Fundamental Journal

Hello,

I have about 2 years of forex trading and focused about the diferent market players/technical analysis/psychology
but I still lack an area: Fundamentals

I have the feeling that I am trading blind when so much high quality report are available and this is way I decided to create this journal with the following assumption:

- Trend on high time-frames is highly influenced by Fundamentals, a change in the underlyings "Triggers" will reverse the trend.
- When trend is identified, just trade with it like a stupid and bank profits...

I would be really happy to have forum member's participation for sharing "Bank reports, Relevant articles" that could help me identifying the trend and triggers.

However no discussion about Technical over Fundamentals etc... Or that bank reports are always wrong ...

Important Source that I am reading on a daily/weekly/montly basis

- Bloomberg/Reuters
- Bank reports (I like the Dankse Bank for SEK/NOK/DKK/CZK/PLN currencies and the BNP Paribas is also good quality graph) I have attached some that I have been reading recently for the one interested in
- Central Bank Website, Reports + Research
- World Bank + IMF Website, Report + Research
- Macroeconomics Website:
http://www.tradingeconomics.com/ <<-- This site is sooo AMAZING and FREE, all the data have been compiled
http://www.eia.gov/petroleum/supply/weekly/ <<- Petroleum is hot topic recently, have to monitor this website closely

If you have some relevant ressources that you want to suggest please share but I am not interested in "Journalism opinion website" such as businessinsider etc...

Please find my bullet point Notes

EUR:
- Expected in 1Sem 2015: ECB sovereigh bond purchase (but facing disagrement from german part) --> Extremly Bear
- Asset purchasing program: Extreamly Bear
- Unemployment rate have been increasing, what about future expectation ??
- High Budget Deficit are still an issues: Bear
- Develaraging issues: Bear
- might have increase cut in 2015 to 0.00: Bear

Inflation Forecast for next Year (ECB): 1% (0.5% 2014) --> Bullish
Inflation Forecast for next next Year(ECB) 1.4% --> Bulll
GDP Forecast for next YEAR (ECB): 1.2% (0.8% 2014) --> Bull
GDP Forecast for next next YEAR (ECB): 1.5% --> Bull
Unemployment Forecast for next YEAR (ECB) 11.3% (11.6% in 2014) --> Neutral
Unemployment Forecast for next next YEAR (ECB) 10.9% --> Bull

- JPMorgan excpect asset purchasing to increase to 3Trilion from 1 trilion which is not possible with current measures
- Bank of Canada EUR/USD 2015 forecast: 1.15
- According to Bank of CANADA, the current monetary policies are to fight Deflation
- From the BNP Paribas Report, 2015 forecast dont seem brilliant --> Fun FACT, Germany Current Accounts Runned positive with CHINA in 2014 That is impressive !!!

VIEW:
Bearish Outlook for the EUR with one of the main Trigger: DEFLATION
Problem --> Lots of hype for EUR bearishness and the current Forex Rate has already overshooted many banks Forecasts

KEY TRIGGER --> INFLATION RATE !!!!!



USD:
- Bull Bull Bull for 2015
- Thanks to strong sign of economic recovery
- GDP/Q3 score 5% recently, + certainly increase of interest rate by June 2015 -> BULL
- Umemployment RATE have been decreasing steadily and expected to further decrease -> BULL
- Bank of Canada USD/JPY 2015 Forecast: 128
- Lots of articles bragging USD Strenght --> i do not like it when its over mediatized... -> BEAR
- Regarding the BNP Paribas reports, everything seem green for USD 2015 economy -> BULL
- For 2015 I would rather invest in USD for any RISK-ON event that happen (WAR, TERRORISM etc...) instead of investing in JPY

VIEW: Bullish Outlook
Triggers for continuing bullishness will be Positive Key economic DATA (unemployment, improved trade balance, GDP, inflation etc...)
and maybe better budget balance and deleveraging would be perceived as good measures when economy is expanding.

