Australian CPI Overshadowed by the Weak Dollar

Australian forth quarter CPI fell sharply but the negative effect on the Aussie was limited. U.S. dollar was generally weak since the FOMC meeting was ahead and more aggressive measures by the Fed were expected. I had a short position on audusd which closed in 29 pips of loss.

ECB Rate Decision and China's GDP Revision

China's GDP revised to 13.0 percent (I think from 11.9 percent). Yen was weaker in Asia in response to the news. I had a short position on eurjpy which was in loss in early European session while the ECB was going to cut the benchmark interest rate. I decided to close the position in the correction when the loss significantly declined.

Dollar Fell Sharply Against the Yen on Options Expiration

On Jan 21, expiration of the option contracts at 10:00 CET sent usdjpy close to 87 (I think the lowest since 1995). It was apparently because the investors avoided betting that the Dollar would not fall below 90 against the yen. I had a long position on usdjpy, ahead of the Japanese Merchandise Trade Balance, which unfortunately closed in loss automatically.

German GDP; Reaction to Supply and Demand Forces

Third quarter GDP for Germany fell 0.5 percent, worse than analysts estimates following a 0.4 percent decline in the second quarter. The economy entered in a recession after two consecutive quarters decline. Euro was under pressure but as always the supply and demand forces dictated the results:

Euro supply side:
- possibility of more rate cuts after weak GDP number
Euro demand side:
- equity indexes such as DAX rebounded later betting that more rate cuts are now in horizon and it could stimulate the economy.

Yen supply side:
- possibility of intervention by the Bank of Japan rose after earlier actions by the Australian counterparts that bought the Aussie to support the currency.
- rebound in equity markets after heavy losses in recent days
Yen demand side: -

As the charts show, selling eurusd might be a better option than eurjpy considering the downside risks to the Japanese yen. My position (sell eurjpy) resulted in 2.5 percent loss which was closed after the price broke its MA26, signaling a reversal may be likely.

The bet finally resulted in 8 percent loss

I closed my positions last night (after U.S market close). Every supports was broken and there was no supportive technical data. In addition, an only pre-order for buying GBPUSD automatically triggered at its daily support which resulted in 49 pip loss very soon.
Looking at sharp drop in commodities prices show that the market may be in an adjusting process. UK CPI and US Trade Balance are ahead but I have no specific plan for the rest of the week.
Although holding positions beyond a day was in contrast by my style but a relatively small size and making a difficult decision (closing all in loss) help to control the loss.
I forget it from now, looking toward the next week. (plan of the trade)

Unusual positions and very usual losses

All recent positions resulted in heavy losses. There are clear reasons:

I was completely wrong when underestimating the possible negative effects from the US housing and credit problems especially the case of Freddie Mac and Fannie Mea. Yesterday, President G. W. Bush made a press conference explaining the government plan for supporting the two firms and the deposits of American people. At the same time, Bernanke was at the senate when repeating concerns on credit conditions and also the prospect of inflation.

I was also wrong in creating the positions. In the case of selling EURUSD there were significant errors and mismanagement:

• Although it was generally inappropriate to sell the euro at that time but considering economic data then the possible option could be EURGBP, not EURUSD.


• Also too much risk had been taken when I hold the position in a very weak technical conditions until making almost 100 pip loss.

In the case of selling GBPUSD I made the worst choice. I sold a currency when it was facing CPI data that has been its only support in recent months. Even a very armature trader doesn't make such crude decision.

The market certainly doesn't make mistake and I paid the full price of my decisions.

25 pip loss, but from a small position

The position (buying EURUSD) closed at 1.5545 in 25 pip loss. I wanted to close it before ECB's Trichet speech (at 10:30 CET) but I came too late. The next play would be probably after FOMC meeting.

Sharp loss experienced

EURUSD hit the stop loss at 1.5360, making 50 pip loss, but the size of position was three times more than my average trades, so increased the magnitude significantly.

I don't know the actual reason behind the reverse in the market. It might be a comment from an EU official. It happened very fast; considering the time of the event which is about shifting between Asian and European sessions, I guess it might be result of different views in the market.

It is relatively reasonable to expect that the general risk would rise when we move through different sessions. So I could be blamed for underestimating this fact when I decided to increase the size of position that time, but not more.

Another fact might be that I didn't give the market adequate time to reflect any possible effect from the last weekend G-8 summit.

66 pip loss, the price of impatience

US pending home sales was well above expectations, I simply underestimate that possibility and its consequences on the Canadian dollar, so I pay the price.

AUDCAD closed in 66 pip loss.

The most frustrating aspect is that I was in 35 pip profit before the report but I understand it after 6 hours.

I am just happy because the size of the position was at the minimum level.