This week, I spent most of the time trading in spot AUD. Vols were getting better bid this week, but several option traders sold gamma thinking that it is way overpriced in the market. Just 2 weeks ago, vols in the EUR were trading at about 13% and this week we saw vols blowing higher by 2% to 3%.
The Aud has been range bound, however, that did not stop me from executing some of the worst trade ever. Selling at the low of 1.0202, holding on to the pain till it got unbearable on Thursday when the AUD blew up as Draghi was speaking to 1.0360, only to see it trade back down to the lows of 1.0170 when his hard lined stance did not put any favour on to the market.
But the AUD has been a strange beast of late. Its a risk on risk off currency, with commodity prices largely influencing its direction. This week showed me that the AUD trades with its own rules and regulations. When S&P tanks, one would generally Buy USD and sell the other currency, but the AUD remained fairly resilient at its current levels.
No matter where EUR trades, we always see the AUD remaining solid as a rock, not yielding to many other noises in the market except for commodity prices.
I will come up with a trading plan this week. Sometimes, spot trading is just not worth the time and effort babysitting. Better off betting on interest rates and volatility.
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