My FX Journal - 80% Fundamental 20% Technical

This is a discussion on My FX Journal - 80% Fundamental 20% Technical within the Trading Journals forums, part of the Reception category; Originally Posted by FXX Sterling is a difficult one at the moment. With trade talks lurching behind a blackmail bill ...

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Old Oct 25, 2017, 7:30am   #25
Joined May 2012
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Originally Posted by FXX View Post
Sterling is a difficult one at the moment. With trade talks lurching behind a blackmail bill and the EU beginning to loosen their hardline, it's in no man's land. If Gdp is worse than expected we could get a few pips out of EURGBP. My focus today will be Cad with policy and oil data later today. I just don't feel like there is a lot of interest in sterling. There are hardly any institutional positions according to cot data http://www.cotbase.com/
I am actually on the same page as you. The prospect of a deviation on GDP is slim. I will watch the release and see what it might bring but I don't think there will be any surprises.

I agree the opportunity will be with BOC later in the day or night in my case i.e. 1 am. I am reluctant to stay up for that. OIS data suggest that the probability of a hike in November is 18 % given what happened with retail sales last Friday. Should it be a surprise it would be a 200 - 400 pips move. The nugget will be in their statement and I am not good at interpreting changes in key words. Your Ransquawk will come in handy.
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Old Oct 25, 2017, 7:42am   #26
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Originally Posted by Brumby View Post
I am actually on the same page as you. The prospect of a deviation on GDP is slim. I will watch the release and see what it might bring but I don't think there will be any surprises.

I agree the opportunity will be with BOC later in the day or night in my case i.e. 1 am. I am reluctant to stay up for that. OIS data suggest that the probability of a hike in November is 18 % given what happened with retail sales last Friday. Should it be a surprise it would be a 200 - 400 pips move. The nugget will be in their statement and I am not good at interpreting changes in key words. Your Ransquawk will come in handy.
I have a preliminary order to long AUDCAD. HSBC have a long on it and when that popped up on ransquawk I wondered what was the reasoning behind it. Long story short I did a bit of homework and discovered NK export 1.6 million tons of coal to China and UN sanctions have now bitten and China now need to fill that gap. 17 percent of Australia's exports are coal and they are right on their doorstep. Further to that I also found the AU government sold a coal mine 2 years ago for 1 million thinking its not really worth it and now it's worth 750 million. Canada data has been progressively worse recently so any dovish tone from that statement could trigger this swing trade. If sentiment is positive on another currency I might also take one there selling Cad against it.
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Old Oct 25, 2017, 8:24am   #27
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I have a preliminary order to long AUDCAD. HSBC have a long on it and when that popped up on ransquawk I wondered what was the reasoning behind it. Long story short I did a bit of homework and discovered NK export 1.6 million tons of coal to China and UN sanctions have now bitten and China now need to fill that gap. 17 percent of Australia's exports are coal and they are right on their doorstep. Further to that I also found the AU government sold a coal mine 2 years ago for 1 million thinking its not really worth it and now it's worth 750 million. Canada data has been progressively worse recently so any dovish tone from that statement could trigger this swing trade. If sentiment is positive on another currency I might also take one there selling Cad against it.
I don't understand the trade rationale to long AUD/CAD for the BOC event. If the BOC statement is somewhat dovish, then I would long USDCAD as currently USD is well supported. Conversely if the BOC statement is somewhat hawkish then I would sell AUDCAD as currently the sentiment on the AUD is negative due to the CPI numbers today.
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Old Oct 25, 2017, 10:47am   #28
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I don't understand the trade rationale to long AUD/CAD for the BOC event. If the BOC statement is somewhat dovish, then I would long USDCAD as currently USD is well supported. Conversely if the BOC statement is somewhat hawkish then I would sell AUDCAD as currently the sentiment on the AUD is negative due to the CPI numbers today.

Sorry it has nothing to do with the BOC event although there is a potential for the event to line up.

My rational:

My observations of data points is that any individual release doesn't change central bank policy and only serves as a sentiment driver. Inflation data globally has been soft although picking up. out of the last 65 q/q CPI stamps for AU, 52% of them have had higher expectations than the release and 91% have missed (including above and below expectations). Out of the last 44 trimmed q/q CPI 40% of them had higher expectations than the release and 75% have missed(including above and below) - I am a bit of a nutcase when it comes to details like this, it helps me solidify my judgement. With a great deal of the data points coming out of line with expectations to me is a property of an imperfect estimation methodology so there is a great deal of margin of error.

