The Yen and Paulson

Today Treasury Secretary Paulson came out and said that he was watching the Yen "Very Closely". This scared the markets (and all carry trades) and sent the Yen up against most major currency pairs. I think that the direction of the Yen is of critical importance. A great deal of the carry trades hinge on a weakening (or Steady) Yen. If the markets (i.e. Fed, ECB etc)deciede that it is not in their best interest's then the Yen will strengthen (Intervention??)and carry trades will be carried out the door. For now I think we are still in a wait and see situation. Currently it is the European community that is most upset with the strong Yen. Yesterday the German Finance mininster was saying that Eur/Jpy would be discussed at the G7.
I do not see intervention as an option, I could see "jaw boning" in an attempt to get the Yen stronger, but then again I do not see it doing alot. A look at today's comments from the Fed makes it clear to me that for the forseeable future (as long as the numbers do not deviate much from current level's) rates are on hold. Yes, they did maintain their tightening bias, but that is to be expected based on the recent numbers. I have actually reentered the waters. I put on some Forward/Forward Mexican rates positions (positive carry), Sold 12 month Usd/Ars at 3.1725 and went short some Usd/Brl at 2.1330 (March BMF).I am still short some Brazilian Forwards.

I am convinced,after reading a comment from a reader, that I have been looking at the markets from to short of a time perspective. So I will attempt to change that (a little P and less L would help my staying power).

THese are the FX Trading Position's for today.

Good Luck and Good Forex Trading

FXTRADINGIDEAS@AOL.COM

Fed Meeting today

There is a large amount of Economic data today. The key ones to watch for me are:
GDP Expected 3.0% (Bloomberg)
GDP Price Index Expected 1.5% (Bloomberg)
Chicago Purchasing Manager Expected 52.0 (Bloombrg)

and last but not least the Fed Rate Announcement. Now 99% of the market are looking for unchanged on the actual rate but the improtant thing to watch is the statement. Are the Governors leaning any particular way....

I am expecting little changed from their last meeting. I still think that rates are on hold for the next 6mths, but of course the numbers are the key factor going forward.

In the current environment I do not think there are any "home runs" in play at the moment. But there are always opportunities brewing. If you see any please let me know.

These are the FX Trading comments for today.

Good Luck and Good Forex Trading.

FXTRADINGIDEAS@AOL.COM

Emerging market currencies continue to suffer against the Dollar as Mexico touched 11.1000 before backing off on early trading. This is the top end of a channel which has been forming for the past 7mths. I am not a real fan of Technicals but other dealers are clearly looking at this so be careful if we break the top side as it could really run. Please see Bloomberg chart above. I am also sitting short Euro/Usd and will stop out at 1.3048 and am looking to take profit at 1.2686. I entered the position at 1.2912

These are the FX Trading Ideas for today

Good Luck and God Forex Trading.

FXTRADINGIDEAS@AOL.COM

Every Dog has it's day

To say that the market this year has been unkind to me is an understatement. Every (I repeat Every....well maybe most..)trade I have taken since June 2 has gone poorly. Some are my fault, others are just being in the wrong place at the wrong time. But as I have stated previously, I believe that you always make your own luck. Hard work will pay off. After further reflection I do not think I have been working as hard as I could, or should be. I one time years ago read a quote by Arnold Swarznager (and I am paraphrasing here) "Whenever I found that I was not achieving my goals I went back and worked harder". No excuses, point the blame where it belongs and move on.

I have also been working on a trading model. It is still in it's testing stage but I will be posting a the signals as they come up. They will not be in real time (as i do work for a living) so by the time you see the signals some will be in the money and other out of the money. Do not take these signals as trade recomendations. It is just something that I am working on.

These are the FX Trading Ideas for today.

Good Luck and Good Forex trading

FXTRADINGIDEAS@AOL.COM

Quiet morning shaping up....

The week seems to be starting out on a quiet tone, with the dollar slightly stronger from Friday's close. Dollar Yen is the biggest mover up at 4 years highs. I will remain on the sidelines with only small trades as I still have not seen a compelling reason to enter the waters.

