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Intrări Blog postat de sarrafx

  1. sarrafx

    Why wear blinkers?

    De sarrafx,

    Basically, I think it is impossible to make money trading FX (or any other market) by using technical analysis alone. No matter what indicators, time frame or system you use it cannot work in isolation.
     
    These markets work on so many levels with so many influences, inputs and indicators that to limit oneself to one seems to me a little naïve.
     
    Read more: http://www.sarrafx.com/en/view-blog-article/46/Why-wear-blinkers?
  3. sarrafx

    The Big Picture

    De sarrafx,

    I am Eurosceptic with a capital E!
     
    My views on the Euro were forged as far back as 1992 when the Maastricht treaty was first signed.
     
    I felt like the boy in the children's story of The Kings New Clothes. In the same way that the boy could see that the king was naked, I could see that the single currency was a potential disaster and I was very pleased that my country (U.K.) would not be participating.
    I do not consider myself a grand sage or predictor of future events. However the vision of one size fitting all was the most preposterous idea I could think of.
     
    Having studied economics and seen at first hand while trading their currencies how Spain and Italy managed their economies it was clear that they would never be able to manage the fiscal discipline of the German model. Their high inflation, high interest rate economies seem to fit nicely the persona of the people and therefore the image of the country. Equally, the discipline of Germany reflected perfectly the persona of their people and therefore the image of the country.
     
    How this was going to work in one big melting pot was something that has been keenly observed over the past twenty years as it has evolved to where we are today.
     
    Read more - http://www.sarrafx.com/en/view-blog-article/44/The-Big-Picture
  4. sarrafx

    FOMC & beyond

    De sarrafx,

    http://www.sarrafx.com/en/view-blog-article/43/FOMC-&-Beyond
     
     
    The Federal Reserve's monetary policy statement was as dovish as it could possibly get. But then, surely it was acting in accordance with its mandate.
    The Committee explained that, "without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions." They outlined their new bond purchase program, pledged to do more if the labor market doesn't improve and emphasized that a highly accommodative monetary policy stance would be appropriate "for a considerable time" after the economic recovery strengthens.
    What the central bank is trying to tell us is that even if the recovery gains momentum, they won't be hurrying to unwind the stimulus until they are certain that the recovery is here to stay.
    As has been the case with QE1 and QE2 the Fed has swung into action in a massive way.
    The open-ended nature of QE3 came as a major surprise for the market and even before the news was properly digested; it was assumed that QE3 is bad for the dollar.
    While currency traders may be confused, the rally in equities and the drop in bond yields confirm that investors are pleased that Bernanke was able to shrug off politics and rev up the printing presses.
    At the end of the day, this will be bearish for the dollar when viewed in isolation.
    However (there is always a however!) this has been a monumental week for the markets yet we have seen the dollar fall by less than 1% since the package of measures was announced.
    We have to remember that the U.S. is not alone in having problems with its economy and currency markets trade on relative value of one currency to another.
    Japan, U.K. and, of course, Europe are all battling to regain traction in their economies and it is only history that will show how well Bernanke, Geither, Noda, Cameron, Osborne, Merkel, Dragi etc. have done in first containing, then growing out of the global economic slowdown. It should be noted that Japans’ Finance Minister killed himself a few days ago although the economic situation in Japan does not appear to have been the reason.
    Japan has a track record of intervening in currency markets to weaken the Yen when its strength threatens Japanese exports. They seemed to be coming to terms with its currency trading at much higher levels. Indeed 80 had become the new 100. Now we see the dollar as unable to sustain a rally above 80 and Japan will not want to see a gradual rise in the value of the Yen so intervention is clearly on the cards.
    Japan is not Switzerland however and the markets will gladly take on Japan if they intervene alone. It is unlikely in the extreme that the Federal Reserve or the ECB will join in concerted intervention so with a lack of policy options to weaken the currency, Japan will continue to suffer.
    The U.K. is, to a certain extent, becoming sidelined globally as its influence wanes. Being apart from the EU allows it to make its own policy mistakes although given where Europe is headed that is maybe no bad thing.
    Enough has been written about the woes of the EU and it is sure there will be more strong headwinds in the coming weeks/months.
    The major currencies will continue to move according to that days or weeks news but this week was extremely significant in that not only were events Euro positive, they were also dollar negative.
    There have only been two QE’s to compare to so it is very difficult to use them statistically to say what will happen to currencies following the third but the only certainty is that there will be volatility
  5. sarrafx
    The up move is overdone and ditto in most of the spaces thus one can expect corrective move.
     