WARNING: I BELIEVE THAT A FAIL TO RAISE INTEREST RATE BY JUNE 2015 COULD BE A BEARISH SIGN FOR USD --> Reasonement is that
market is expecting it and pricing it already + interest rate have been low for sooo long...



GBP:
- Impacted with negative EURO condition but should outperform the EURO Zone for 2015
- Have to monitor Economic DATA

JPY:
Abenomics: Sell Yen like an idiot
They used a lot of their Tools already -> Low interest rate + QE but they still have their large Pension Funds GPIF to further weaken the YEN would Abe policies not taken seriously by the markets participants

According to Bank of CANADA, the current monetary policies are to fight Deflation.

VIEW: Just sell it, I believe markets participants will do what Abe is requiring.
Triggers will be INFLATION, GDP, TRADE BALANCE, DEBT TO GDP, could get some good opportunities to Sell on "Political Rally".


CHF:
- SNB problem is that they have used one of their last persuasion tool by going to negative rate, they however still have lot of rooms to buy EUR (could sell their huge USD Reserve for EUR for example)
- Next one would be fiscal Policy to monitor, as a safe heaven, they could be pressured by EUR-ZONE to reduce their fiscal laws wich would devaluate the CHF (capital outflows). By doing so the entire economical model would need to be restructered

VIEW
BEARISH
I trust that SNB will maintain the 1.20 EUR/CHF floor with their policy, they give clear signals they want a weaker currency to increase exports. so EUR and GBP should outperform CHF next year

CAD:
Difficult Pair,
- they should increase their exports and economic activity as their best partners (US) are expected to perform well in 2015
- They still have 1% interest rate and no central bank intervention --> Bull
- Have to monitor future commodity prices such as petrol for sign of future strenght --> I will be bull if this parameter is fullfilled
- Also a change of OPEC supply policy could change the game
- Oil exports amount for 18% of total exports

VIEW: Trade it carefully with future PETROL price expectation, change of OPEC supply policies.

AUD:
This one is also tough to analyse:
- China's economy loosing steam -> Bearish
- Commodity prices decreasing -> Bearish
- Higher unemployment rate -> Bear
- Central Bank gave hint that the fair value of AUD/USD should be around : 0.75 -> Bear

- Citi Q1/2015 AUD/USD Forecast: 0.80; Q2/2015 AUD/USD Forecast: 0.70
- No bank intervention -> Neutral
- STill high interest rate for Major pair -> Bull
- Future RBA inflation forecast 2015: ??
- Future RBA GDP forecast 2015: ??
- JpMorgan expecting Rate cute in Q4/2015- > GDP 2014 2.8% from 3.3%, GDP 2015 3% from 3.1%

It seems that the RBA is doing very well in their policies and can dictate the markets what it wants it to do without wasting their Tools as it is anticipating economic cooling off

VIEW:
BEAR until one of the two triggers happen: IRON CORE PRICE increase, Chinese economy increasing

Some Trade IDEAS for Q1/2015 in order of preference:

USD/JPY Long
EUR/USD Short
AUD/USD Short (tll 0.75)
USD/SEK + USD/PLN (Short PLN for event with Russia embarguo)
GBP/JPY Long
GBP/CHF Long
GBP/AUD Long
AUD/JPY Long ??

EUR/CAD CHF/CAD Short (if hint of higher oil price)
CAD/JPY Long (if hing of higher oil price)
NOK/SEK Long (if hint of higher oïl price)

EUR/SEK Short (waiting my trigger with positive inflation forecast or nice increase in exports in Sweden)

I briefly plotted some of the BANK prediction for 2015 in the excel file attached,

DOES ANYONE KNOW A WEBSITE/RESSOURCE THAT TRACKS BANK/HEDGE FUNDS... POSITIONNING/FORECAST ?? Apart of COT
I found a website but their research paper are too expensive for me...

subscribed! looking forward to this very much! you sound like you know whats going on, here I think is what you looking for: hope this helps! http://www.forex-central.net/forum/viewforum.php?id=17

Hello RTM,

Great website, that is exactly the kind of ressources that I am looking for !! Good luck with your trading

I was really busy with my work this week, but I will at least post once a week and the key figure that I find from my research !