An article in todays USA Today, talks about Interest rate cuts in the States. The article says that the Federal Reserve will cut interest rates at the end of 2007 not earlier as previously expected. This actually makes sense to me. The economic numbers have definitly been better then (I) expected. In the currenct environment I can see the Fed holding off rather then doing anything. Also if you take a look at the predictions on the street curently, Merrill Lynch and U.S. Trust expecting rate cuts and The Conference Board and Bear Stearns looking for increases, a wait and see approach does not seem out of the question. This I think can lead to range bound (wider ranges as the year goes on) markets both in Interest rates and currencies.

These are the FX Trading Ideas for today (not many huh?)

Good Luck and Good Forex Trading


FXTRADINGIDEAS@AOL.COM

Risk Aversion...the name of the game

Yesterday, and now into today risk aversion trades are in flavor. Emerging Market currencies have been under extreme pressure led by Zar,Try, Mxn and Brl. Today the Mexican Central Bank will announce it's latest interest rate policy. No change is expected this month, but a strong signal that next month rates will be raised is expected. Earlier this week Mexico had "OK" inflation numbers and that market tried to take rates lower, but in looking back it seems as dealers took that opportunity to cut short rate positions. Yesterday saw only paying interest in dollars across the board and a definite interest to pay interest rates.

I am in the proocess of cutting my short rates position (like everyone else) in everything except Brazil. One thing is very puzzeling to me. U.S. dollar rates. For the last few days rates have been moving higher and with risk aversion in play I would have thought that dollar futures would benifit. So far that has not happened. I assume you can guess which way I am positoned there !!!

These are the FX Trading ideas for today....


Good Luck and Good Forex Trading.

FXTRADINGIDEAS@AOL.COM

Yen recovers

The Yen recovered last night on reports out of Europe that European government officials were growing impatient with the currenct Yen weakness. This seems to have scared the dealers who have been using Yen to fund higher yielding currencies, and has made the market slightly more cautious.

Brazil last night cut rates 25bp as expected. This is a slightly slower pace then previous cuts, but is consistent with the direction that we have seen for the last 18 months.

The Mexican market is fixed on tomorrows Central Bank meeting. Although no rate rise is expected tomorrow a signal that rates are going higher in the future is expected.

These are the FX Trading Ideas for today.

Good Luck and Good Forex Trading

FXTRADINGIDEAS@AOL.COM

Quote of the day

He who has a why to live can bear almost any how.
--Friedrich Nietzsche

Driving while Distracted

In today's USA Today there is an article on distracted drivers. According to the article 80% of drivers admit to multitasking. 59% of these drivers do not consider themselves distracted drivers! Now I will be the first to admit that I am terrible at multitasking at work. I try but I fail miserable. But I can sure multitask behind the wheel. According to the article the top 10 things that are done by drivers (1200 people surveyed)are as follows:

1.Adjust radio station
2.Drink Beverage
3.Talk on Cellphone
4.Eat snack
5.Eat meal
6.Daydream
7.Drive without shoes
8.Experience road rage
9.Listen to books on tape
10.Smoke

Now these might seem like trival things but according to Bill Windor, Nationwide's associate vice president of safety 25-50% of all accidents are as of a direct result to self imposed distrctions while driving. "If you are going 65 miles per hour and your distracted even 3 seconds thats the equivilent to driving a whole football field. Now think about this when you are trading. For medium to longer term traders I do not think it is an issue, but for short term traders I think it can have a real effect on their results. Short term momentum traders need total focus to trade in the markets. Trying to take a few pips out of the markets is very hard work and a total commitment to concentrate is necessary. You need to "feel" a change in momuntum. Notice how a similar currency pair is reacting or be ready to react to current market news. Now I do not trade like this but I have seen very successful traders who have. I these types of markets I think it is sometimes better to take more smaller pieces out of the markets and less big pieces.

