Posts Tagged: speculators

 

In the aftermath in the recent surge in China’s renminbi volatility which saw it plunge at the fastest pace in years, many, us included, suggested that the immediate next step in China’s “fight with speculators” (not to mention the second biggest trade deficit in history), was for the PBOC to promptly widen the Yuan trading band, something it hasn’t done since April 2012, with the stated objective of further liberalizing its monetary system and bringing the currency that much closer to being freely traded and market-set. Overnight it did just that, when it announced it would widen the Yuan’s trading band against the dollar from 1% to 2%.

The PBOC’s overnight release:

 
 

The healthy development of China’s current foreign exchange market, trading body independent pricing and risk management capabilities continue to increase. To meet the requirements of market development, increase the intensity of market-determined exchange rate, and establish a market-based, managed floating exchange rate system, the People’s Bank of China decided to expand the foreign exchange market, the floating range of the RMB against the U.S. dollar, is now on the relevant matters are announced as follows: >> Read More

 

“It is going to happen in a matter of days rather than weeks, Brazil and India can start the move,” said Dipak Dasgupta, a top Indian official.

Mr Dasgputa told Reuters that China, Brazil, India, Turkey, Russia and South Africa have all been squeezed as the US Federal Reserve prepares to tighten monetary policy. Joint action would give emerging markets greater firepower, allowing them to deploy their combined $8.7 trillion (£5.6 trillion) of reserves and crush “speculators”, rather than being picked off one by one.

However, it is unclear whether such action would serve any useful purpose if the real problem is exhaustion of catch-up growth models in these countries, and boom-bust credit cycles. “This could backfire,” said Ian Stannard, of Morgan Stanley. “If they did this, they would have to sell US and European bonds and that would push up yields. It was rising yields that started this process in the first place.”

The side-effect of such intervention would be monetary tightening, pushing countries into deeper trouble. India’s growth fell to 4.4pc in the second quarter, the lowest since the post-Lehman crisis in 2009. This is eroding tax revenues and pushing the budget deficit back over 5pc of GDP, with a ratings downgrade looming. >> Read More

 

The $9 trillion (£5.8 trillion) accumulation of foreign bonds by the rising powers of Asia, Latin America and the emerging world risks going into reverse as one country after another is forced to liquidate holdings to shore up its currency, threatening to inflict a credit shock on the global economy.

India’s rupee and Turkey’s lira both crashed to record lows on Thursday following the US Federal Reserve releasing minutes which signalled a wind-down of quantitative easing as soon as next month.

Dilma Rousseff, Brazil’s president, held an emergency meeting on Thursday with her top economic officials to halt the real’s slide after it hit a five-year low against the dollar. The central bank chief, Alexandre Tombini, cancelled his trip to the Fed’s Jackson Hole conclave in order “to monitor market activity” amid reports Brazil is preparing direct intervention to stem capital flight.

The country has so far relied on futures contracts to defend the real – disguising the erosion of Brazil’s $374bn reserves – but this has failed to deter speculators. “They are moving currency intervention off balance sheet, but the net position is deteriorating all the time,” said Danske Bank’s Lars Christensen.

A string of countries have been burning foreign reserves to defend exchange rates, with holdings down 8pc in Ecuador, 6pc in Kazakhstan and Kuwait, and 5.5pc in Indonesia in July alone. Turkey’s reserves have dropped 15pc this year.

“Emerging markets are in the eye of the storm,” said Stephen Jen at SLJ Macro Partners. “Their currencies are in grave danger. These things always overshoot.” >> Read More

 

So we have a date for the next iPhone event, if weekend reports are to be believed, and one analyst is already venturing prices for the supposedly forthcoming 5S and 5C.

Horace Dediu of Asymco predicts the premium version of the phone, set to be unveiled on September 10 apparently, will cost an unsubsidised $650 at launch. If the design remains the same, the iPhone 5′s successor should be called the 5S under Apple’s nomenclature.

If Apple also unveils a lower-priced version of the iPhone – the 5C it’s been suggested, as in Cheap perhaps – he sees this being priced at $500 initially.