Looking at the AU CPI data q/q, previous stamp was 0.2 and today it is 0.6 which is positive. Trimmed CPI has been bouncing between 0.4 and 0.5 since July 2016 so it is range bound but more importantly not getting any worse.

China is a critical piece of AU's economy and they have been ticking up in various areas of the economy so their demand for raw materials is growing and this is confirmed by the most recent BOA policy statements and the price of ore like copper and coal. All this to me puts the BOA on hold with a slightly hawkish tone.

Moving onto Canada, exports have been weakening, Inflation weakening, business confidence is worse than earlier in the year, inventories picking up while retail sales worsening, building permits and starts worsening, worsening trade balance, foreign investment worsening. There also seems to be market chatter to the tune of BOC potentially hiking too soon and now going into a hold pattern until data improves. I don't expect a hike today and I will be looking for anything negative in the minutes that were not present in the last statement.

So in summary I see greater risks to the downside for CAD than I do AUD and looking to capture a reassertion of AUD fundamentals and a softening of the current CPI sentiment. I am hoping the BOC minutes will be the catalyst and my order is set for a breakout of this range so if it doesn't trigger then its not in issue.
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Old Oct 25, 2017, 10:57am   #29
Joined May 2012
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Originally Posted by FXX View Post
Sorry it has nothing to do with the BOC event although there is a potential for the event to line up.

My rational:

My observations of data points is that any individual release doesn't change central bank policy and only serves as a sentiment driver. Inflation data globally has been soft although picking up. out of the last 65 q/q CPI stamps for AU, 52% of them have had higher expectations than the release and 91% have missed (including above and below expectations). Out of the last 44 trimmed q/q CPI 40% of them had higher expectations than the release and 75% have missed(including above and below) - I am a bit of a nutcase when it comes to details like this, it helps me solidify my judgement. With a great deal of the data points coming out of line with expectations to me is a property of an imperfect estimation methodology so there is a great deal of margin of error.

Looking at the AU CPI data q/q, previous stamp was 0.2 and today it is 0.6 which is positive. Trimmed CPI has been bouncing between 0.4 and 0.5 since July 2016 so it is range bound but more importantly not getting any worse.

China is a critical piece of AU's economy and they have been ticking up in various areas of the economy so their demand for raw materials is growing and this is confirmed by the most recent BOA policy statements and the price of ore like copper and coal. All this to me puts the BOA on hold with a slightly hawkish tone.

Moving onto Canada, exports have been weakening, Inflation weakening, business confidence is worse than earlier in the year, inventories picking up while retail sales worsening, building permits and starts worsening, worsening trade balance, foreign investment worsening. There also seems to be market chatter to the tune of BOC potentially hiking too soon and now going into a hold pattern until data improves. I don't expect a hike today and I will be looking for anything negative in the minutes that were not present in the last statement.

So in summary I see greater risks to the downside for CAD than I do AUD and looking to capture a reassertion of AUD fundamentals and a softening of the current CPI sentiment. I am hoping the BOC minutes will be the catalyst and my order is set for a breakout of this range so if it doesn't trigger then its not in issue.
NAB take on the relative stage of economic growth between Canada and Australia.

rate-hike-implications-audcad_12092017.gif
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Old Oct 25, 2017, 1:15pm   #30
FXX
Joined Oct 2017
FXX started this thread Trade on USDZAR

Ransquawk announcement: South African treasury says total borrowing requirement over the next 3 years to rise to 1TRN Rand. They are on the brink of another downgrade and this will seal the deal in that regard.

entry 13.78199 target 13.85371
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Old Oct 25, 2017, 1:17pm   #31
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Trade on USDZAR

Ransquawk announcement: South African treasury says total borrowing requirement over the next 3 years to rise to 1TRN Rand. They are on the brink of another downgrade and this will seal the deal in that regard.

entry 13.78199 target 13.85371
target hit
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Old Oct 25, 2017, 1:33pm   #32
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Originally Posted by Brumby View Post
I am actually on the same page as you. The prospect of a deviation on GDP is slim. I will watch the release and see what it might bring but I don't think there will be any surprises.

I agree the opportunity will be with BOC later in the day or night in my case i.e. 1 am. I am reluctant to stay up for that. OIS data suggest that the probability of a hike in November is 18 % given what happened with retail sales last Friday. Should it be a surprise it would be a 200 - 400 pips move. The nugget will be in their statement and I am not good at interpreting changes in key words. Your Ransquawk will come in handy.
I missed a nice trade on GBPAUD post GDP but to be fair i wasn't all too interested in it which really isn't great since the sentiment opportunity was right there for the taking.
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