These are the FX Trading Ideas for today.

Good Luck and Good Forex Trading

FXTRADINGIDEAS@AOL.COM

Asain Central Bank warn against Capital Inflows.

According to Reuters News.

Asian central bank governors on Monday warned against risks from growing capital flows into the region, a phenomenon they said could be the biggest challenge they face because of the impact on currency fluctuations and economic policies.

"It is, and will surely be, the most difficult task for any monetary authorities to maintain the stability of foreign exchange rates, the free flow of capital and the independence of monetary policy simultaneously," Bank of Japan Governor Toshihiko Fukui told a symposium held to mark the 10th anniversary of the region's currency crisis.

This statement comes on the heels of the Bank of Thailand implimenting capital controls to slow down the Baht's rise. The region is "hot" due to improved macroeconomic factors prompting forgign investors to invest.

The downside to to much investment is apprciation of the currency that would hurt the regions exports.

The Asian currencies are abit weaker this morning. Led by the Yen. I would assume these currencies are being used as funding instruments against other higher yielding currencies.

Good Luck and Good Forex trading.
FXTRADINGIDEAS@AOL.COM

Consolidations in the FX Markets

There was an article in this weeks FX-Week about Brokerage consolidation. This has been an on again off again story over the past few years, it is also something which has to happen. A recent poll on the Lords of the Forex Yahoo groups asked

Which one(s) is/are your forex brokerage firm? (you can choose more
than one if you work with more than one firm)

FOREX.com
o ACM
o ODLS.com
o MGForex
o GFT
o FXCM
o SaxoBank
o GFX Group
o MIG Investsments
o CMS Forex
o Synthesis Bank
o CMS Forex
o FXSol
o Interbank FX
o WESTCAPFX
o IFX Markets
o CMC Markets
o Man financial
o Crown Forex
o Other
This is certainly a lot for any trader to digest. This situation reminds me of the earlier 1990’s when there used to be (and I use this bank as an example only) a Sumitomo bank branch in
New York, San Francisco, LA, Chicago and Toronto. All of these branches, trading the same instruments and products with little to no communication (now again I use this bank as an example only I have no knowledge of how this organization operated or currently operates) between themselves. As technology became more efficient it was easier and cheaper to consolidate what each branch was doing. Currently most international financial institutions would have one major “hub” per time zone and a few “spokes” which feeds off them. This is exactly what will happen with the FX portals. A few of these portals will get together combine technology, customers and goals to form a more sizable company able to compete in the market place. The article in FX-Week talks about two large French banks merging their brokerage units, Fimat and Calyon Financial. The chief executive of Fimat Nicolas Breteau, is quoted as saying “The industry trend is towards consolidation, and you need to be as big as possible to compete in this environment”. He goes on to talk about the growing volumes (increased execution risk) and lower commissions. A consolidation of portals is a reasonable conclusion. This will also help when it comes to defaults (Refco !?!?). A lot of people were left high and dry after Refco collapsed. I think with consolidation less of that would happen.

These are my FX Trading Ideas for today, what are yours?

FXTRADINGIDEAS@AOL.COM

Missile test in China

The United States has come out and critized China for destroying and old weather satellite with a missile.

"The United States believes China's development and testing of such weapons is inconsistent with the spirit of cooperation that both countries aspire to in the civil space area," National Security Council spokesman Gordon Johndroe said Thursday. "We and other countries have expressed our concern to the Chinese."

How does this story effect the region ? Japan certainly cannot be happy, nor can Taiwan. Does this cause other nations to step up spending in military space programs?

How about partnerships.....Iran has oil, China needs oil....Iran trying to establish themselves with nuclear weapons....China has them. Alot of questions and the U.S. is stretched very thin already.

Asia a hot bed for investment in recent years could become less attractive if alliances are formed and tensions heat up.


Good Luck and Good Trading.

FXTRADINGIDEAS@AOL.COM

Iran making waves...

