Monday, 1 February 2010

Position Update

Have been away on leave in Australia, and have been very slack about updating...apologies!!

Here are the trades I am active in:

Long AUD 3,735,990.04 short JPY at 82.79 average.

Current rate: 79.64
Current: Loss 315 points

See AUD/USD comments below.
USD/JPY: Japan is set to again increase quantitative easing, especially with the Yen strength in recent weeks. Given the overall USD weakness, the Yen will settle in the 95-100 area, with the Euro itself making all the longer term gains against the USD.

Still have a longer-term target in the AUD/JPY cross of 105.00. I am happy with the current exposure.

Long NZD 3m short JPY at average of 57.23.

Current rate: 63.28
Current: Gain 605 points.

See Yen comments in AUD/JPY above. See NZD/USD comments below.
I am happy with the current exposure.


Current rate: 1.3880
I must admit I have been surprised by the USD strength in recent weeks. Euro money supply is shrinking. US money supply is expanding. The USD must weaken against the Euro in the long run as a result. Overall I see the USD weakening considerably due to ongoing quantitative easing pressures. Remember Europe is not in a QE stance. Europe will raise interest rates before the US does.

I will add a new position EUR1m long if we see sub 1.3600.

Long AUD 2m short USD at 0.8670.

Current rate: 0.8820
Current: Gain 150 points.

I believe the Australian economy remains extremely well placed to benefit from the commodity demand, especially with China still growing strongly. I expect an interest rate increase from Australia, either tomorrow or in March. I still believe that the AUD/USD has a long way higher to go yet. Target remains 1.0000.

I will add to positions if AUD/USD 0.8600 is seen.

Long NZD 2m short USD at .7160.

Current rate: 0.7010
Current : Loss 150 points.

The NZD/USD is following the AUD/USD, and to some extent the EUR/USD moves. As we are now in the export season for New Zealand, upward pressure will intensify. This will compound when the RBNZ raises interest rates in April this year. The NZD/USD still has a long way higher to go yet. Target remains the highs of 0.8216.

I will add to positions if NZD/USD 0.6800 is seen.

Unrealised gains NZD130k (AUD/JPY -148, NZD/JPY +287k, AUD/USD +34k, NZD/USD -43K).

Total gains banked since August 2007:


jesuscheung said...

hi kiwi, what if the very unlikely double dips shall come- will you cut loses, and then reposition?

Kiwi Trader said...

A very good question.
Honestly not sure at this stage.

I think that the USD remains overvalued, and the Euro undervalued.
But the 15 cents down move in the Euro seen in the last weeks has dented my resolve for sure.

I will still buy Euros under 1.3600, but will probably sit with my current AUD and NZD positions.

I don't think there will be a double dip scenario, but the debt problems in Europe are only the first of many to erupt around the world. A flight to safety is hurting my carry trade positions, and I may need to wait awhile for them to come right.

The world seems muddled at present, so having a longer term view is hard.

Ultimately I think the US debt will be a huge curse for the US, but it may take some time to cause the USD serious weakness.

The behaviour of the US bond markets remains the key to USD direction. If that falters, so will the USD.

peterquixote said...

$ Kiwi trader, I thought you had gone to Mongolia and died, such was the lack of transmission.
Your Christmas girls were only average and I was not satisfied.
Now read this.
What in God's name would a wealthy trader like yo be going to Australia for.
Autralia has Australians in it all over the place dude.
You deserve better.
I went to Morocco last year and it was fun, then my girl friend got picked up by a Moroccan and I came home, should I kill myself do you think, I really have hardly any money left , and I look so verage and boring, and worse still I read your column and get it all wrong, but maybe tomorrow.

rose said...

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


Kiwi Trader said...


I went to OZ because I like it there!
It was a chance to spend some time with family in Sydney and Melbourne.

Why would anyone go to Morocco?

Anyway, stick with me, and we will try to make you some money this year.
I will try to update more often as well?