The sales of existing houses in US rose the most since October with a growth of 4.9% from last month. This is one of the key indicators for economic health as the housing market has a ripple effect on the overall economy. The final figure of 4.89 million new houses beat the estimate by a healthy margin.
However the markets reacted in the opposite manner yesterday where the USD failed to gain against major currencies.
According to Mr Tan, an increase in house sales would decrease the demand in the US dollar, which explains why the dollar did not enter a bull run yesterday.
I did not trade based on this data yesterday as I already have open positions in AUD/USD, EUR/USD, GBP/USD, USD/CHF and USD/JPY from a few days ago.
Monday, June 23, 2014
Friday, June 20, 2014
Trading on mobile
I was down with food poisoning for the majority of the week and had to use my phone to trade. The mobile application was surprisingly good and fast.
No screenshots of graphs, but my entries were based on either price action or harmonics. Most have been profitable.
No screenshots of graphs, but my entries were based on either price action or harmonics. Most have been profitable.
Saturday, June 14, 2014
Exercise your right to vote!
It is AGM season for a number of listed companies in Malaysia. I would like to stress the importance of voting, every vote counts and will make a difference. It is a responsibility to vote regardless of how many shares you hold. This is the very least one should do if he or she cannot make it for the AGM.
AGMs are usually scheduled on weekdays so it does not appeal much to the working crowd. Hence mostly retirees are the ones who are present. Do ask questions if you`re in an AGM!
The main purpose to attend should not be solely for the food.
AGMs are usually scheduled on weekdays so it does not appeal much to the working crowd. Hence mostly retirees are the ones who are present. Do ask questions if you`re in an AGM!
The main purpose to attend should not be solely for the food.
BoJ monetary policy trend broken for USD/JPY
Linking back to my earlier post on the backtesting done on the USD/JPY pair, the outcome on Friday did not follow the historic movements.
The graph generally slows an upwards movement from the time the statement was released. I shall attempt to see why this happened with fundamental analysis in a future post.
The graph generally slows an upwards movement from the time the statement was released. I shall attempt to see why this happened with fundamental analysis in a future post.
Friday, June 13, 2014
Backtesting the effect of the BoJ`s monetary policy statement on USD/JPY
A backtesting is a type of predictive mode using historic data to forecast future movements. This post shall cover how the USD/JPY pair behaves prior, during and after the Bank of Japan`s (BoJ) monetary policy statement.
For March, the pair was at 103.237 at the start of the new day, while strengthening to 103.195 an hour after the statement was made public. The downtrend continued till 15th March.
In April (8/4). the same trend could be seen where USD/JPY dropped after the statement came out at 10.50 am.
Again, the second monetary policy statement in April shared the same trend as the two before. The lowest level for the day was 57.1 pips lower than the open.
This is the chart during the monetary policy statement in May, the downtrend lasted for a shorter period.
USD/JPY chart from March
This test is based purely on trend and does not take into account the content of the statement which would affect the movements in a greater scale. In conclusion, a drop in USD/JPY is present in every monetary policy statement since February this year. However, the downtrend tends to last for a shorter period every time. This is due to the fact that quantitative easing is expected some time in future and when that happens, USD/JPY is expected to spike upwards instead.
For March, the pair was at 103.237 at the start of the new day, while strengthening to 103.195 an hour after the statement was made public. The downtrend continued till 15th March.
In April (8/4). the same trend could be seen where USD/JPY dropped after the statement came out at 10.50 am.
Again, the second monetary policy statement in April shared the same trend as the two before. The lowest level for the day was 57.1 pips lower than the open.
This is the chart during the monetary policy statement in May, the downtrend lasted for a shorter period.
This test is based purely on trend and does not take into account the content of the statement which would affect the movements in a greater scale. In conclusion, a drop in USD/JPY is present in every monetary policy statement since February this year. However, the downtrend tends to last for a shorter period every time. This is due to the fact that quantitative easing is expected some time in future and when that happens, USD/JPY is expected to spike upwards instead.
Thursday, June 12, 2014
Reserve Bank of New Zealand`s monetary policy
A key point of the monetary policy statement from the RBNZ is the increase of the Official Cash Rate (OCR) by 25 basis points to take it to 3.25%. In addition to this, the GDP is estimated to have grown by 4% in the year.
The full monetary policy statement is available here.
We shall explore the effects of interest rate parity here, with the assumption that the starting point is at 0.86253 (5.00 am). As interest rate rises, demand for the currency would increase as investors would like to get a share of the higher interest. Theoretically with the increase of 25 basis points, the intrinsic value of NZD/USD should be 0.86469 (0.86253 x 1.0025)
NZD/USD at the time of this post was at 0.86816, where the 34.7 pip difference is due to investor sentiment and taking into account the optimism from the GDP estimates.