Here are some nice graphs from the BNP Paribas reports:
EUR 2015 Inflation: 0.2
US 2015 Inflation : 0.8

UK interest rite hike in 2016
US interest rite hike to 1% in 2015

I do not fully understand the US develeraging chart but I believe this is another good sign for the US

But the most interesting chart is the Monetary supply chart, my understanding is that EUR is not supplying enough money to the market for its needs

I read for the first time in two years the minutes of FOMC, and I actually enjoyed it Well written and easy to read !

My keynotes:
This time the tones used is "more patience" than the previous statetment regarding rate Hike
-> Cause the inflation rate forecast diminused due partially to commodity price decrease

They seem relatively confident about GDP Target and unemployment target

Key Data that I am looking for: 5.5 unemployment rate + above 1% inflation


From the pictures, most agree for 1% rate in 2015 and 2% in 2016

Today, I focus my reasearch on the NZD currency:

RBNZ Inflation Target: 1-3%Actual Interest Rate: 3.5%

Current Account Export/import:
Running negative current account: with a huge peak of -5000 milions in Q3/2014
They seem ciclycaly to have lower export in Q3 and higher import in Q3 from the years I have reviewed--> Why ????

Leading agricultural exports include meat, dairy products, forest products, fruit and vegetables, fish, and wool. The main export partners are Australia, China, European Union, United States, and Japan.New Zealand imports mainly machinery and equipment, vehicles and aircraft, petroleum, electronics, textiles and plastics. Its major import partners are: Australia, European Union, China, United States and Japan

Inflation:
2012-2014 at about 1-1.5%


GDP: Was in recession in 2008-2009 (got hurt very badly from the subprimes crisis in US) but then GDP has been from 2 to 3% from 2012

Employment:
Very high participation rate of about 70% in 2014
Unemployment rate has been decreasing from 7.3% in Q3 2012 to 5.4% in Q3 2014

Other information:
Gof Budget: -2.10% (australia -1.20% US, -2.80%)
Debt/GDP: 35.90% (austrlia 20,48% US, 101.53%)
As running net account deficit since 1973, the level of endebtement does not seem to high to me

Now RBNZ statistics concerning the future:
Household 1year inflation rate: 3.1%
Household 5 years inflation rate: 4.1%


Statmenet from RBNZ 11 December 2014:
"The exchange rate does not reflect the decline in export prices this year and remains unjustifiably and unsustainably high. We expect to see a further significant depreciation" --> Bearish but market is not taking the governor seriously haha

Survey from Nielson Company regarding the future (December 2014):
http://www.rbnz.govt.nz/statistics/tables/m14/

2015 CPI expectation: 1.59%
2016 CPI expectation: 2.06%

Expected +0.26 CPI in Q4 2014 QtoQ
Expected +0.40 CPI in Q1 2015 QtoQ

The survey shows that they find the monetary policies still too acomodating --> expecting rate HIKE --> BULL SIGN

2015 GDP expectation: 2.7% from 3.1%
2016 GDP expectation: 2.5% from 2.7%

2015 Unemployment expectation: 5.3%
2016 Unemploymenet expectation 5.2%

Q1 2015 NZD/USD prediction: 0.77
Q3 2015 NZD/AUD prediction: 0.88 --> NZD/AUD 1.13

View:
BULLISH on the NZD, anticipating rate Hike in 2015
(unemployment is impressive as well as GDP forecast), CPI might fail, NZ is a beautiful country that can attract tourism, capital.
Site to Watch: http://www.globaldairytrade.info/ for Dairy price + monitor Commodity prices + Current account + Inflation

-> NZD/european currencies Buy
-> NZD/JPY Buy

Just a basic tought I had:

1. Most government/countries like/want/need a weak currency as it helps to stimulate exports hence growth which is what they are mandated for.
   Citizen enjoy strong currency as it creates additional wealth to them (travel, buying from abroad at a cheaper price)
2. Not all currencies can be weakened at the same time. (one when strengthen, another one weakened)
3. Central bank/government needs to align their monetary policies with one another, it is important that their share information as not to engage in similar program.
   
