Friday 30 August

Thursday's ​jobless claims and GDP data show a still strong US ​economy. Adding to the 'risk on soft landing narrative'. The S&P is up, the VIX is down, the overall mood certainly lends itself to a 'risk on' trade.

The USD initially gained following the data as it appears the FED's first cut will be .25 rather than .5, but has since weakened again. And the question is: which currency to short? Especially as the CHF is weakening, possibly due Thursday's ​'soft' inflation data from Europe, which does open up the possibility of adding the EUR to the 'to ​short' list (the EUR does often behave like a 'risk off' currency').

Not long ago, core PCE data was extremely important, whilst it still holds significance, I think it would take an outsized number from today's reading to create volatility. As long as the VIX remains suppressed and S&P remains positive. 'risk on' trades with a stop loss behind 1hr support are very viable. It's then a case of comparing the momentum of the 'risk off' currencies against each other (and support and resistance) to determine which currency to short.

Of course, it is Friday and month end, so there is no shame in sitting on the sidelines and waiting until Monday.

Feel free to email any questions: johnelfedforexblog@gmail.com