    More or less the pair achieved the closer to the max range of 1.6100-1.6130.
     
    Further gains would be tough to negotiate and thus would prefer a dollar rally.
     
    This is despite the fact that the dollar has broken the trend line in weekly and thus posted one of the bear pictures in the recent months.
     
    However most of the pairs are in critical junctures like Euro near the monthly trend line, Sterling near the channel high drawn and also near the weekly trend line.
     
    This ideally suggest corrective rally for the dollar before next move.
     
    Thus a) the influence of Sterling and Sterling alone b) influence of EURGBP c) the broad dollar action in that order is what is one should look into.
     
    The fulcrum has substantially moved from 1.5880 to 1.5960 and the upside focus is towards the 1.6100-50 area. Only break and close below 1.5960 can potentially threaten the up move.
     
    Intra-day shorts recommended as the RR favours within the ongoing dollar bearish bias.
     
     
    Strategy : Sell here and 40 Stop Loss:- 1.6208 Take Profit:- 1.5980
  7. sarrafx
    Where can the West find growth?
    The release this morning of GDP data for the EU shows that growth is going to remain elusive for developed economies for some time to come.
    A further quarter on quarter fall and a year on year figure of -0.6% shows just how dire things remain. German Factory Orders also released this morning were appreciably better than expected but this merely highlights how bad things are in the rest of economy that is inexorably linked by the single currency.
    Now that the immediate issues of the debt crisis have been postponed it remains to be seen what can be done to promote the growth that is the only way that a sustainable recovery can be achieved.
    Mrs Merkel has said in a number of speeches recently that growth is the key driver for economic recovery. Of course never having had to stimulate the German economy to create growth she doesn’t actually have any practical experience.
    Austerity for the foreseeable future is not going to be a sustainable policy and expansion through public spending is the only way that confidence can be promoted. Confidence will lead to investment, investment to growth and growth to recovery.
    Interest rate announcements have now become very boring!
    Little can/will change for some time to come. It would be interesting to know when Central Bankers would predict when they see rates actually being increased. It has to be measured in years but I would hope less than five! Maybe three?
    In the U.S. things are not a lot better than in Europe from the growth perspective but the economy has a very different dynamic. Stimulation has become a byword and the U.S. Treasury is not really into austerity (the debt mountain is a testament to that). I hope that the current generation are not merely providing case studies for future MBA candidates in how they are handling their respective economies.
    Real people with real problems are being affected on both sides of the Atlantic! It is truly tragic to imagine that there are youths in Spain and probably other European countries who will NEVER work! Not through an institutional lethargy but simply due to the lack of opportunity. This is the terrible legacy of this crisis and may be the single issue that creates a sufficient groundswell if not to pull the Eurozone apart then to create sufficient support for programmes that create jobs.
    It is clearly the responsibility of every politician in every country to support such programmes. The EU centralized in all the wrong ways and also decentralized in all the wrong ways. If there is commitment to this experiment then it needs total commitment, harmony on taxation a single Central Bank and job creation schemes that stretch from Malaga to Oulu and Bruges to Larnaca.
  8. sarrafx
    It seems that we can no longer label those heavily indebted countries of Southern Europe as being the periphery.
    The idea that Greece leaving the Eurozone could cause the disintegration of the single currency means that the tail continues to wag the dog and will do for some time to come.
    Europe is at last waking up to the idea that were Greece to leave, then the domino effect could be catastrophic. Keeping Greece in the club and funding its needs seems to have been accepted as policy.
    Mrs Merkel added to the feeling that a solution is close by saying yesterday that “If Greece one day can rely once again on its own revenue, without having to borrow, then we’ll have to look at this situation and make an evaluation,” Merkel told Bild am Sonntag in an interview when asked about the prospect of debt forgiveness. It wouldn’t happen before 2014 or 2015, “if everything goes according to plan,” the chancellor said.
    It remains to be seen just how constitutionally possible such an action would be and we are nowhere near getting ratification from inside the EU or, just as importantly, those outside agencies that are equally as heavily involved.
    Those are very much matters for the future but the markets clearly liked what they have seen and have gone heavily into risk on mode with the Euro trading comfortably above 1.30 and looking very much lined up for an assault on the heavy resistance at 1.3120.
    This is a heavy data week with the final NFP of the year to be released on Friday preceded by the PMI reports across both Europe and the U.S.
    In line with current optimism, the expectation is for European data to show some improvement from very poor figures released last month and for the U.S. to see a slight pullback. Italy was the first to release and they showed a weaker than expected number.
    Economic data has taken a back seat over 2012 as risk sentiment and the debt crisis have driven markets. Therefore it will take something spectacular (and PMI data isn’t considered spectacular) for the sentiment to change.
    The JPY continues to be weak and trade comfortably above 80.00 and 106.80. It could be that we are seeing the beginnings of sustained weakness for the Japanese currency and that will be a relief for the new Government following the upcoming elections.
    It seems that the Euro will be relatively strong into the New Year. The Greek issue has been deferred yet again but the markets don’t seem to mind. This has had a positive knock-on effect on Spain, their bond yields fell again in November and Italy has managed to avoid the limelight.
    It remains to be seen if this serenity can be continued into the harsh reality of European winter following the festive season.
  9. sarrafx