   What would be the results if all countries would be printing/QE at the same time ? – No growth would be created and the burden of the printing would be bear by the population.
   This is why central bank need to coordinate their actions = COLLUDE as following:
   

Year 2012-2013

1. US Central Bank: our economy is tanking really hard, we will devaluate our USD
2. EU: OK big brother, we will wait for your economy to recover
3. Japan: OK, we have no choice, we will do as it please you

Year 2014:

1. Japan: Sorry US, we have been in economic stagnation for 10 years, it is our turn to devaluate
2. EU: please big brother, we are fighting with political/deflation issues, we need to devaluate as well
3. US: ok guys, I see your situation is worse than ours, key indicators over here are good so we will appreciate our currency (but do not forget we are doing you a favor !!!!)

SNB floor EUR + CHF thought:




At 9am, I was monitoring SNB foreign reserve to see how much it has accumulated EURO, however I could only find the November 2014 statement. So I was still believing the floor will hold and check back later in January/February to see wheter the SNB has enough capacity to pursue buying EUR.

10:30am, I happened to be watching the market at that exact moment the SNB announced it will not hold the floor at 1.20. It was more interesting to watch than a soccer game !!! I saw this huuuge scary spike that took a few minutes only then stabilized at 1.10 with a widened spread.

 

1. From my perspective, I felt it was quite unfair. The word used by the SNB were really strong (“we will give the Floor at all costs” like) and made me believe they would Sell their reserve of USD to buy EURO. Furthermore, I did not see any hint from them that they could do such action. (change of tone, or alarming reserve accumulation). I felt it was like I have been lied by my own family members…

1. Then I put myself in their shoes,
   
   

1. They recently used their last psychological tool which was to go negative rate, it was announced at a surprise time à the effect was ridiculously faded.
2. The faith people have in their monetary policy was not enough to sell the CHF (price was holding at 1.2010 for a few weeks)
3. THEY MUST KNOW THE EURO IS HEADING MUCH LOWER, otherwise they would keep accumulating EURO at a bargaining price.

So they had no other choice than to do it suddently and abruptly to limit their buying accumulation before being left with trillions of EUROS, a softening in their tone would have in all the cases broke the floor, so anyway they were trapped.

Exection of their plans: CHF is seen as a safe-heaven currency, economy should be better than the EURO-ZONE, as to avoid a huuuge market collapse, they mixed their action with a bearish elements à Further negative rate, it was a great idea according to meJ. I also believe that they really did took everyone offguard and did not hint their big-boys friend on the move (that is what I really hope)

My view on the EURO and CHF

 

1. This move has hinted me that the EURO is heading lower EUR/USD 1.15 for sure, parity maybe ??
2. Price held for a long time at 1.10 this afternoon, with widening or spread (I believe the SNB was intervening at that level)
3. I also saw two huge spike at 0.8750, certainly SNB intervening here as well
4. CHF will now outperform the EURO for this year, I am seeing EUR/CHF helding at parity for a while at around 0.90 and 1.10???
   
   Shall we come close to 0.90-0.80 I would expect further SNB interest cut

JPY JAPAN


My view on most of the major has been quite right for this first month of January at the exception of the JPY pair. I have been crushed by the JPY pair in the first month of 2015, USD/JPY has been quite stable, but JPY has been appreciating against the other MAJOR.


This is why I take this Sunday to analyze more deeply the factors/economy of this pair:

 

1. Issues with Japan prior to 2014:
   1. been hit hard with Fukushima in 2011 and growth has been quite low for the past 5 years
   2. GDP went from 4500bil USD in 2001 and peaked to 6000bil USD in 2013.-> it then accelerated down to 5000 bil USD in 2014
   3. With bad GDP number from 2013 and 2014, government budget to GDP debt to GDP have been one of the worst WORLDWIDE with the low GDP !!!!
   4. has been flirting with Deflation from 2000 to 2013/2014
   5. Really strong Currency, was perceived as a safe heaven
   6. Aging population
   7. Unemployment rate decrease steadily from 5% in 2010 to 3.5% in 2014
      1. à Problem with GDP growth/Inflation prior to 2014

