Thursday, 28 February 2008

Position Update

Here are the trades I am active in:

NZD/JPY
Long NZD1.5m Short JPY at average of 82.90 (79.50, 88.00, 81.20).

Current rate 86.60: gain

Comment:
Volatility has calmed down, but thought it was time to bank some gains, so halved the position, still expecting an eventual test of 90.00 this year.

Cashed out:
Long NZD1.5m (82.90 average) at 87.30 yesterday, for a gain of NZD75,600 (not counting carry interest).

NZD/USD
Long NZD1m Short USD at average of 0.7500 (0.7300, 0.7700)

Current rate 0.8150: gain

Comment:
Expecting a test of 0.8500 this year. But decided to bank some gains, so halved the position.

Cashed out:
Long NZD1.0m (0.7500 average) at 0.8150 yesterday, for a gain of NZD79,754 (not counting carry interest).

EUR/USD
Long USD short 1m Euro at 1.4550

Current rate 1.5100: loss

Comment:
Waiting for bad news on the Euro to run the EUR/USD back below 1.4000.
If 1.5300 is seen, I will double the USD Long position.

AUD/USD
Long AUD1m short USD at 0.8720

Current rate 0.9400: Gain

Comment:
Expect test of 0.9500 this year.

Total Gains :
NZD155,354.00


That will keep the wolf from the door for the next wee while.

Next trade:
Looking to sell NZD1m buy AUD on a move into the 0.8800 area.

Thursday, 21 February 2008

Large Issuance Of NZD Bonds Props Kiwi - RBC

[Dow Jones] Chunky NZD-denominated uridashi and eurokiwi issues over past 2 months has helped to remove "an otherwise significant drag on NZD," says RBC Capital Markets senior FX strategist Sue Trinh; notes issuance of these bonds have offset redemptions recently, leading to positive net issuance for 1st time since July 2007.

In January there were NZ$1.7 billion of these bonds issued vs scheduled redemptions NZ$1.3 billion, February issuance so far NZ$1.7 billion vs scheduled redemptions NZ$1.6 billion.


Still more coming in than going out, expect NZD/USD to continue to trade higher ahead of RBNZ Monetary Policy Statement on March 6th.

Friday, 8 February 2008

More Uridashu investment

This could be why the NZD/USD has been so well bid this week:

TOKYO, The European Investment Bank (EIB) will sell a NZ$845 million ($663 million) uridashi bond, documents filed with Japanese financial authorities showed on Thursday.

The bonds will be issued on Feb. 19, with the sales period running from Feb. 8 through Feb. 19. The kiwi bond will have a 7.38 percent coupon and mature on Feb. 22, 2010.

EIB is rated triple A by Moody's Investors Service and Standard & Poor's.

Thursday, 7 February 2008

US Federal Reserve Chief Lends His Ear To A Diverse Group

WASHINGTON -- Alan Greenspan, the former Federal Reserve chairman, tops a long list of academics, executives and economists who met with the Fed's current chairman, Ben Bernanke, during a turbulent period for the nation's economy.

According to records obtained under a Freedom of Information Act request, Mr. Bernanke had lunch with Mr. Greenspan on Jan. 2. That was just eight days before Mr. Bernanke delivered a speech in Washington that signaled a newly aggressive approach to interest-rate cuts.

Neither the Fed nor Mr. Greenspan would elaborate on what was discussed. A Fed spokeswoman described the lunch that day as "social" and Mr. Greenspan said it was "private."

Last year, Mr. Bernanke's second in office, was a stressful one for the economy and -- by extension -- the Fed chief. Pressures from the housing slump and the subprime mortgage market spread to Wall Street, where big banks announced heavy mortgage-related losses. Mr. Bernanke's meetings offer a rare window into his private daybook from January 2007 through last month.

Mr. Bernanke met separately with the chief executive of Fannie Mae and Freddie Mac, the government-sponsored mortgage giants, and at least twice with former Senate Banking Committee Chairman Phil Gramm, now the vice chairman at UBS Investment Bank. On Sept. 5, he met with Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc., whose company weathered the credit-market turmoil better than some competitors.

