FX lunch time update 28 December 2017
Yesterday’s comments can be copy/pasted today. We continue to see USD supply into year end.
Not so much on fixings, I guess most investors have learned their lesson over the years not to concentrate all flows inside a 5 minute window around 4 PM London time but pretty constantly in between.
USDJPY finally came off with persistent better economic data.There are a few big option expiries at 113.00 (1.8B) and 113.50 (3.5B) that could keep it up for now . I am short from 113.30, keep it tight in case the option traders would like to see it spike around 3PM gmt , but will sell into the rally if seen. I am also still longEURUSD, where I trailed the stop now to 1.1920, which held the morning retracement.
I will cover both tomorrow afternoon if the USD slide continues
The tiny AUD long and USDCAD short have been covered with about 0.5% profit . I am not sure how much further both can run , prefer to take what I’ve got on these small positions.
I reckon month end Bundesbank led EURGBP demand this morning kept a lid on the Cable. Which brings me to the currencies I’d like to counter trade when the USD sales will be over at 4PM gmt tomorrow.
Mainly GBP and NZD are my favs.
I’d like to either sell GBPJPY or straight Cable . GBPJPY as I said yesterday close to 153 or a break sub 150 will trigger a position. I will narrow it down tomorrow once we have a clearer view on the flows. I do believe in difficult Trade negotiations coming up with EU, sparking uncertainty among foreign companies in Uk and possibly investors. Since the flows have been taken GBP higher this, I view as a selling opportunity come tomorrow 4PM. Anything above 1.3475 towards 1.3550 will be good enough for me to enter a short there. Above 1.36 I will need to think about the strategy, unless it flies before tomorrow’s fixing, in which case it’ll feel like an even better sell.
NZD is enjoying decent short covering since we broke back above the 0.6920 wedge resistance. The amplitude of the wedge is about 200p ,which gives 0.7120 as a target, give and take a few for the yearend uncertainty. 0.7108 is the 50% fib of the Sep-Nov decline and 0.7132 a pretty decent swing level. 0.7105 = 200 DMA. I will enter short in that zone if seen tomorrow afternoon. Leave some space to add into the multiple lows 0.7168 and the 61.8% fib at 0.7185 zone. Stop for the play will be above 0.7210 .