Iranian President Mahmoud Ahmadinejad said on Thursday that his country was ready to face " anything" over the disputed nuclear program, showing his intransigence to the UN sanction resolution and rumors of possible U.S. military strike.

During a visit to the Iran Cultural and Press Institute, Ahmadinejad said the Islamic Republic had gone through "formidable path" and "Iran is ready for anything on this path".

The U.S. military has just sent the second aircraft carrier to the gulf region, and some Western and Arabic media reports disclosed that the U.S. government had decided to launch attack against Iran from the sea before this April and would deploy PAC-3 anti-aircraft missile systems in Arab countries.

Although the U.S. Defense Secretary Robert Gates has said the increase of U.S.
forces was aimed at sending Iran a message not to misjudge the current situation in the Mideast, the top official and White House have denied the rumors, saying the U.S. currently has no intention to attack Iran.

Referring to the UN resolution 1737, Ahmadinejad said Tehran would not be stopped by sanctions and threat.

"They are trying to weaken Iranian nation's resistance, but they cannot succeed," he stressed.

This story comes from Reuters News

Japan keeps rates steady

The Bank of Japan decieded to leave thier target policy rates unchanged after a 6-3 vote. Current rates are .25% for o/n and .40% for the Lombard rate. This move was not totally unexpected as in recent days there has been reports out of Japanese newspapers that rates would be left the same. This being said the shorter end of the market did still hold out hope that a rate rise might occur. Therefore this morning has seen a large shift in short term forwards, toward a larger differential with U.S. dollars. The Yen also weakened considerable from a close last night of 120.61 to an opening level this morning of 121.35. Based on the 6-3 vote many analsts are now expecting the rate change to occur at the February 20-21 meeting.

Good Luck and Good Trading

FXTRADINGIDEAS@AOL.COM

Another Day

These markets are going to be the death of me. Yesterday, before I left the office I liquidated all of my spot positions. I felt that I was just “chasing my tail”. No reason for the trades to be on and therefore it gave me little opportunity to make any money. In times like these I always feel it is better to cut everything and start again with no bias (I did however keep my interest play in Mexico, as it is mostly short dated).

I have been consistently talking to other dealers trying to get the pulse of the market. Most of the people, that I have been talking to, have been struggling with these markets (I guess I am talking to the wrong people!). But for ever winner there is a loser so someone is sitting back with a big grin on their face. Two things came up in my conversations.

1. The market will do little this year so do not look for a trend rather take smaller pieces out of it…(this made sense to me)
2. Whatever you are expecting the opposite will happen (this made more sense to me !)

So where does this leave me? Right now with almost no position, no direction and feeling a bit lost. But I have been here before and with patience I know that a move that I can embrace is in my future. I just hope it is in my near term future !

Good Luck and Good Trading

FXTRADINGIDEAS@AOL.COM

Japanese rates and Oil.....

Reports out of Japanese newspapers this morning that the BOJ is unlikely to raise rates later this week. This initially put pressure on the Yen as the market was expecting (or at least hoping) for a rate rise. The problem as CB officials see it is that they have not seen enough sustained evidence that consumer prices and spending have picked up, and will stay up.

Oil was again on the front pages as Venezuela is calling for Opec, in an emergency meeting, to cut production by up to 500,000 barrels per day. This as prices are currently falling again (at 52.07 currently). Mexican interest rates are under pressure this morning as a result of the falling oil price. With the curve steepening out from very flat levels.

Good Luck and Good Trading

FXTRADINGIDEAS@AOL.COM

Basketball Hall of Fame

Yesterday rather then do the normal chores around the house, myself and my two sons decided to take a short road trip to the Basketball Hall of Fame in Springfield Mass.

The place is great very enjoyable. The first floor is a large basketball court. Numerous balls and baskets that all ages had to opportunity to use for as long as the wanted. Floor two consisted of uniforms, history and a host of interactive activities. We were able to make the call on the famous John Havlicek intercepted pass to win the NBA championship. “Play” one on one against NBA and WNBA players. “Make the Call” that referees do every night. On the top floor were the plaques. It was great reading about the players accomplishments. Many I was unaware were even in the Hall. This floor was my favorite (not my sons obviously). It really got me thinking about what it takes to make it to the top.