      
      
      
      

   
   

2. Import/export situation:
   1. Has historically always runned positive current account at the exception of 2012 to 2014 when it flirted with slightly negative current account
   2. Exports: 23% transport vehicule, 19% machinery, 17% electric machinery, 11% vehicule -> Export partners: 18% USA, 18% China 7%South Korea, 6% Taiwan
   3. Imports: Mineral fuels (34% -> with 18% petrol), machinery 21%,
      High increase of fuels with the closure of nuclear plant, Import partners -> 22% China, 16%Petrol arab countries , 8% US,

   
   
   

3. ABENOMICS:

Government:

1. The government spending curve has been steadily increasing during the years, NO SPECIAL INCREASE HERE
2. Company tax rate cut from 40% in 2011 to 33% in 2014 however increase of sales tax to 8% in 2014 from 5% in the previous years also +10% in income tax
   1. So taking less taxes from companies and taking more from the individuals

      1. 1. Their government spending program was not very successful as it was offset by in increase of taxes which did not stimulate enough extra comsuption
         2. Monetary policies:

         
         

      
      

   
   

3. From 2012 BOJ stopped accumulating foreign reserve and remained at roughly 1260B USD
4. Money supply increasing steadily with a peak of increase of 1% in Dec/14 from Nov/14
5. 0% interest rate from 2010 to date
6. QE from april 2013 60-70 trilions yens of bonds a year
7. QE from October 2014 80 trilions yens of bonds a year
8. Another big boy the GPIF said to invest abroad and adopt a riskier strategy (sell Yen and buy foreign currencies) http://www.bloombergview.com/quickta...ns-pension-war

   1. 1. 1. Decision to Devaluate their currencies to stimulate the exports, markets reacted favorably and YEN has been devaluated drastically

         
         
         

      
      

   
   

End 2014/ Beginning 2015 Key indicator:

Most of the bank reports I read were bearish YEN, Here are the key indicator I can think about:

1. Unemployment rate of 3.5 à Bullish
2. Oil price decline (I see it stabilizing at around 40 to 60 for 2015) + general commodity price decrease -> highest import cost of Japan -> EXTREMELY BULLISH
3. Weak currency -> Bullish
4. Inflation shooting up !!! +3% YOY from april 2014 -> EXTREMELY BULLISH
5. Weak Yen -> Bullish
6. Current monetary policies -> VERY BEARISH
7. Government Budget and debt: -> VERY BEARISH
8. Low interest Rate -> Bearish
9. GDP : -0.5 in Q3/2014 and Q4/2014 expected to be negative again -> BEARISH

My expectation:

1. Inflation target of 2% a year should be fulfilled for 2015
2. QE to stop by Q1/2016-Q3/2016
3. GDP for 2015 should be positive and beat estimation as: low unemployment, oïl price decrease will reduce importation costs and boost the demand for cars (increase exports), cheaper YEN will also boost exportation

VIEW on YEN:

1. Currency strength: MIDDLE
2. It has a strong mixture of bullish and bearish elements, I see strong economics projection mixed with extreme bearish monetary policies and gouvernement budget. I would still be USD/YEN Bull but I could buy Yen against other weak currencies…

Currency Views for Q1/2015

Strong: USD

Middle Strong: GBP; CHF, NZD,

Middle: JPY, CAD

Middle Weak: AUD

Weak: EUR

I usually read all the posts from FXTyrant:

Here is an interesting one about the BIG BOYS of Forex:

BOJ, ECB, FED, BOC, PBOC, RBA, RBNZ, BOE, etc etc <- Biggest of the Biggest boys...
BIS, IMF..... <- Supranational big boys.
HSBC, JPM, GS, CS, DB, CITI, UBS etc etc.... <- Multinational Big Boys.

