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04-25-2007, 10:55 AM
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DailyFX Analyst
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Quote:
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Originally Posted by Andy K
Richard,
Can you give an example of how/when you would use this hedging strategy (presumably you mean hedging cable against geppy?).
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In a general sense, I may be long spot cable but be playing pullbacks on yen strength in the cross throughout the sessions. Because the cross is essentially synthetic, I look for short term opportunities in one, while holding a leg long or short. In my honest opinion, for example, being long the major sterling and short the cross just doesn't make sense...because ultimately the cross has to respond to major action and vice versa. |
04-25-2007, 10:56 AM
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Quote:
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Originally Posted by JohnG_FX
Thanks Richard,
I still do use GBPJPY as a hedge, usualy for a news release, any big move on USD and hence cable is offset by the USDJPY move.
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Just a quick question, are these usually done on a short term basis or do you hold the hedge for longer than a week (for example)? |
04-25-2007, 11:00 AM
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Well, cable still looks pretty strong to me, so I'm still playing it from the bull side. Plenty of time to get on board if/when it turns.....
Break out of wedge, tight bol bands suggesting a momentum move ard the corner, macd CROSS, etc....
2.0106 is the sept 92 high, and to me that remains the big lvl on the topside.
Euro currently stalling at the 1.3668 lvl - the dec 04 high. If that goes (I think 3750 is on the cards), no reason for cable not to retest the recent high.
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04-25-2007, 11:08 AM
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Quote:
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Originally Posted by Richard Lee
Just a quick question, are these usually done on a short term basis or do you hold the hedge for longer than a week (for example)?
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It depends, usualy these days it's only a short term trade, a year or so ago I found it easier as there was generaly a negative correlation between cable and GBPJPY in that GBPJPY would normaly go with the USDJPY side of the cross, so back then I wouuld often hold opposing positions for a week or more. That doesn't occur so much now if at all as everyone is intent on selling the Yen regardless, and USDJPY can get stuck at an importer/exporter interest level like the current 119.00/120.00
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John G
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04-25-2007, 11:13 AM
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Quote:
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Originally Posted by Richard Lee
Well there has been talk of some speculators taking the bid side ahead of next week's data, although the schedule is running pretty thin. Overriding theme right now is the underlying bet that rates may be increased b 50 basis points. I wouldn't be surprised if positions were pared back shortly after the decision in two weeks. Although futures are still pricing in the likelihood of a rate hike after the upcoming May meeting, the actuality may not be realized till well into the third quarter.
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Yes, i can understand the the desire, but not at these levels, Furhter upside must come from the backs of the shorts covering or there is too much absorbtion for the longs. Just think probabilities favour shorts, myself not playing here short or otherwise until prices come off, buying a break is my thinking at what level God only knows but volumes are geting thin right now, i see another small leg up before any conciderable correction of magnitude, which im quite sure will be bought hard.
Yet on the other side If euro is about to become major currency of the future, then pound must either decline to a parity with it to be enlisted within its strucutre, which i sure must happen further down the road. So much to speculate upon.
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04-25-2007, 11:24 AM
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Quote:
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Originally Posted by JohnG_FX
It depends, usualy these days it's only a short term trade, a year or so ago I found it easier as there was generaly a negative correlation between cable and GBPJPY in that GBPJPY would normaly go with the USDJPY side of the cross, so back then I wouuld often hold opposing positions for a week or more. That doesn't occur so much now if at all as everyone is intent on selling the Yen regardless, and USDJPY can get stuck at an importer/exporter interest level like the current 119.00/120.00
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good point on the importer exporter levels...should be interesting what happens next week when those particular exporters are off on holiday.
What I have found though is the overwhelming relationship that still exists with the GBPJPY and USDJPY in the overnight. Seems like there still may be something there to trade. |
04-25-2007, 11:27 AM
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Quote:
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Originally Posted by Jac144
Yes, i can understand the the desire, but not at these levels, Furhter upside must come from the backs of the shorts covering or there is too much absorbtion for the longs. Just think probabilities favour shorts, myself not playing here short or otherwise until prices come off, buying a break is my thinking at what level God only knows but volumes are geting thin right now, i see another small leg up before any conciderable correction of magnitude, which im quite sure will be bought hard.