What makes a champion?

I do not think you can teach true champions. It is something inside of you. Something that makes you reach for the top even when the situation around you seems to be falling apart. In Darryl Dawkins book,Chocolate Thunder,he talks about this and he states

“I’d sit in the stands and watch some games where a guy averaging 20 points would stink up the court, missing easy shots, fumbling passes, committing stupid fouls. Then comes the game end of the game and he’d make a clutch shot to put his team over the top. The conclusion I cane to was the superstars work hard every night, even when their game is in the crapper. They just keep busting it until, maybe, they’d find themselves in the middle of a play that could redeem their poor performance and decide the outcome”

Now I must admit I never expected to be quoting “Chocolate Thunder” although I did always enjoy him when he played (a little hard work and he would have been awesome) but to me this makes a lot of sense. When trading, keeping yourself in the game and never giving up, will provide you with opportunites for another trade as long as you do not go broke.

Be prepared.

What do you do if a country raises interest rates to 1500% (Thailand 1997), revalues it’s currency (China 2006) or defaults on it debt (Ecuador 2006-7). These situations all occurred and if you can anticipate the unexpected then you can react appropriately. I call it sitting up in your chair. When markets are quiet, or you are in a losing streak, it is quite easy to sit back read the sports section and “wait till something happens”. Friday’s employment number or a new IPO hitting the street will always give you something to look forward to. But I think it is better to sit up in your chair listening to what is going on around you. Others feed off that body language (and you off thiers). Read, research and prepare. Last week my son missed an open jump shot for his CYO basketball team. He was visibly upset and when he came home he expressed his unhappiness to me. “Dad did you see that shot that I missed it was such an easy shot and I missed it”. I was not quite as surprised as he was. You see we have a basketball hoop in the driveway and my son never (well almost never) goes out there and practices. Rather he relies on a bit of natural ability. I told him if he practiced that shot 100 times a day 7 days a week and then missed it I would be surprised. But just walking on a court ill prepared and missing a shot is something which can easily occur. Trading without being prepared will usually have similar results.

Good Luck and Good Trading

FXTRADINGIDEAS@AOL.COM

Long weekend ahead.....

Really nothing to say this morning. Chile cut rates 25bp yesterday, which was a surprise to the market. I have been running an unofficial basket trade of:

Long Argentina
Long Brazil
Short Chile
Short Mexico

I have no strong conviction, just kind of stuck with these positions (not a good thing I know).

Good Luck and Good Trading

FXTRADINGIDEAS@AOL.COM

ECB on hold

The ECB held rates steady today even as the Bank of England raised their base rate by 25bp. Trichet said that the ECB were "Monitoring all developments of essence". The key word left out of his comments today was Vigilence. By the elimination of this word the Euro came under heavy pressure as the market percieved that future rate hikes may not be a certain thing.

Emerging Markets are very shacky. Asian currencies were under pressure all session as were selected Latam currencies. Liquidity in the short dates (used to fund positions) were very tight today. With the long weekend ahead I expect that pressure will continue into tomorrow both for the currency and funding.

Why does the dollar remain strong against the majors? Answers...Please provide me with an answer!

Good Luck and Good Trading.

FXTRADINGIDEAS@AOL.COM

Bank of England Raises rates 25BP

In a surprise move the Bank of England raised rates 25bp this morning to 5.25 percent, parity to U.S. rates. The market was calling for no change and the move cause the pound to rally sharply from 1.9350 to a current level of 1.9520. The Euro rallied in sympathy but no change is expected from the ECB later this morning. Nervousness about inflation (CPI is currently 2.7% and moving up) and the high pace of money supply were the reasons cited. Since the majority of mortgages in the U.K. are floating rate's, any move in rates has a direct and immediate impact on the economy. This should place the CB on hold for now as they wait to see how this rate move effects the economy.