His reasoning is based on how Apple has differentiated pricing for its iPads and assumes older iPhones – like the 4 and 4S – will be phased out. How operators will decide on their level of subsidies and price the devices for locked-in consumers is another field of reasoning entirely.

Here’s one of his colourful predictive charts to mull over:

 

SPECULATORS BET ON THE EURO

 

  • EUR net long 6k vs short 8k prior
  • JPY net short 80K vs short 82K prior
  • GBP net short 46K vs short 49K prior
  • AUD net short 77K vs short 73K prior
  • CAD net short 10K vs short 11K prior
  • NZD net short 1K vs short 1K prior
  • CHF net short 0.3k vs short 1K prior
  • Dollar Index net long 25K vs 25K prior

Speculators shift to euro net long position for the first time since late June.

 
1.  Position adjustments were mostly minor.  There were four exceptions.  The gross long euro position grew 9.9k contracts.  Both gross long and short Canadian dollar positions were reduced (9.9k and 13.2k contracts respectively).  The gross long peso position increased by 14.7k contracts.  
 
2.  The speculative market remains net short all the currency futures tracked here, except the Mexican peso.  A month ago, the speculators were also long the euro and Swiss franc.  
 
3.  The gross short Australian dollar position is the smallest since mid-May, and at 81.3k contracts, it remains the third largest behind the Japanese yen and euro.  
 
4.   The new yen shorts, which have grown by about 25k contracts over the course of July are in weak hands as the dollar has fallen to five week lows in the spot market. 
 
5.  The speculative market appears to have used the bounce in sterling to lighten up on longs.  The gross short position has been halved in recent weeks to 19.1k contracts, while sterling has recovered six cents sin the past three weeks. 
 
6.  At 63.1k contracts, the gross long euro position is the largest among the currency futures we track.     The last time the euro was trading near current levels, in late June, the gross long position was nearly a quarter larger.  
 
(spec position in 000′s of contracts)
Net Prior Gross LongChangeGross Short Change
Euro-27.9-37.263.19.991.00.6
Yen-87.5-85.822.52.3110.04.0
Sterling-49.7-37.419.1-5.568.86.7
Swiss Franc-5.4-5.06.3-4.411.8-4.0
C$-16.8-20.022.3-9.939.0-13.2
A$-64.0-70.717.3-1.981.3-8.6
Mexican Peso19.811.455.514.735.76.3
 

A ‘senior White House official’ quoted by Reuters says no announcement about a Federal Reserve Chairman is imminent and likely won’t come until the fall. They also say Obama has not made a decision on a candidate.

Translation: There will be an announcement tomorrow.

Separately, Senate Democrats are writing a letter in support of Yellen for the nomination.

 
1.  The net position swung from long to short in the euro and Swiss franc in the reporting week ending July 2.

2.  The general pattern was for the gross long positions to be reduced and the gross short positions to increase.  There were a few exceptions.  Speculators slightly added to their long Swiss franc, Canadian dollar and Mexican peso position.    Short Australian dollar and Mexican peso positions were reduced. 

3. In the five sessions prior to Bernanke’s speech on July 10, there were minor position adjustments in the currency futures (less than 10k contract adjustment in gross positions).  The only exception was 17.7k contract expansion of gross short euro position.  Nine of the 14 gross positions we review here changed by 5k or few contracts. 

4.  However, this obscures the large change in positions over the past few weeks.  The late shorts were in weak hands.  We suspect that Bernanke’s remarks triggered a short squeeze, which, coupled with the thin markets at the time helps explain the dramatic price action.    Gross euro shorts had grown by more than a third over the past two reporting periods.   Gross yen shorts had expanded by 25%.  Gross short Canadian dollar futures rose by two-thirds. 

week ending July 9              Commitment of Traders
(spec position in 000′s of contracts)
Net Prior Gross LongChangeGross Short Change
Euro-40.9-16.052.2-7.193.117.7
Yen-80.3-70.725.1-2.2105.47.4
Sterling-34.3-31.331.3-1.365.61.7
Swiss Franc-1.8-0.112.33.414.15.0
C$-23.8-16.237.31.961.19.4
A$63.2-70.520.9-0.684.2-7.8
Mexican Peso8.02.831.33.823.2-1.4
 

NF-ICON“The more a price pattern is observed by speculators, the more prone you are to have false signals. The more a market is the product of nonspeculative activity, the greater the significance of technical breakouts.”