Hedge Funds, Large Corporates <- Large Specs.
FX Retail Margin Trading clients, Retail Banking Clients <- Small specs
Bank Depositing Clients <- Risk averse small specs

CFTC FUTURE POSITIONING WEBSITE:
http://www.cftc.gov/dea/futures/deacmelf.htm



Another important post from FXTYRANT:


"so if a lot of retail traders are short. what would the big boys likely do?
well ill tell you what they would do... they will hunt for stops, try to take out the short traders.

imagine you are holding short at 1.16 with SL at 1.1650, the big boys will move eurusd up to 1.1650 to kill your trade before they let the EURUSD fall further.

i am expecting stop runs to happen especially on an increased volatility on ECB conference. BUT! the overall trend is down because QE is still coming whether we like it or not.
and Fed will hike rates whether you like it or not. "

CAR MANUFACTURERS STOCKS IDEA:

I unfortunately do not own any trading account to purchase stocks and just write it for my records to review this call at the end of the year J

EUROPEAN CAR MANUFACTERS
Macroeconomics outlook:

1. Low oil price à Increased demand for cars POSITIVE
2. Low EURO à Increased exports POSITIVE
3. ECB QE à inflated stock price POSITIVE
4. Developing countries increase for cars POSITIVE (china running negative account balance with Germany)

Trade idea:
This is why I believe purchasing VOLKSWAGEN group stock could be a good trade idea for 2015, it is more on the higher end
You also could try Renault-Nissan group + Peugeot PSA

As a hedge we could sell some American cars manufacturers cars shares or Fiat Chrysler group. As America have an appreciating USD, expected increase interest rate and no more QE.

Trade plan:
Buy limit Renault-Nissan at 65,60,55 SL 50, TP 80
Buy Limit VOW at 180 to 150 SL 125 TP 225
Buy limit Peugeot from 11 to 8 SL 5 TP 20

For any Hedge required on the way (bad car manufacturers outlook and short term retracement) à Sell short American car manufacturers + Fiat

CHF FISCAL POLICY OUTLOOK

I want to share with you an interesting article about Switzerland fiscal policies outlook:
http://www.letemps.ch/Page/Uuid/46bf...es_entreprises

Switzerland attracts foreign companies in his territories with special tax regime (only for foreign companies).
Under European pressure, it will be forced to abolish those tax reliefs to foreign companies by the horizon of 2019 to avoid European sanctions. (This is not fair to have a special tax regime for national companies and another one for international companies, countries might engage in taxation rate wars with dual taxation regime).

1) In order to avoid capital outflows from the country, politicians are discussing a corporate rate cut of about 6% on both international and national companies.
Politicians are very serious about it and from the tone of the article I would rate as +80% chance of being voted…

2)Furthermore, in Switzerland, company’s losses can be carried forward for a period of 7 years for taxation purpose. It might be decided that losses can be carried forwards indefinitely. (This is still relatively unsure)

 

1. Basically, this would not change much for international companies; I hope this will be enough to retain them here. However it would change a lot for national Swiss companies that would save lots of taxes.
   
2. Then need to see who will compensate those taxes:
   1. Citizen ??
   2. Shareholders ??
   3. Invent a new tax for national Swiss companies ??

   
   

I believe Citizens is the most likely.

Trade plan: Invest in Swiss listed stock price in 2016-2017 J (we are still too early and need to see how the plan will be articulated)

AUD WEEK 26-30 January 2015


http://www.businessinsider.com.au/an...0-cents-2015-1

Very important article from ANZ bank FX Strategist Mr Breen:

BOC Rate cut --> Bearish commodity currencies CAD/AUD/NZD
Outcome of Business confidence + CPI EXTREMELY IMPORTANT, COULD CONFIRM FURTHER EASING FROM RBA

ANZ AUD/USD forecast: 0.76 by Q2/2015

I totally agree with you.

" "

Nice job ChanhXanh.....not until recently did i add fundamentals to my trading .....i felt i was not pulsing the market the way i should...its early days...but i tell you...its been worth it....am subscribed already...you doing a great job...trust me...a few people would the once to appreciate this.....because a few truely understand......nice job..........