I am yet again not surprised that the market  reacted so slowly to the bad numbers such as last Friday’s  NFP  when the positioning is not in the same direction.  Big players  were  keen to save time to hand over the hot potatoes to the other risk bulls and used good China numbers over the weekend as a good reason.

Below is the story of the overnight price action.

AUDUSD dropped from 0.9305 to 0.9171 and  GBPAUD rallied from 1.7293 to 1.7615.

EURJPY got smashed from 133.82 to 131.63 and USDCAD bounced from 1.0314 to 1.0414.

Basically XAU dropped 26$ and Crude chased the tail for 2.5$ led AUD, CAD suffering while risk off theme led EURJPY getting hit as well.

I think for the rest of the day, as long as any good news dominates the session with better recovery stories, every squeeze of risk shorts must be a good chance to sell on rallies.

*Stocks, Oil Drop as Bonds Rally on Concern Recovery to Slow

Jan. 12 (Bloomberg) — The Standard & Poor’s 500 Index dropped for the first time this year while European stocks fell the most in three weeks and Treasuries rose on concern the economic recovery will slow as governments withdraw stimulus.The S&P 500 tumbled 0.9 percent to 1,136.22 at 4 p.m. in New York. Europe’s Dow Jones Stoxx 600 Index declined 0.9 percent. The 10-year Treasury note yield declined 0.10 percentage point to 3.72 percent, while the yield on the German bund slipped to the lowest level this year. The yen strengthened against all 16 major counterparts, while crude oil slumped the most in five weeks. Grains plunged in Chicago after the government said farmers harvested record corn and soybean crops. China ordered banks to set aside more reserves to cool the expansion of the world’s fastest-growing major economy, stoking concern that recovery from the global recession will falter.
“On top of that, there’s also China weighing on the market. As the global economy shows signs of strength, central banks will have to start tightening at some point.”

I think today is one of those mornings, after losing money on an illiquid Monday morning due to good size internal SL orders and no chance to make it back as you left the office at 10.00 AM in the morning, even before Londoners woke up.

With two-three trading ideas in mind, leaving some positions open and orders  was the idea to get involved while sleeping but those were canceled by an invisible hand overnight and the opportunity cost was  half of the P&L number yesterday. I must admit, I’ve never had any intervention on my overnight positions as long as I was in position size and P&L limits before which was the case yesterday as well, still in shock with no explanation except saying AUDUSD looked bid. Well, It looks like it was only my bid at 0.9305 when I was buying back that short and printed 0.9235 this morning.

When I started to type down the post this morning, one of the China Sovereign Fund official said that Dollar hit the bottom, limited topside room to fall further and Yen would continue to fall. As you could imagine, EURUSD collapsed from 1.4485 to 1.4453 with ACBs on the offer and USDJPY rallied up to 92.43 on a bounce from 91.85.

I managed to get some Cable at 1.6075-80 area, counting on the Swiss bids in regular sizes between 62-75 with a tight SL at 60, and cheap EURUSD at 1.4465 with a tight SL at 1.4445 which is  the 38.2% fibonnaci retrace level of  1.4264 to 1.4557 rally.

Same official who seems to be taken some special medicines so far this morning hit the wires once again saying that comments were his personal views. EURUSD rallied from the lows up to 1.4495 and Cable to 1.6095.

Still tilting at windmills and expecting another squeeze higher in majors before London gets in.

Lets hope and stay tight..

Yesterday, ECB Council member Stark, a German, complained that Greek deficit spending is too high and warned there will be no bailout of that government by the rest of the EU.  Greek officials rebutted him, saying no bailout will be necessary.

ACBs and semi-officials buying more than yard of EURUSD around 1.4290-1.4320 together caused early London squeeze up to 1.4365-80 area and as Fed Officials Discussed Increasing Asset Purchases at Last Policy Meeting caused a break of 1.4380 to extend  the  rally up to  1.4435.

On the other hand, despite softer usd later on the day, Yen weakened following news that FM Fujii resigned because of his ill health.  Fujii had favored a strong exchange rate.

On a day like that, I intended to stay low profile and did not buy back the stopped out long USDJPY below 91.60 early in the morning around TKY fixing time, which might be called disciplined by not being stubborn on a losing position or might be called regret !

I managed to sold some EURUSD around 1.4435 area and small Cable around 1.6050 after buying dips post- Greece comments and EURUSD got stopped out at 1.4485 after FOMC minutes.  I was lucky enough to buy mighty Cable back at 1.5955.

When was the last time that I had a bad trading idea but  hit the price target on the other side ?  Well,  it was yesterday.   AUDUSD short idea didnt work so I felt not good about Aussie which kept me away from getting involved yesterday. I   basically picked the topside  at 0.9170 ( yesterday high at 0.9174) and did not sell any into it.  I think this is a major issue to pay attention in the future so need to learn after losing trades how to stay focus on the pair and re-build a strategy to gain the losses.

Secondly, lack of liqudity in EM pairs in Asian session puts me behind to build up some confidence as EM is less technicals, more fundamentals and market positioning in addition intraday feeling. I managed to sold some USDTRY at 1.4765ish with a tight SL at 1.4835 in mind, targeting 1.4685 on the downside but after XXX-JPY getting smashed and keeping USD trades under pressure, I closed the position which hit the take profit level just after Istanbul opening. So need to learn to stay calm with EM positions and feel more confident about it in early Asia trades.

Finally, good order execution in EURNOK and well-earned p&l was not good enough to cover the cost of  SL in USDJPY long from 91.70 and a forgotten SL oda for the same position on an e-platform.  I managed to sell half of USDJPY long at 92.05 and re-bought at 91.70 after office hours but got stopped out at 91.40 later in the evening. Also covering the extra shorts from 91.40 at 91.75 was the real pain in the bud.

Today is a  new day.

So Lets move on.