Dyslexic BoJ : Sell USDJPY short term
USDJPY was my trade of the year last year into this. Not boasting about the peanuts it made me but the sense of sweeping gratification when it finally did make its move.
Thus it feels unreal to be writing this and a small betrayal to my ultimate price target of 103.
The upmove has been swift, Ichimoku rendered useless these days.
So I went back to good old Fibonacci, who always has something to say, and picked the 10 year top of 124.14.
Not the purist, as always, in these matters which will probably attract a scornful snigger from the Retired Trader, I am guessing a ripe retracement coming up. Yes, yes. I could have said this last week or the the week before.
But I am saying it now because everything else has hit exhaustion point and we are starting to see that after 3 months of talk, nothing much has really improved. An economist explained it nicely today at a conference. Many Jap export companies have switched to JPY payments so only about 60% of exporters benefit from JPY weakness. But since the tsunami, the country has become even more dependent on imported fuel which makes 100% of companies suffer.
Shirakawa is stepping down on 19 Mar. Kuroda promises swift action.
I think we have about a week to play this. Trade target 91.50-92.00. Stop loss 97.25-50.
Argghhh.. I just read this one.
Hi,
I’m confused.
I’ve got an expiring UBS AG Australian Bond, ISIN code : AU3CB0157824.
It paid out it’s last coupon on 26 Feb 2013. It matures 26 Aug 2013.
However, the price is above par at $101.18~.
Anyway, I just sold it.
May I know why it was trading above par even after the last coupon payout?
I understand it was priced at 50.0 bp yield spread off 0.45 YR / 2.93% (interpolated AUD Interest Rate Swap).
However, why would anyone buy at $101.18 and then get back $100 in mths time. Isn’t it loss making?
Appreciate your education on the topic.
Thanks.
Hi Bondie
If the bond you are talking about is the UBS6.25 26Aug2013, the coupon is 6.25%. Thus it makes alot of sense to pay 101.18 for it because you have a final coupon of 3.125 cts to collect in 6 months time which makes it annualised yield of approx. 3.65% a good bet over cash deposit rates.
Buying this UBS paper is akin to depositing AUD with UBS bank.
And I am pretty sure your UBS current account will not be paying over 3% which is the RBA cash rate.
50 bp yield over 2.93% gives you 3.43% which is again, not bad.
Hope it helps.
I’m confused. It already paid out it’s last coupon last month.
In August, it will only be returning you the principal.
So how come we have a final coupon of 3.125cts in 6mths time?
Hi Bondie
Without being absolutely sure, until I see the prospectus of your bond, I believe the common structures are to pay the interest at the end of the coupon period. Thus, if your bond is maturing in Aug, there should be 1 last coupon payment to go with it. I have yet to come across a bond that pays the interest/cpn at the start of the cpn period, the same for a bank deposit.
Since your UBS paper is a semi annual bond, there should be another coupon payment coming up.
You should clarify with your banker.
Good Luck !