interest down at 1.4150/60, and so I may decide to cut the trade there if it can't get through these levels after the US Senate vote.

This makes me synthetically short EUR/CHF since I have a short in USD/CHF as well.

USD/JPY is still boring...

Regards,
xXTrizzleXx
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  • #366
  • Aug 2, 2011 12:24pm Aug 2, 2011 12:24pm
Trizzle, I get your analysis for deciding to long or short, but entry's a whole 'nother beast - how do you manage to always pick the bottom or top??
  • #367
  • Aug 2, 2011 2:48pm Aug 2, 2011 2:48pm
Quoting vicky_ag
The point in my original post was I was genuinely surprised by the strong USD movement. Maybe my understanding of risk aversion is incorrect, bad ISM numbers are something worse off than bad GDP??
Surprising.

Then there was talk about ISM causing risk aversion which I found to be a sticker explaination.
Bad ISM = USD strength = Risk aversion
what if
Bad ISM = USD weakness. Then would the explaination be USD weakness due to bad news?
Just to put things to perspective - I am not questioning anyone. Just being curious and would like to...
One thing I am a believer in is that news usual just "speeds up" what the market wants to do.. it takes a bit of liquidity out of the market and increases the volatility.

very rarely will you find a news report changes the course of an entire trend.. like stop it in its tracks and begin a new movement... it just doesn't work that way.. in fact price is a representation of future expectations.. so when the news arrives you can bet the market has already priced it in..

if the news is dramatically different then people digest it and think about how that will fit in to other future events and begin pricing it in up to the next event.

thats how I view it atleast.. I could be extremely wrong.. and I would also be interested to hear how trizzle, bug, and others play it.


think about what I said though when NFP comes this friday... watch how the market continues along the trend in the end.. just picked up the pace thats why I enjoy news discounts where the market whiplashes around.. you can enter the market at a discounted price if you select the proper direction...

  • #368
  • Aug 2, 2011 7:14pm Aug 2, 2011 7:14pm
Quoting randomuser
Trizzle, I get your analysis for deciding to long or short, but entry's a whole 'nother beast - how do you manage to always pick the bottom or top??
Heya randomuser,

It's a bit of an internal conflict really. In essence you want to place your order somewhere where it looks like there's a slim chance it will be hit, but that chance is still there nonetheless, and that gives some nice, low-drawdown entries. Sometimes though I feel it's more of being in the right place at the right time more than anything else! But don't be mistaken, I have my share of sloppy entries, and this style of trading lends itself to several missed opportunities - it's made me a much more patient person actually.

Quoting newyear498
One thing I am a believer in is that news usual just "speeds up" what the market wants to do.. it takes a bit of liquidity out of the market and increases the volatility.

very rarely will you find a news report changes the course of an entire trend.. like stop it in its tracks and begin a new movement... it just doesn't work that way.. in fact price is a representation of future expectations.. so when the news arrives you can bet the market has already priced it in..

if the news is dramatically different then people digest it and think about...
Heya newyear498,

I do agree where there are instances where the news can be used as an excuse to fulfill the intentions of other market participants. However, regarding their ability to simply continue the prevailing trend, for me, it depends on how the numbers print and what the market expectations are. The market focus has now shifted to global growth concerns, and as such participants are fearful of and eyeing a softer NFP number. If the NFP number happens to print out 100K+ I think the current risk averse trend would be halted at least temporarily.

________________

I'm planning to play AUD/USD retail sales tonight at 9:30, and from what I've gathered, expectations are for a weak number. This certainly cannot help with the current risk-off sentiment, and weaker retail sales will further the RBA's case to keep interest rates on hold, as it will contribute to lesser inflationary pressures. Could be worth a pip or two.

Regards,
xXTrizzleXx
  • #369
  • Aug 2, 2011 7:51pm Aug 2, 2011 7:51pm
Quoting xXTrizzleXx

I'm planning to play AUD/USD retail sales tonight at 9:30, and from what I've gathered, expectations are for a weak number. This certainly cannot help with the current risk-off sentiment, and weaker retail sales will further the RBA's case to keep interest rates on hold, as it will contribute to lesser inflationary pressures. Could be worth a pip or two.

