FXStreet

The 100,000 usd/jpy has been closed 6pips ahead. I'd hoped for a sustained appreciation to 116.40+ but doubt this will happen prior to the session close. The Dow never made it above its open (8,635.31) , and so we've seen a retracement of earlier dollar gains.

eur/jpy has been shorted for 100,000 units from 117.10 , stop 117.55 . I'm expecting a return to 116.5 , perhaps prior to the Tokyo session. Also the usd/chf limit order Long 100,000 from 1.45 has been activated . This currently stands 1pip ahead.

Bal: 101,748.47 ::: P&L: 1,724.51 + (-132.88)
short CHF 145,000 , EUR 100,000 ::: long JPY 11,710,000 , USD 100,000

current trades :
S eur/jpy from 117.10 , stop 117.55 , tp 116.03
L usd/chf from 1.45 , stop 1.4480 , tp 1.4595

I've entered a Long for 100,000 usd/jpy from 115.89, stop 115.70. The pair had peeked above 116 a moment ago and may be staging a return to 116.40 or beyond.

Today's economic news was rather good IMO .

Greenspan's testimony is here

synop. :
Fed Chairman Alan Greenspan says that absent further shocks, the U.S. economy is poised for sustainable growth, though depressing effects still linger. In addressing the falling dollar, he cautioned against overinterpreting its drop. He also said that corporate governance problems could hurt business efficiency, and more reports of corporate misdeeds may continue to surface. Moreover, he reiterated the fact that price inflation has fallen to its lowest level in four decades. Fed estimates for US Real GDP are 3.56-3.57% in 2002, 3.5-4.0% in 2003. Price Index 1.5-1.75% in 2002, 1.5-1.75 % for 2003. Jobless rate 5.75-6.00% in 2002, 5.52-5.50% in 2003.

June Industrial Production rose 0.8% (exp 0.4% prev revised to 0.4% from 0.2%).
June Capacity Utilization 76.1% (exp 75.7% prev revised to 75.6% from 75.5%).

Last night's trades worked well yielding $1,625.59 to bring the account balance up to $101,778.88.
The only trade that had failed was a limit order to short 100,000 eur/usd from 1.01 that stopped at 1.0110.
The usd/jpy trades closed in the 115.70's and at 115.55. The usd/chf trade took profit at 1.4504.

The only open trade is a usd/chf short from 1.4531 for 50,000 that I'd placed shortly after noon (EST) hoping to catch a retracement to 1.4500 from 1.4550.

** this trade was stopped while I'd been writing this , looks as though the Dow is about to exceed its open. USD is responding positively across the board. Notice the account revision below.

Bal: 101,696.38 ::: P&L: 1,672.79 + (0)
no open trades
current trades :
none

The usd/chf limit order short @ 1.4598 for 100,000 has fired.
I've also added 100,000 usd/jpy short from 116.22 , stop 116.6 , tp 115.55 .

It appears that trading is relatively thin this evening. Price formation among the majors is characterised by small average range variations in clearing prices at most intervals punctuated by 15 to 20 pip spikes, occuring in either direction, that are quickly returned. The latter is indicative of low liquidity.

The usd/chf has recently begun heading towards 1.46 though the dollar has been gradually declining most of the session. The usd/chf seems prone to erratic reversals and occasionally decouples from both dollar and euro movements. I've closed the 70,000 usd/chf short for a 24pip loss an am going to place a limit order to short usd/chf @ 1.46 for 100,000 units. This will be intended as a medium range trade targeting 1.44 w/ a stop @ 1.4715.

the account balance now stands at 100.153.29 w/ -90.38 in unrealized losses.

Monday, July 15, 2002

new trade

Short 150,000 usd/jpy from 116.15 , stop 116.32
* this trade is comprised of two positions- one for 100,000 and a second for 50,000 .