Good Luck and Happy Trading.


FXTRADINGIDEAS@AOL.COM

Oil Lower again

Oil fell once again, this time to below $55 per barrel. This is a 19month low in crude. A factor in this move was the compromise which has been reached by Belarus to resume exports of crude to Europe (Source Reuters).

Talking to friends in the market, everyone seems confused and having trouble making money. I have the same positions as previously detailed, except that I sold Usd/Cop today at 2257.

Good Luck and Good Trading


FXTRADINGIDEAS@AOL.COM

Latam Markets do not like the Venezuelan news…

Latam markets got hit today as news spread that Hugo Chavez, the President of Venezuela decided to nationalize major utilities as he expands what he calls a socialist revolution. This according to Reuters. The Bolivar officially pegged at 2150 per dollar was trading on the “Black Market” at 4100 per dollar. Stocks also fell 14.75%. Wow !

There was a major spillover effect into the rest of the region (much to my dismay). Stocks in Mexico are down 1.6%, Brazil 1.45% after being down much earlier in the day. Although I generally understand the reason for the sell off, I do believe it will be temporary (not Ven, but rather the other countries). Chavez has been a lose cannon for a while. The U.S. makes no bones about disliking him and wanting him out of power. The other countries in the region were approached by Chavez looking to form a Latin American Central Bank of sorts earlier last year. Lula, the President of Brazil, and a leftist also did not go along with the plan and even did his best to distance himself from Chavez. Please remember that I am “talking my book” but if this is the reason for the sell off then I am comfortable attempting to ride out the storm.

But why is the dollar so strong in the face of all that is going on. Sen. Ted Kennedy was just on TV telling the American people that the president will face resistance in his attempt to send more troops.

What I am missing? Please let me know.


FXTRADINGIDEAS@AOL.COM

Markets opening abit calmer this morning

The markets this morning are opening a bit stronger then the close of the last few days. Emerging market currencies are stronger and the feel of calm and optomism is in the air. I am not sure if this will last BUT I have decieded to add to my positions. The more I think about these markets the more I feel that we are due for a major bond rally in 2-4 months. Likewise I think the dollar will come under continued pressure. So my positions as described in last nights post remain the same, but I will be adding to them during today's session.

FXTRADINGIDEAS@AOL.COM

Slow markets=Research

I just began reading Inside the House of Money by Steven Drobny. This is certainly my type of book. It is non fiction and deals with a subject that I live and breathe Trading. In the book the author interviews a diverse group of traders on the subject of Macro Investing. While reading each chapter I began to realize that the way most of the money managers trade is exactly how I structure my portfolio at the bank. I was examining my positions today. I have a few spot positions, positive carry with a medium term view. I have a yield basket (dollar neutral) and I have two main interest rate plays, a Mexican yield curve play and a Brazilian rate cut trade. For any regular readers of this Blog this comes as know surprise. I have had these similar trades on for many months to varying size (lesser size currently). To fill my day, rather then over trade, I “mine “for new trades. Presently I have a dollar yield curve trade on my radar (I am looking for the curve to steepen), as well as the now often repeated Iceland and Turkish currency/interest rate play.

This is not how I started my career out trading. When I first entered the market I was what was called a “jobber” in and out of the market hundred’s of times a day for a few pips at a time. I then began “market making”, which is providing liquidity to corporations, bank and investment houses. Now I am essentially a proprietary trader (I market make to a small select customer base, although I wish I didn’t have to), in the same style as some of the big hedge funds. Of course my position size is a fraction of the “big boys” but the mythology is exactly the same (based on my readings in Inside the House of Money and Market Wizards). I am much happier in my current trading style. The point to this post is you must continue to evolve or the markets will eat you up. If you get a chance read Inside the House of Money by Steve Drobny and Market Wizards by Jack Schwager (the original not The New Market Wizards). These are two of my favorites, and have provided a confidence boost to my trading. Basically there is no holy grail, I am doing what these men are doing (ok on a smaller scale). Have confidence in your abilities and have a plan (so don't lose the rent money!), then execute it.