Regards,
xXTrizzleXx
I might take a look, too.

As part of my efforts to prepare for it, I just ran across this interesting analysis: "Australian Retail Sales is expected to expand by 0.4% today. With low Unemployment Rate and being one of the most sought after currencies out of the majors, today’s Retail Sales could come slightly better than expected… However, recent CPI reading has shown that disposable incomes are being squeezed out by persistent inflationary pressures, and with the appreciation of the AUD at a much slower pace during the month of June, Retail Sales could be slightly worse than expected… Therefore, there should be no pre-news trading for this release as it is quite unpredictable."

For more details, click the (LINK)
  • #370
  • Edited 8:52pm Aug 2, 2011 8:36pm | Edited 8:52pm
Better luck next time I guess? OANDA didn't fill me.

Quoting The Cheetah
I might take a look, too.

As part of my efforts to prepare for it, I just ran across this interesting analysis: "Australian Retail Sales is expected to expand by 0.4% today. With low Unemployment Rate and being one of the most sought after currencies out of the majors, today’s Retail Sales could come slightly better than expected… However, recent CPI reading has shown that disposable incomes are being squeezed out by persistent inflationary pressures, and with the appreciation of the AUD at a much slower pace during the month of June, Retail Sales could be slightly worse than expected… Therefore, there should be no pre-news trading for this release as it is quite unpredictable."

For more details, click the (LINK)
Hope you got filled if you played it!

Regards,
xXTrizzleXx
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  • #371
  • Aug 2, 2011 8:57pm Aug 2, 2011 8:57pm
Quoting xXTrizzleXx
Better luck next time I guess? OANDA didn't fill me.

Hope you got filled if you played it!
That sucks! Was that a market order?


I got in at 1.0720, and I took a 30 pip gain. It took me about two minutes to find info on the release. I am using an FXCM demo account (web-based trading). This Mac has not been conducive to trading, but it's a great laptop.
  • #372
  • Aug 2, 2011 9:32pm Aug 2, 2011 9:32pm
Quoting The Cheetah
That sucks! Was that a market order?


I got in at 1.0720, and I took a 30 pip gain. It took me about two minutes to find info on the release. I am using an FXCM demo account (web-based trading). This Mac has not been conducive to trading, but it's a great laptop.
Indeed it was a market order...I do have a proxy limit order put in place if price happens to come back for another visit for what it's worth. But careful when moving from demo to live as there were some things in demo that I took for granted, like slippage, unfilled orders etc.

Nice trade.

Regards,
xXTrizzleXx
  • #373
  • Aug 2, 2011 11:26pm Aug 2, 2011 11:26pm
Quoting xXTrizzleXx
Indeed it was a market order...I do have a proxy limit order put in place if price happens to come back for another visit for what it's worth. But careful when moving from demo to live as there were some things in demo that I took for granted, like slippage, unfilled orders etc.

Nice trade.

Regards,
xXTrizzleXx
Nope, guess it wasn't meant to be! Stopped out on some short covering so I've put AUD/USD behind me for now.

Regards,
xXTrizzleXx
  • #374
  • Aug 3, 2011 12:51am Aug 3, 2011 12:51am
Quoting xXTrizzleXx
Heya vicky_ag, sometimes the bad ISM can result in USD weakness followed by risk aversion, other times it just leads to risk aversion right off the bat, depending on how the market is positionned and what its expectations are. That's why I said it's a counterintuitive trade, but examine what happens a few times and you can build your confidence in interpreting it and trading it in the future.