The usd/jpy trade is in response to a fall below 116.20 towards 116. We'll have to see what happens at 116 , but I'm assuming it will penetrate towards 115.7 again.

eur/usd is up to 1.0080 again. There's a good chance it will hit 1.01 tonight , but to this point hasn't displayed sufficient momentum to break significantly higher. I'm frankly not sure which way it will move in the near term , so I'm sitting still. If there's a retracement to .99 or .98 , these levels might provide good buying opportunities. I have a suspicion that we'll be looking at 1.025 within the next month. This may not last long , but until dollar pressure has abated somewhat the dollar down draft will pull the euro higher.

current trades
S 100,000 usd/jpy from 116.15 , stop 116.32
S 70,000 usd/chf from 1.4563 , stop 1.4607, tp 1.45

the Nikkei is currently up 0.28% , from a recent high of 10,500 . A reflection off of 10,400 , and continuation upwards could add value to the Yen .

more good news

from FXStreet :

Tom Fitzpatrick, senior technical analyst at Citibank in New York.
Monday, July 15, 2002
"Parity is a psychological, not a technical level...and whether we pause around parity or not, we are likely to see significant further dollar losses...Our initial target is $1.03 to $1.0450. If that level is taken out, it actually casts a question mark against the whole of the dollar's rally of the last seven years, and could open up a full-blown bear market for the dollar."


Julian Jessop, chief European economist at Standard Chartered Bank.
Monday, July 15, 2002
"The dollar is under pressure from everything from economic problems to asset reallocation away from the U.S. and corporate accounting problems. It's difficult to see any positive factor for the dollar at the moment. The root of the problem is the U.S. current account deficit. If the U.S. doesn't have to attract an enormous amount of foreign capital, people wouldn't have to worry about domestic problems. One solution to this is a weaker dollar."

I've entered a short for 70,000 usd/chf from 1.4563 targeting 1.45 , stop 1.4607.
Also , a limit order to short 100,000 eur/usd @ 1.01 has been entered. I'm expecting to catch some retracement on this , thought I'd gotten stung by the same strategy last night.

There appears to be some resistance at 116.20 usd/jpy . If this breaks and subsequently breaches 116 I'd expect a revisitation of 115.7 and likely 115.5 . There's a limit order for 100,000 long waiting at 115.60 .

Intervention Update

Forexnews :
7/15/2002 8:12:00 PM Japan's Eco Min Takenaka says they must take action on FX if rates move away from fundamentals and that he wants to see BoJ take more easing steps. He also states that he wants BoJ to consider fx moves when deciding monetary policy and adds that Japanese stocks are undervalued.

for further analysis go to the Forexnews Japanese Trading Preview

Also , tomorrow chairman Greenspan reports to Congress and June Industrial Production figures come out with the expectation of a %0.4 rise along with June Capacity Utilization baring a consensus forecast for a %0.3 improvement. Each of these will factor significantly on the dollar considering its recently lows . Their imminence may inhibit further dramatic movements this evening through the first half of the NY session.

Evening Round-up

We're up $268.79 on the account and $241.66 in realized P&L w/ no open trades.

We'd gotten walloped on the 200,000 eur/usd limit order long @ .9995 . I had expected a correction from the 1 - 1.0050 range to either the low .9900's or into the .9800's; the trade was stopped @ 1.0055 ( - $121.00 ) . Rather that retrace , the euro proceeded virtually unabated to 1.0090. It's currently at 1.0040 . The Tokyo and London sessions may push this above 1.01 if the dollar resumes its decline.

Dollar limit orders @ 116.09 (100,000), 115.74 (100,000) , 115.79 (10,000) , which had replaced the original usd/jpy Long trades from the low 117.00's , saved the day by returning $534.61when closed shortly after the close of the NY session for 116.21 and 116.23. A 100,000 usd/chf Short from 1.4583 placed at about 11:00 am , that closed at 1.4556 an hour later, provided $185.49 to bring the account from last night's low of 99,514.62 to 99,700 . The remainder of today's profits are entirely attributable to the usd/jpy trades.

Tonight should prove interesting - will the markets experience buyer's remorse and sell the euro , or will such a robust break above parity inspire Euro bulls to begin climbing for 1.0250 ?

I'm watching eur/jpy for a break below 116.5 as an opportunity to short towards 115.

lessons for the day :
stop loss orders are good
chasing interventions downhill is annoying and inefficient - use limit orders instead.