    That was 2012

    De sarrafx,

    So, that was 2012!
    What did we learn? Well, as far as I am concerned, I learned that gravity doesn’t exist! What is holding the Euro up? I have now idea.
    It seems that with Greece having secured a further bailout, all in the garden is rosy. The Euro is trading up above 1.30 (as I write) and making multi month highs against an ailing JPY. There is something of a paradox here. Of the two major safe haven currencies, the JPY is weaker as their economy struggles and further QE is expected while the other the USD is weaker as their economy is starting to improve (if the revised GDP data is to be believed.)
    So, that was 2012! What of 2013?
    Well one thing is certain the issue of the Fiscal Cliff will be resolved, like the stars of an old romantic movie, the Democrats and Republicans are acting coy but will get together before the final reel!
    Europe will continue to kick the can down the street and muddle along without taking decisive action. I saw this morning that Mr Draghi says that the population of the EU can trust him and the ECB. Trust them to do what is the question!
    I am still a believer in my tenet that the Euro is not best solution for what ails the Southern countries and help from the North cannot be expected to last forever. Indeed a Bloomberg Survey just released shows that most economists believe that the continuation of the debt crisis will drag Germany back into recession. Without their help as the major contributor to the various bailout funds what will happen?
    That is definitely a question for the New Year.
    A topic I have mentioned before but feel no shame in mentioning again is that the action taken by the U.S. at the start of the financial crisis (is it coming up to five years ago?) was not maybe a perfect solution but it was decisive and gave America something to build upon. The EU is still bumbling around in the dark and hoping that doing pretty much nothing is a solution in itself.
    I have three wishes for 2013, they won’t come to pass in this year but I would like to see some progress; First the collapse of the Euro (naturally). Guys, it’s not working, please wake up.
    Second, some progress in the U.K. to leave the EU. They don’t belong and never will. The populace don’t like it. Brits view sovereignty totally differently to mainland Europeans and will cling to every last vestige before they hand anything to Brussels (or Frankfurt/Berlin).
    Finally, can we have our market back? Trading that works technically due to fundamental reasons. That is to say, let’s say goodbye to risk on/risk off and welcome back to currencies and commodities that move due to supply and demand created by economic fundamentals.
    I have a trade Idea!
    Sell Eur with a TP at parity! I am not sure when it will happen but I know it will.
    Trust Me!!!!!!!!!
  20. sarrafx

    SARRAFX: Our philosophy

    De sarrafx,

    Our philosophy is to give our clients all the tools that are necessary to enable them to be successful.
     
    Our management team is experienced in the financial markets having spent, collectively, more than five decades in the business.
     
    Our experience teaches us that not all information is good information and feeling obliged to report readily available data and news to clients is not only wasting their time but is also counterproductive.
     
    Over the past twenty years markets have changed out of all recognition but the dissemination of information has barely changed at all.
     
    With the advent of fax technology every trader could expect to receive numerous missives from his banker/broker each saying roughly the same thing giving fact rather than interpretation.
     
    With the advancement of the web and email together with any number of electronic delivery channels little has changed.
     
    Sarrafx aims to be different. We will never tell you we have an exclusive news item but we will always have exclusive interpretation.
     
    Do not expect to see an email at 8.00 every morning or to see this blog updated at regular intervals.
     
    It is our intention that when you see an updated blog it will have been written to be informative and not to simply keep our name in front of you.
     
    We will provide an economic calendar on our site but we remain well aware that that most information we provide is widely available on the Internet.
     
    We would not expect you to visit our site to see what data is expected to be released today but to see what we believe are the money making opportunities those releases present.
     
    What is not generally available is the incisive interpretation of that data offering our clients money -making opportunities.
    The regularity of articles will ebb and flow with the markets. It may be that you will see two or three in a day and nothing for three days.
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