Short EUR/USD

Short Jun '14 @ 1.3820

Lower German inflation gives ECB more ability to QE, which they were likely to do anyways, this just makes it easier.  As will trouble from Ukraine, which is about as certain as anything can be.

Expectations for US jobs are pretty high, so there's room for disappointment...biggest risk to this trade.  FOMC will likely be 'stay the course.'

Target is...I don't know.  It depends on how long I want to hold this trade.  I may take it for the initial leg down, then try it short it again after a rebound.

UPDATE: stopped out at 1.3820 after EU inflation numbers.  I have no stomach to be the wrong way.  Lack of conviction?  On timing, I think so.  EU inflation numbers won't push ECB to QE before AQR is done...but when will it be expected?  I'm going to watch ADP numbers this morning...thinking AUD/USD may be closer.
UPDATE2: and so I did.  Q1 GDP came in at .1%, far lower than expectations.  Everything jumped on the news, but was overdone.  Used moderate leverage to short AUD/USD on the snapback @ 92.48, covered at 92.34.  Gain of 4.7%.  Will be watching tonight's Aussie and Chinese data...

Trade ideas

I know what, but I don't know exactly when.  I want to short AUD/USD, but don't think its ready until summer.  Same for EUR/USD.  Later in the year for GBP/USD.
USD/JPY is have long, and I think earlier than the above.  But when?  Hard to say, as I don't think that the BOJ will actually start QE until summer, but I do think it's highly anticipated, so I don't know that the market will wait that long.
I think the smartest thing to do now is just wait as I think equities will move down sharply Q2, and larger currency moves summer + this year.  Let's see if I'm smart enough to wait, lol.

New trade

AUD spiked on employment news that was worse than it looked on the surface (strong part-time job gains, large full-time job losses; lower unemployment rate, but a lower participation rate), so shorting seemed an interesting prospect once the much worse than expected Chinese trade data came out.  I expect this to be a very short-term trade with minimal gain or loss; I still think the uptrend is intact (or at least not ready for a reversal just yet).

Short 6A (AUD/USD futures) June '14 contract @ 93.79
Stopped out at 93.79.  I don't have time to keep playing with it, so I'm moving on for now.

Not so sure AUD is set to go lower just yet

I still don't have a trade idea, and don't want to just dick around in the markets...I'm far too busy now for that anyways.  I think AUD is a good short, but I don't think its had it's last run yet.  Oil is too volatile and unpredictable with Ukraine and ME concerns laid over a backdrop of slow Western growth, more efficient vehicles and increasing US oil and gas production.  GBP is overvalued and their property bubble is getting a bit silly, but I don't see a catalyst for a reversal (then again, I'm not looking too hard at that one).  JPY should be going lower, but now the BOJ seems to be balking at additional QE.  EUR seems overvalued on both Ukraine and likely (eventual) additional QE, but as the ECB's balance sheet decreases with repayment of LTRO's, I won't touch it without an indication of QE and/or continuation and need for new LTRO's (expire/repayment by December I think).  S&P looks topped out, momo stocks are finally taking a hit, but I've seen these corrections before; without a catalyst, I don't see a market correction coming soon enough to justify shorting after the few days of drops we've had.  There's still alot of stupid out there willing to buy more exciting momo stocks at + 50x p/e and utterly stupid business models (getting people to pay for games that would have sucked even in the 80's, etc.).

I think I'm going to wait for something more obvious.  In the meantime, here is my reasoning on my most recent trade idea (that is on the back burner for now, UNLESS of course tomorrow's FOMC minutes and Aussie employment numbers suggest to do the opposite):

Reasoning for short-term stability/rise in AUD:
1) anticipated Chinese stimulus in Q2, even though I think markets will be disappointed;
2) a less-hawkish FOMC Minutes release tomorrow;
3) a short rebound in Aussie economy, and a general expectation of a return to normalcy, and iron ore prices  recovering (a big dead cat bounce);
4) commitment of traders indicating a shifting of positions from short to long, but not so far as to create a snap-back yet;
5) From the RBA's perspective, a housing bubble that may not be compatible with low interest rates and a weak currency (I'm suggesting they'd rather let the air out, not pop it).

I don't think the fundamentals look good for AUD medium-term, though:
1) Chinese rebalancing is moving forward, and with it, slower growth and less need for iron/copper/etc. imports (that's not even considering the possibility of larger defaults in China causing runs, while likely to be controlled as to extent and duration, will still hit confidence and growth);
2) normalization of Fed policy (but I've been surprised before...);
3) Aussie housing bubble bursting, along with other credit (see below).  It is awfully reminiscent of the U.S. housing bubble;
4) Once popped, the RBA will likely go dovish (for the RBA that is, not necessarily like the Fed).
5) current high value of AUD has and is negatively impacting exporters (e.g., car manufacturers packing up and gone by 201?6?), and with it employment.

via macrobusiness.com.au


via macrobusiness.com.au


via macrobusiness.com.au