Good Luck and Good Forex Trading.

FXTRADINGIDEAS@AOL.COM

Strong Growth for Latin America in 2007.....

According to Argentina's Central Bank Governor, Latin America is headed for another year of strong growth in 2007. He believes that the big three economies,Brazil, Argentina and Mexico "are poised for continous growth", according to Reuters. If this happens it will be a similar theme to 2006 stronger currencies and lower rates. This because these economies are coming off very high interest rate environment's. Inflation is contained and tremendous flows going into the country. As I said on Friday I am again short Usd/Brl,Usd/Mxn and Usd/Ars, so this story comes at a good time (or is it just giving me false hope?!?!). I am not getting aggresive with my postion's but will instead try to keep a small core position which will enable me to be nimble if need be. Forex can be a fustrating market at times.


FXTRADINGIDEAS@AOL.COM

Confusion........

As I wrote yesterday, these markets have me a bit confused. On the close yesterday Stocks were under pressure, U.S. Interest rate futures were bid and Emerging Market currencies were being sold off. The easy trades in 2006 were Yield baskets. As I have written in the past I am a big believer in positive carry trades. Over the holidays and into the New Year everyone I talked to and everything I read talked about them. Trouble on the horizon, maybe. This week EM currencies (the highest yielder’s) began selling off. I received many calls from market participants asking me “What do you think”. In my experience most people ask “What you think” only when they have the wrong position and are looking for re-enforcement.

The employment numbers only added to this confusion. To me the number’s themselves were very strong. But as the day wore on, U.S. interest rate futures grinded higher, as stocks sold off and EM currencies continued to sell off. The Bovespa (Brazil Stock Exchange) was off 4% yesterday!

After the numbers I initially thought that we had some direction. Strong U.S. number good for the dollar, good for EM currencies, I sold Usd/Mxn, Usd/Brl, Usd/Ars and sold forward FX contracts in Brazil and Mexico (looking for lower rates in both countries). By the end of the day I am not sure I have this right. I almost never trade short term. My normal time horizon is 2-4months, but these trades do not feel right from the beginning (a former manager of mine used to say those are the best position…hhmm). I am glad it is the weekend as it will let me get away from the markets for a short term and let the markets digest what occurred. BUT, in my gut I think that:

Dollar interest rate futures could rally
EM currencies could come under pressure
Stocks (globally) have some problems ahead
The “big” dollar could be in trouble.

Please remember that I have been very unsure of my trading positions this week. A lot of people piled into the market so as not to miss the move. This people usually have a very short pain threshold. I have most of my firepower on the sidelines and suggest everyone do the same.

FXTRADINGIDEAS@AOL.COM

Not exactly what I was expecting…

Well the employment number came out to day and showed considerably more strength than the market was expecting.

Bloomberg Survey 100k
Actual 167k

This after revision from the previous month from 132k to 154k. Anyway you look at these numbers they are strong. Initially U.S. futures reacted exactly as you would have expected selling off 12-13 ticks but as I write this we are now only down 7 ticks. It seems that for today at least we are trading off stocks (down 88). Stocks for the past few weeks (months??) have been grinding higher on the expectation that the Fed was ready to ease. These numbers clearly put that thought process on the back burner. I re-entered my EM trades, selling Usd/Brl and Mexico while also getting short the forwards. No great size but with a clear bias that way.

I do feel abit lost at the moment.


FXTRADINGIDEAS@AOL.COM

Employment numbers one day away

The markets today were very concerning to me. U.S. dollar futures were very bid and Emerging Market currencies were under alot of pressure. Talking to friends in the markets some Hedge Funds were definitly in liquidating some positions. Usd/Zar, Usd Mxn, Usd/Ars, Usd/Clp to name a few. Also the longer end of the Mexican Interest rate curve also very bid. The dollar, strangely, traded with a biddish tone all day (maybe looking at the dollar as a safe haven?). All this makes me very uncomfortable. With an Employment number out tomorrow I am much happier with a smaller position.