The full monetary policy statement is available here.
We shall explore the effects of interest rate parity here, with the assumption that the starting point is at 0.86253 (5.00 am). As interest rate rises, demand for the currency would increase as investors would like to get a share of the higher interest. Theoretically with the increase of 25 basis points, the intrinsic value of NZD/USD should be 0.86469 (0.86253 x 1.0025)
NZD/USD at the time of this post was at 0.86816, where the 34.7 pip difference is due to investor sentiment and taking into account the optimism from the GDP estimates.
Australian unemployment numbers
Two key indicators of the Australian workforce were released this morning at 9.30.
The unemployment rate remained at 5.8% beating estimates of 5.9%. The unemployment rate is the percentage of the workforce unemployed that is seeking employment actively and wanting to work.
In contrast, the unemployment change painted a red figure at -4.8 thousand jobs. Economists surveyed expected a creation of 10.3 thousand new jobs.
While new jobs created did not meet the estimates, a drop in unemployment is a sign of a healthy economy and a healthy economy will increase the value of the home currency.
At 9.30 am just before the numbers were out, the Aussie Dollar was at 0.93814 and currently hovering at 0.94048 which represents a rise of 0.249%.
The unemployment rate remained at 5.8% beating estimates of 5.9%. The unemployment rate is the percentage of the workforce unemployed that is seeking employment actively and wanting to work.
In contrast, the unemployment change painted a red figure at -4.8 thousand jobs. Economists surveyed expected a creation of 10.3 thousand new jobs.
While new jobs created did not meet the estimates, a drop in unemployment is a sign of a healthy economy and a healthy economy will increase the value of the home currency.
At 9.30 am just before the numbers were out, the Aussie Dollar was at 0.93814 and currently hovering at 0.94048 which represents a rise of 0.249%.
Wednesday, June 11, 2014
Scalping with harmonics and price action
Today has been a scalping day for me, with various entries of long and short trades of GBP/USD, EUR/USD, USD/JPY and NZD/USD.
It was a pretty quite day with no key economic data out. No graphs will be uploaded as there were too many entries which most look similar. The time frame I used was M1.
It was a pretty quite day with no key economic data out. No graphs will be uploaded as there were too many entries which most look similar. The time frame I used was M1.
Tuesday, June 10, 2014
Harmonics and price action for the day
I shorted EUR/USD today based on the double top formation in the graph. This indicates that resistance cannot be broken and buyers are not willing to push the price up further. Managed to close a profit of around 25 pips. I wanted to reenter with another short after the false green bars were formed but I was occupied with GBP/USD at that moment and missed another good short entry.
I went in long for NZD/USD based on the bullish rhythm. It stayed pretty much sideways after a 10 pip gain so I closed the trade.
Monday, June 9, 2014
HIbiscus management discussion and analysis
Besides the financial results in an annual report, the management discussion and analysis section can tell a lot about a company.
Among the notable highlights is the oil wells in Oman which seem to be doing well. Historically on 3rd February and 6th March earlier this year when the announcement was released on Bursa`s website, the counter shot up by more than 30 cents during the first few hours and the bullish upbeat remained for a few days. The oil discovery in Oman was the first successful flow test from East of Oman in 30 years.
Among the notable highlights is the oil wells in Oman which seem to be doing well. Historically on 3rd February and 6th March earlier this year when the announcement was released on Bursa`s website, the counter shot up by more than 30 cents during the first few hours and the bullish upbeat remained for a few days. The oil discovery in Oman was the first successful flow test from East of Oman in 30 years.
An area of concern however is the Norway venture. Investments there started as early as November 2013 (RM22.96 million) and a further RM 159.89 million was used to facilitate the drawdown of a government-backed loan of NOK 300 million from Skandinaviska Enskilda Banken AB (SEB). A caveat to this is that "all concessions are undergoing seismic acquisitions or processing work" and partners are expected to make a `drill or drop` decision by the third quarter of this year.
Going over to Australia, five contracts will be awarded in the third quarter of 2014. These are:
- Operations and Maintenance
- MOPU
- FSO
- Export System
Going over to Australia, five contracts will be awarded in the third quarter of 2014. These are:
- Operations and Maintenance
- MOPU
- FSO
- Export System
- Drilling
The price of this counter is at an all time low for 2014, and the same happened back in 2013. Upside potential of say a RM0.30 cent jump in a day is possible if the results from Norway point to a drill decision.
The price of this counter is at an all time low for 2014, and the same happened back in 2013. Upside potential of say a RM0.30 cent jump in a day is possible if the results from Norway point to a drill decision.
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