GalleonFX - 7/5/06 Another good month for C150

C150 did very well for June 06, coming out ahead at 9.58% return for the month. Most of its great gains were made in the first two weeks when it took advantage of the correction of the weakened dollar. The USDCHF had been vacillating in a channel for most of May, staying between the range of 1.2050 (low) and 1.2275 (high). The first week of June saw the USDCHF once more fall back down towards the range low, and the C150 picked up on a few profitable EURUSD channel-based strategies that it knew by then it could easily profit from. Then, after the USDCHF bobbed around in its low for a few days, by June 6, it was once again prepared to move upwards and retest the channel high (1.2275). This is when the C150 made a killing, for the day before this corrective move C150 had heavily piled on some counter-trend USDCHF strategies in the 1.2080 area. And, fortunately for C150, the USDCHF did not just move up to retest the resistance area of 1.2275; it decided to break through it. In the days that followed many of its counter-trend strategies exited around the 1.2325 area, gaining 250 pips each.
Thus, by June 19, C150 was up by 20%.

In the following two weeks, some USDCHF strategies stayed open from early on and new trend based USDCHF strategies entered in the now-trending USDCHF. All were hoping that the market could keep its momentum and break the second level resistance area of 1.2500. The market tested this upper area on June 23 and then again on June 29, and for many days it looked as if this area was going to break, in which case the USDCHD would have a clear shot at re-capturing most of its lost ground from April and May.

However, the FOMC meeting took place in the afternoon of June 29 that was to unravel the technical corrective phase of the dollar. One small comment by the fed chair at the end of the FOMC meeting was interpreted as anti-dollar (signaling possible pause in rate increase next Aug meeting), which sent the dollar crashing with the speed of a dropped rock. In seconds, the USDCHF fell from 1.2500 to 1.2300, a drop of 200 pips. Consequently, C150 was stopped out of few USDCHF strategies that had climbed aboard on a later stage of what looked up until June 29 to be new emerging currency trend. June 29 and the following day we gave up a good bit of potential profit. That being said, it should be re-emphasized that the C150 had grabbed such a considerable percentage return from the early run of the USDCHF that, despite the unpredictable FOMC comment and the resulting loss of potential profit, it was still able to finish the month off with a very healthy 9.58% return. Many currency managers who did not pounce on this corrective phase of the USDCHF, or who were instead long EURUSD, would have been stopped out in the dollar correction. June would have been a bloodbath for many long euro managers, who would have had few remaining euro positions left to take advantage of last minute June 29th euro comeback.