Regards,
xXTrizzleXx
Well Trizzle I was already positioned short before the numbers came. Had the ISM numbers been good I would have been stopped out.
What I find interesting is that everyone seems to be attributing bad ISM numbers to risk aversion, which is certainly not the case as per my understanding.
  • #375
  • Aug 3, 2011 3:07am Aug 3, 2011 3:07am
Quoting vicky_ag
Well Trizzle I was already positioned short before the numbers came. Had the ISM numbers been good I would have been stopped out.
What I find interesting is that everyone seems to be attributing bad ISM numbers to risk aversion, which is certainly not the case as per my understanding.
Heya vicky_ag,

Like I said it's a bit of a counterintuitive trade. If the ISM numbers are bad, then risk appetite would definitely be absent from the market. It's not as simple as bad US numbers = dollar weakness; ie. risk appetite; depends on the nature of the trade.

______________

Seems like the SNB has grown some cojones and decided to cut their already accommodative rates to as close to 0% as possible! Immediate reaction was large scale shorting of CHF in an already short market. Maybe BoJ should take a page from their book? Will the SNB's actions deter investors from seeking a flight to safety in the midst of what may be some more European trouble and global growth concerns? It remains to be seen, but they don't have a very good track record!

I have completely squared all trades, and look forward to how things will play out for the rest of the week!

Regards,
xXTrizzleXx
  • #376
  • Aug 4, 2011 2:30am Aug 4, 2011 2:30am
So it seems like the BoJ have finally had it with us evil speculators and have decided to intervene in USD/JPY. I was expecting them to do it a bit lower at 76/75 and had some limit orders placed there, but also placed a pending buy above our current range which was hit as I was sleeping this morning. This is my most profitable trade yet, as I put on a relatively large size with a 20 pip SL. It's also risk free. I'll be waiting to see the results of the monetary policy meeting on Friday to determine my next course of action. My TP may be just ahead of NFP where I'm expecting a soft number, however I will trail my stop up in the event that the numbers do surprise to the upside.

Seeing as BoJ has actually intervened it questions the viability of USD/JPY as a safe haven pair, and so I have put on a short in USD/CHF which I'm thinking will resume it's downwards trend. The position is admittedly in a bit of heat though with the spate of USD buying.

EDIT: Looks like the BoJ Monetary Policy Meeting was cut a day short so I should see their plans as to whether they will ease their policy to contribute to greater JPY weakness. If only I had my NZD/JPY position still

Regards,
xXTrizzleXx
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  • #377
  • Aug 4, 2011 6:33am Aug 4, 2011 6:33am
And I've decided to close my USD/JPY long for some tidy gains, as I do not feel like the global/investor climate favors such a position. If it starts to range at these levels, I'll be looking for some shorts once again. I anticipate on playing this game again with BoJ in the near future!

Regards,
xXTrizzleXx
  • #378
  • Aug 4, 2011 7:04am Aug 4, 2011 7:04am
Quoting xXTrizzleXx
And I've decided to close my USD/JPY long for some tidy gains, as I do not feel like the global/investor climate favors such a position. If it starts to range at these levels, I'll be looking for some shorts once again. I anticipate on playing this game again with BoJ in the near future!

Regards,
xXTrizzleXx
USD discounts
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  • #379
  • Aug 4, 2011 9:31am Aug 4, 2011 9:31am
Quoting newyear498
USD discounts
I like the way you put it! I'm with you on USD/CHF as well...if tomorrow's NFP fails to impress then it's hello 0.7500! Amazing how far we've come when you really think about it... However if the NFP does impress, then we may have a one-way bus to catch.

At the end of the day, there's coin to be made both ways!

Regards,
xXTrizzleXx
  • #380
  • Aug 5, 2011 2:30pm Aug 5, 2011 2:30pm
Unfortunately, before I could pusle the market effectively on EUR/USD, the bus had already left the station. As a result I had to instead play NFP on AUD/USD, where I now have a risk-free short which I'll let ride into the next week. Amazingly, my short on USD/CHF is still intact, and with rumors of S&P not being too pleased with the US government, I'm tempted to leave it to run to see what it can do.

USD/JPY has gotten boring once again...still looking for that lucky 76/75

Regards,
xXTrizzleXx
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