Yet on the other side If euro is about to become major currency of the future, then pound must either decline to a parity with it to be enlisted within its strucutre, which i sure must happen further down the road. So much to speculate upon.
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good point....the market looks considerably thin considering the action that has been happening. volatilities are pretty low in both the major and sterling crosses...making conditions mature for short squeezes on itchy trigger fingered traders.
one thing, I don't understand how the pound would come to parity to fall within the structure...are you referring to a possible inclusion o fthe pound in the euro or the EURGBP cross pair?
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04-25-2007, 11:29 AM
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Quote:
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Originally Posted by Richard Lee
What I have found though is the overwhelming relationship that still exists with the GBPJPY and USDJPY in the overnight. Seems like there still may be something there to trade.
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I haven't actualy had a look at that, I will do so. thanks
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04-25-2007, 11:45 AM
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Richard sorry, i meant inception into the EU only seems rational to me to think this
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"chance favors the prepared mind"
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04-25-2007, 11:52 AM
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As expected, the currency looks to break out in the intraday, probably making another move in the overnight.
Ultimately, speculative traders may be looking to potentially add to their positions at this point on a retrace.
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04-25-2007, 11:54 AM
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Quote:
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Originally Posted by Jac144
Richard sorry, i meant inception into the EU only seems rational to me to think this
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any reason?
there's just an overwhelming sentiment that the UK will never want to be added to the current Eurozone roster. |
04-25-2007, 12:37 PM
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Quote:
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Originally Posted by Richard Lee
any reason?
there's just an overwhelming sentiment that the UK will never want to be added to the current Eurozone roster.
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Well i think its coming down to global consolidation, speculations of Ameridollar Mexico USA Canada joing seems like the path of nations
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04-25-2007, 02:24 PM
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Any opinions?
Trading at 237.74, the GBPJPY has traded in relatively the same spot now for most of the New York session as the 238 psychological figure remains a formidable barrier. As a result, downside momentum is likely to ensue, backed by confirming momentum indicators. A stochastic death cross has already formed in line with a divergent MACD histogram. However, downside fences remain thick with the 237.58 (200 hMA) and 237.45 (100 hMA) figures looming just below. Should the aforementioned be taken out, sights will likely target the 237.00 psychological.
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04-25-2007, 02:34 PM
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It seems the shake out upthrust 5-6 hrs ago was balance by its brother 2 hrs later with same magnitude, it hsould become interesting here pretty soon
Maybe a test of the hrly 236.88 lo which seemed to show good demand, 4hrs provides good demand around the 100 bar MA, maybe nobody home anymore. Not likely that nobodies home. EW wise looks like it could use a shot north to 238.30-40 area
There is no shortage of supply that is forcertain, think the LT carries are more than happy unloading into the rallies as the charts indicate
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"perception is the measure of evolution"
"chance favors the prepared mind"
Last edited by Jac144; 04-25-2007 at 02:47 PM..
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04-26-2007, 03:47 AM
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Morning all
Let's see if we get some decent movement today.
Still holding the cable option straddle and short on spot @ 2.0057 it needs to hold below 2.0074 today or else another 2.0130 test is likely and probably up to the 2.0230's imo
My downside target is 1.9940 looking for 1.9929/00 to hold the downside for a next possible move up, below 1.9900 and I think 1.9800 or lower is likely.
I'm getting hung out to dry on the Dow, I have a short june futures contract at 12,976 which is not looking too clever at the moment 
Any other views on cable ?
Edit : apparently there is a UK clearer on the bid this morning, related to a GBP 2Bn dividend payment due in May so that could hold up any decline for a bit
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Last edited by JohnG_FX; 04-26-2007 at 04:20 AM..
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