On asking which is better, technical analysis or fundamental analysis, he answered, “That is like asking a doctor whether he would prefer treating a patient with diagnostics or with a chart monitoring his condition. You need both. But, if anything, the fundamentals are more important now. In the 1970s, it was a lot easier to make money using technical anaylsis alone. There were far fewer false breakouts. Nowadays, everybody is a chartist, and there are a huge number of technical trading systems. I think that change has made it much harder for the technical trader.”

Advice to novice traders: “First, I would say that risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least half.” “They personalize the market. A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; it doesn’t care whether you make money or not. Whenever a trader says, “I wish,” or “I hope,” he is engaging in a destructive way of thinking because it takes attention away from the diagnostic process.”-Bruce Kovner

FRIDAY-08Last Close : 5840

Yesterday  Boldly Recommended …Not Breaking low of 5755 & Trades above 5764 will take to 5825-5834 & Gap of  5850 will try to fill.

(Yes ,It kissed HIGH of  5854.60  level )

NF-50

Above is Daily Chart of Nifty Future.

now what to do

Yesterday in our SMS ,We had given Rally upto 5860—–5869 not ruled out !!

Now ,Today Once crosses 5869 with volumes and stays for 15-20 minutes will take to 5895——————-5904 level in hrs only.

Trendline Hurdle at 5910 level.

5898-5941-ASR

Three Consecutive Close above 5941 +Weekly Close will take to 6069—-6112 level.

alert_graphic

Today ,If Nifty Future closes above 5852 level…….Then Next Week will see MORE FIREWORK in Market !!

3DEMA @ 5821 ,7DEMA @ 5793 level ……………Will act as Support.

-More Details to our Subscribers.Updated at 7:37/05th July/Baroda/India

 
1.   The past reporting period was largely characterized by the reduction of speculative positions than taking on new risk.  There were a few exceptions.  Gross long and short yen positions grew, though minimally.  Together they rose by less than 2.5k contracts.  Gross long Canadian dollar positions were extended, practically doubling to 27.2k contracts.  Gross short peso positions were grew by a minor 4k contracts.
 
2.  The other main characterization of the position adjustment was that it was largely minimal.  There were 8 of 14 gross positions were track that changed by 5k or less contracts.  There were 4 gross position adjustments that of above 10k contracts.  These include gross long and short sterling positions were cut, the gross long Canadian dollar position, as we noted, was increased, and the gross long peso position was pared.  
 
3.  There has been a dramatic clearing of positions in the peso.  It had been the largest gross long speculative currency futures position.  For most of the last several months, it has been the only currency futures we track that remained in which speculators remained net long.  The overcrowded positioning has now been alleviated.  The net long position was 121k contracts in late May.  At the end of the most recent reporting period it stood at 5k contracts.  
 
4.  Part of the sell-off in the euro since the reporting period ended likely reflects speculative longs liquidating. At the end of the last reporting period, the gross long euro position was more than twice the size of the gross long position in any of the other currency futures.   >> Read More

Reader Discretion & Risk Disclaimer

Our site is objectively in letter and spirit, based on pure Technical Analysis. All other content(s), viz., International News, Indian Business News, Investment Psychology, Cartoons, Caricatures, etc are all to give additional ambiance and make the reader more enlightening. As the markets are super dynamic by very nature, you are assumed to be exercising discretion and constraint as per your emotional, financial and other resources. This blog will never ever create rumors or have any intention for bad propaganda. We report rumors and hear-say but never create the same. This is for your information and assessment. For more information please read our Risk Disclaimer and Terms of Use.

Technically Yours,
Team ASR,
Baroda, India.