Mr. Bernanke also spoke with some of the country's top business leaders, including John Chambers, chairman and chief executive of Cisco Systems Inc., Samuel Palmisano, chairman and CEO of International Business Machines Corp., Alan Mulally, CEO of Ford Motor Co., James Dimon, chairman and CEO of J.P. Morgan Chase & Co., and G. Kennedy Thompson, chairman and CEO of Wachovia Corp.

Other visitors included House Financial Services Committee Chairman Barney Frank (D., Mass.) and Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee. The schedule shows 26 different meals, meetings and phone calls with lawmakers, most of them Democrats. He also met with consumer groups and labor union leaders, including James Hoffa, general president of the International Brotherhood of Teamsters.

"It's useful for board members to hear a broad range of views and insights from market participants, consumer groups, business leaders and academics," Fed spokeswoman Michelle Smith said.

Mr. Bernanke frequently has breakfast with Treasury Secretary Henry Paulson, and his schedule also has included conversations with Jean-Claude Trichet, president of the European Central Bank, and Mervyn King, governor of the Bank of England.

Wednesday, 6 February 2008

Position update

Thought it was time for an update, so here are the trades I am active in:

NZD/JPY
Long NZD3m Short JPY at average of 82.90 (79.50, 88.00, 81.20).

Current: gain

Comment:
Volatile, certainly caused a few grey hairs when down at 78.00, but expecting an eventual test of 90.00 this year.

NZD/USD
Long NZD 2m Short USD at average of 0.7500 (0.7300, 0.7700)

Current: gain

Comment:
Expecting a test of 0.8500 this year.

EUR/USD
Long USD short 1m Euro at 1.4550

Current: loss

Comment:
Waiting for bad news on the Euro to run the EUR/USD back below 1.4000.

AUD/USD
Long AUD1m short USD at 0.8720

Current: Gain

Comment:
Expect test of 0.9500 this year.

Next trade:Looking to sell NZD1m buy AUD on a move into the 0.8900 area.

At last, some help for the bond insurers

NEW YORK - Eight large banks have joined forces to seek a rescue plan for MBIA Inc, Ambac Financial Group Inc and other troubled bond insurers battered by the global credit crunch.

The $2.5 trillion bond insurance industry is struggling with mounting losses and capital shortfalls, jeopardizing the "triple-A" credit ratings that insurers such as MBIA and Ambac depend on to function normally.

The eight banks are Barclays Plc, BNP Paribas, Citigroup Inc, Allianz's Dresdner Bank, Royal Bank of Scotland Group Plc, Societe Generale, UBS AG and Wachovia Corp.

The banks retained Greenhill & Co, a boutique investment bank, as an adviser, CNBC said, citing the unnamed source.

The banking industry itself has suffered more than $100 billion of write-downs in the last year related to mortgages and other complex debt. Bond insurers got caught after venturing beyond writing coverage for bonds typically used to finance hospitals, roads, schools and sewer systems. Instead, to increase profit, they chose to also underwrite structured products, including securities backed by risky subprime mortgages. That decision backfired last year as credit markets tightened, homeowner defaults soared, and the value of those securities sank.

Unless the market or the insurers stabilise, investors may unload hundreds of billions of dollars of bonds, raising borrowing costs and ultimately burdening taxpayers. It could also result in hundreds of billions of dollars of additional write-downs at banks worldwide, analysts have said. Standard & Poor's estimated total banking industry losses tied to mortgage problems will exceed $265 billion.

Regulators including New York Insurance Commissioner Eric Dinallo have been meeting with industry participants to discuss a rescue. Dinallo was not immediately available for comment. Credit rating agencies have taken away triple-A ratings from a handful of bond insurers.

In recent trading, the cost to protect MBIA debt against default fell to 14 percent upfront plus 500 basis points (5 percentage points) a year, from 17.5 percent upfront plus 500 basis points, according to CMA DataVision. Ambac debt protection costs fell to 14.5 percent upfront plus 500 basis points, from 18.7 percent upfront plus 500 basis points.