We saw these types of moves before and they were all "sold into" but this one has me a concerned. Lets see what tomorrows number brings and I should have a better feel after that.


FXTRADINGIDEAS@AOL.COM

Fed News...

The FOMC came out with the minutes of the last meeting and stated that:

The downside risk to growth has increased.
Growth of labor productivity may be weaker than thought.
Some signs to grow close to long run sustainable pace.

Seems the Fed is a bit more bearish the was previously stated. Friday we have Employment numbers, could the Fed be preparing us for a weaker number?


FXTRADINGIDEAS@AOL.COM

OK Back to the markets

As I sat at my desk today trying to come up with a great new trading idea I realized that, that was my problem from the beginning. Why a new trade idea? The themes that have been in the market have changed just because the calander has gone from 2006 to 2007??.

It seems that to many traders try to out think the market. The Dollar to me still seems to be under tremendous pressure( Buy Euro). Emerging Markets seem to have a bounce in their step. I would however look to cross some of these postions. Short Chile, Long Colombia. Short Chile, Long Brazil. Short Usd/Agry. Similar trades to what I have had on for quite some time. Mexico rates have come a long, long way. I am not as aggressive at looking for lower rates in theis country. Although I still hold a similar size position I have moved it considerably down the curve. Everyone I talk to seems to be bullish on Asia. I am also but selectivly. I do not have these positions on yet, but will be looking to short China and Taiwan against Korea and India (possibly Indonsia also).


I have no other words of wisdom at this time.


FXTRADINGIDEAS@AOL,COM

So now we start again…..

January always brings me mixed feelings. On the upside it is a time for new beginnings. New Year’s resolutions, diets, exercise, getting organized are all high on the agenda. But to me the start of the New Year always brings anxiety. As a trader in a large international bank it is the start of January which knocks the “score card” back to Zero. You have to go out and prove yourself all over again. In recent years this process has become easier. Maybe because I have done it for the past 15-20 years, maybe because I have become more comfortable in my surroundings (work environment) or maybe because I have a bit more balance in my life. You see January is also the start of baseball training for my youngest son. After his fall baseball season ends (mid October) I strongly discourage him from picking up a baseball or bat until January. I have always encouraged this “break” from the game as I think that as a pre teen (he is now 11) it is very important to have varying interest. Clearly my youngest son centers most of his attention on sports (American football and basketball are his two other favorite sports), but chess and lots of board games are also a major part of his “off season”. He has an older brother who certainly does not share this love of sport but I do practice the same approach with him. At the beginning of the school year I would only allow him to sign up for two honors classes (he made 3 of the 4 that were offered) as I felt that three would put to much pressure on him (he is 13) and would not allow him to participate and enjoy his other interests (Drama and recreational tennis). I certainly believe that education is very important, but I also feel that school years are a time to explore and enjoy. I was never a very good student (C to B at best), but I always felt I had a lot of common sense and I worked hard. It has paid off. I have a good job that I enjoy, but it has taken me many years to learn to enjoy “the ride”. I think I have only learned this from my sons. Trying to get them (without the lecture, I am very good at the lecture) to have fun everyday. This in turn has helped me do the same. I cannot tell you how many days I have taken off to watch an 11year olds baseball game. Or an afternoon watching a 6th grade spelling bee (you can not imagine how exciting a spelling bee is until your son is a part of one….and Win’s it!). It is just an amazing feeling. I have found that after these days off, when I go back to the office, amazingly it is still there, the same people, politics and problems. I also have learned that I am usually a lot fresher, capable of seeing things from a slightly more neutral view after a day or so off. So although it is easier said then done I try to enjoy life around me everyday. As Lord Byron (poet) said “Always laugh when you can. It is cheap medicine”.


Good Luck and Good Trading……Happy New Year!


FXTRADINGIDEAS@AOL.COM