Today's Trade: Friday 27 September

Jarratt Davis

Special Consultant to the FPA
Messages
1,495
After comments overnight from the Bank of Japan regarding the proposed corporate tax laws, we have seen the yen strengthen. If we couple this with a weak Asian session performance of the Australian dollar, we can look for for selling opportunities on the AUD/JPY currency pair throughout today's London session.
 
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redrag

Private, 1st Class
Messages
51
After comments overnight from the Bank of Japan regarding the proposed corporate tax laws, we have seen the yen strengthen. If we couple this with a weak Asian session performance of the Australian dollar, we can look for for selling opportunities on the AUD/JPY currency pair throughout today's London session.

Hi Jarratt

Nothing to do with this trade, but can you explain to me why CHF is so strong? It's trade-weighted index is higher than it has been since it introduced the "cap" against the euro in 2011. True, it's well above the EURCHF cap of 1.20 but the SNB does monitor it trade-weighted value too, as can be seen in their latest report.

I don't see the need for "safe haven" purchases at the moment and there's certainly no carry advantage.

What am I missing?

Kind regards.


LATER:

OK, I realise that CHF was being used as a safe haven because of the risk of the US "running out of money" but, hey, it won't happen. On the other hand, tensions over Syria have eased, also Iran. Relations with Russia are better.

Is it the case that (again) everybody would be thinking this and so the market pushes the other way to take out the stops? Or am I being a conspiracy theorist. But then I ask myself why only 10% of traders are profitable. Is it that those 10% are contrarian? But you're successful and I don't see you as contrarian. I can see that you're quite prepared to accept a loss and that you stay out of volatility.

What do you put your success down to?

Regards.
 
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yetiman

Private
Messages
19
Hi Jarratt,
thanks for the heads up got in on a small pull back at 91.83 and run down to 91.64 just above S2.
cheers Brian
 

flashking71

Private
Messages
13
After comments overnight from the Bank of Japan regarding the proposed corporate tax laws, we have seen the yen strengthen. If we couple this with a weak Asian session performance of the Australian dollar, we can look for for selling opportunities on the AUD/JPY currency pair throughout today's London session.


Thank you for the analysis, is there any reason for the poor performance of AUD? Can't find any news to warrant the sell off.
Thanks
 

Red Herring

Corporal
Messages
388
Hi Jarrat

Good forecast again from you. Do you expect this sell opportunity to continue in the next week?

Have a nice weekend.
 

Jarratt Davis

Special Consultant to the FPA
Messages
1,495
sir
can you please explain why and how the tax cut will make jpy strong??
Hi Bangla,

Basically the reason the yen strengthened was because the finance minister stated that they probably wouldn't be adjusting the corporate tax rates, as everyone was expecting based on previous rumours.

It weakened in the first place because it was an added measure to the growing stimulus package, which ofcourse weakens the yen.

The idea that they actually might NOT impose it so soon, caused the markets to take the other view, and the yen then strengthened.

So It wasn't the fact that they were cutting taxes that strengthened the yen, it was actually a rumour that they might not be after all...

Hope that helps!

(I'm sure the yen will be up and down as the rumours continue to surface, but you can make pips off these things in the short term)

Any questions, let me know!

J
 
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Jarratt Davis

Special Consultant to the FPA
Messages
1,495
Hi Jarratt

Nothing to do with this trade, but can you explain to me why CHF is so strong? It's trade-weighted index is higher than it has been since it introduced the "cap" against the euro in 2011. True, it's well above the EURCHF cap of 1.20 but the SNB does monitor it trade-weighted value too, as can be seen in their latest report.

I don't see the need for "safe haven" purchases at the moment and there's certainly no carry advantage.

What am I missing?

Kind regards.


LATER:

OK, I realise that CHF was being used as a safe haven because of the risk of the US "running out of money" but, hey, it won't happen. On the other hand, tensions over Syria have eased, also Iran. Relations with Russia are better.

Is it the case that (again) everybody would be thinking this and so the market pushes the other way to take out the stops? Or am I being a conspiracy theorist. But then I ask myself why only 10% of traders are profitable. Is it that those 10% are contrarian? But you're successful and I don't see you as contrarian. I can see that you're quite prepared to accept a loss and that you stay out of volatility.

What do you put your success down to?

Regards.

Hey Redrag,

You basically got it yourself! ... It's purely safe haven play (They probably won't run out of money, but would you want to be the guy long USD if they actually did?) It is a concept called 'career risk' and basically means that it doesn't really matter what you do as long as it is the same as everyone else. This way you cannot be blamed or stand out as an idiot if it all goes wrong.

If your IFA invested you into really bad index tracking fund run by HSBC, It's not his fault it went wrong they can blame the markets and point to the HSBC name, and you'd probably just take it. On the other hand, if he invested you into a brand new start up hedge fund that was full of promise but was unknown, unregulated and using new strategies .... He would be called incompetent and lose all his business / get fired.

It is also the reason why the superstars (Buffet, Tepper, Cohen) break away, start their own hedge fund and make billions by doing what they think is best rather than trying to stay tied to the herd.

Good question!

I think the best way to answer that is to think about the time when I was not successful and compare the two eras for differences in my approach..... And I have to say the major difference is in my head.

Now, I pretty much don't even wonder if I will make a profit , it's what I do ... It's my profession. Of-course I have losing days / weeks / months but because I know my technique those times do not really shake my confidence.

When I was struggling, I used to have losses and then doubt myself, change my strategy or study the charts for a new pattern or something else that magically never lost .... I think the reason I did that, was simply because I didn't actually know what I was doing. So I was getting into a trade and terrified that the price would go the other way, And if it did go the other way I'd take a loss and then try and trade with that direction, but then I'd get stopped again and before i knew it I was just chasing price based on little spikes up and down on a 5 minute chart! (I was just trading blind)

Now If the price goes the other way, I check the wires for a reason, and if there is nothing my conviction remains .... Because I understand WHY the markets move and WHAT causes those moves.

So I'd say the key is having that knowledge and understanding so that your psychology doesn't kill you.

Hope that helps!

J
 
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Jarratt Davis

Special Consultant to the FPA
Messages
1,495
After comments overnight from the Bank of Japan regarding the proposed corporate tax laws, we have seen the yen strengthen. If we couple this with a weak Asian session performance of the Australian dollar, we can look for for selling opportunities on the AUD/JPY currency pair throughout today's London session.


Thank you for the analysis, is there any reason for the poor performance of AUD? Can't find any news to warrant the sell off.
Thanks
Hi Flashking71,

I think on this occasion it was just the fact that the AUD had fallen overnight and everyone was becoming 'risk off' because of the weekend and the looming US debt ceiling votes etc...

Basically no one would have been buying the Riskier currencies at that time, So I thought it might be a great opportunity to pair it with a strengthening currency like yen :)

Hope that helps!

J
 
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