Oct 12, 2017 - Market Update (FOMC Minutes - debated inflation, JPMorgan & Citigroup reporting, Goldman Sachs back to investment banking?, EURUSD above 1.1830, heading to 1.2000 but..., CZK on the horse, Gold - which way now?, Homework time for Catalonia until Monday)

Short recap

Asia up reaching 10 yr high

Europe opening flat to lower

Spain gave until Monday Catalonia to drop independence

Otherwise will take over all powers over the autonomy region

Oil inventories rising even though OPEC is cutting production

FOMC Minutes – inflation debate intensified

Some patience to assess inflation path warranted

But others are looking at Dec hike

Doves and Hawks at Fed  chart

Repatriation tax rate at 10% according to Trump

Equities

A bit of reminder of .com area – A Biotech Company Changed Its Name to ‘Riot Blockchain’ and Its Stock Is Surging  link

Japanese equities may still look interesting but don’t forget that BoJ is still active in the market

Better days for banks ahead?  link

May get support from rising rates that will translate to higher profit margins

Citron (short seller) – looking to publish more of their research on Shopify

JPMorgan – should report a bit better results, focus on trading and loan business

Citigroup – expecting slight disappointment earnings

BlackRock enjoying the bull run as index investors take the AUM to USD 6 trln

Goldman Sachs looking to return to investment banking as it is looking for new deals

Bonds

10-yr Trys yield at 2.34%

10-yr Bund yield at 0.46%

Wealth manager warns on bond markets creating the 'biggest financial crisis of our lifetime'  link

Are bonds ready for a quick reversal as central banks look to remove QE?

Bond markets are at certain point illiquid

Guessing that ECB knows this one better as they have sometimes troubles to find suitable available bonds to buy

EURUSD

Catalonia is over for now, markets turning attention back to EZ macro

Back above 1.1830, opening the door for 1.2000

Resistance at 1.1910

Support at 1.1862 (23.6% Fibo), 1.1845 (100 DMA)

USDJPY

Resistance at 112.61 (10 DMA), 112.70 (Ichimoku turning line)

Support at 111.89 (200 DMA), 111.85 (23.6% Fibo)

EURCZK

CZK on the rising wave, now below 26.00

Resistance at 25.88 (10 DMA), 25.97

Support at 25.47

Bear in mind that it is still too early read the charts after CNB 27.00 floor adventure

But at least weekly chart can give us some clues where we are heading to

CNB sitting on tons of foreign reserves and now losing money

Some politicians calling for joining EUR

General elections taking place on Oct 20-21

 Source: Saxo Bank

Gold

Resistance at 1295/96 (highs), 1297 (50 DMA), 1299 (38.2% Fibo)

Support at 1281 (50.0% Fibo)

Source: Saxo Bank 

Data/events

ECB’s Draghi (1430 GMT)

ECB’s Praet (1430 GMT)

Fed’s Brainard (1430 GMT)

Fed’s Powell (1430 GMT)

ECB’s Coeure (2000 GMT)

ECB’s Lautenschlaeger (2010 GMT)

Fri

Fed’s Rosengren (1230 GMT)

ECB’s Constancio (1415 GMT)

Fed’s Evans (1425 GMT)

Fed’s Kaplan (1530 GMT)

Fed’s Powell (1700 GMT)

Oct 18 – China National Congress

Oct 22 – Japanese elections

Oct 26 – ECB

Nov 1 – FOMC

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Mar 23, 2017 - Is Czech Central Bank ready to remove the EURCZK 27.000 floor?

Well, as mentioned in our Market Update yesterday link, something must be baking no doubt...

There many traders asking the question how to trade the move but unfortunately, there is a huge two-way risk related to unpegging of EURCZK. As it is getting very crowded and nothing has been going on (spot wise) except for Czech National Bank regularly intervening there, the risk of abrupt move within almost inexistent liquidity is very high. Thus many brokers charge high margin requirements on spot trades or went manually on forwards and completely removed option trading.

More and more traders question the date when CNB will remove the peg. Wouldn’t be surprised if central bank moves soon (already in April/May) what is before the summer and well before next parliamentary elections in the fall this year in Czech Republic. It can do so even in between the official rate announcement days as the CNB may be pressed by inflation pressure.

Next CNB meeting is taking place on Mar 30, what is right before the end of the period (Q1 2017), thus before the deadline the CNB gave to market to keep the EURCZK floor at 27.000 intact. In other words we are getting closer as the following meeting takes place May 4.

Another date to watch may be Apr 10, when the March inflation data will be released. Meanwhile the year on year inflation moved to 2.5% level what is above the target level of CNB.

Read more in our article from Jan 2017  link

How to trade it? All of us recall the CHF event and let's believe CNB won't follow this example either. On the other hand, trades have learnt the lesson or hope so, and are aware of the potential risks. In other words, the first move will likely be down, followed by eventually swift correction back higher, bit of up-and-down yoyo...etc., and then we may get settled either way. 

It is hard to say what the target lower level may be but market may still find, for example the 28.000/500 appealing to enter the shorts.

On the lower end we may look at: 26.600/650, 26.000, 25.500 or 24.000/300

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

Read More