Thursday, November 7, 2013

AUDJPY - 7th November 2013 - Day trade #1

I only took one trade today.

I took a look on the daily chart and felt that the AUDJPY would behave bullish for the next week or so, based on technicals.

This meant that I'd be looking for long opportunities today.

Earlier today, weakish Australian unemployment figures came up, with the unemployment rate nudging up 0.1% and 30k full-time jobs lost. While this was bad news, I didn't feel it was that bad, and could be a statistical blip. I felt the plunge had been overplayed, and buyers would be looking to get in at some point, which would be around 93.400. At this point, price had also moved beyond 50% of the daily ATR(14), suggesting there isn't much downside left for the day.

Once the range formed around 93.400, I looked for tell-tale signs of an upturn, mainly high-volume, low-volatility candles. I timed it a little too early, though, as you can see. Price dove a bit before finally breaking out on the upside. I took profit just below 93.500.

Net pips won = 6.1 pips - 0.55 pips = 5.55 pips

I was aiming for 93.600 but when price stalled at 93.500 for a couple of candles, I decided to close here. I got the gut feeling that the market will range for most of today. There isn't any strong reason to rally after the earlier plunge.

I got work so that's all my trading for today.


I just took a look at my chart after finishing work and noticed that the AUDJPY shot up and completely recovered from the AUD-related unemployment plunge that took place earlier today.

The rallies were triggered by non-AUDJPY news events. The European Central Bank reduced rates to 0.25%, and US jobless claims for this week came well within expectations. How did these events influence the AUDJPY?

The AUDJPY reacted positively to the EUR interest rate drop. This meant good news for Australia, and bad news for Japan. Why? Some thoughts:

- yield on the EUR fell lower, making the AUD relatively more attractive for yield seekers (the AUD still retains one of the highest interest rates amongst developed countries. With the 2nd most traded currency now near 0 percent, the AUD shines even brighter).
- the Eurozone is a manufacturing zone. Stimulus should help commodity prices, thus help the AUD. In contrast, it doesn't help the JPY, which competes against Europe. 

Now, the AUDJPY's reacton to US jobless claims is quite interesting. US jobless claims came well within expectations (336k vs 335k) so why the highly volatile reaction? I'm quite puzzled. US jobless claims did fall, but as it was within the overall forecast, this should have been priced in already. I guess this was good news, even if expected, and the USD rallied anyway. I'm guessing the AUDJPY moved due to some correlation with the USDJPY, taking out stops on the upside and triggering its own rally.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.