The John Elfed Forex Blog

Monday 17 June.

It's a fairly quiet Monday in the forex market with no particular stand out news. The political uncertainty in Europe has calmed down for now. Mixed data from china during the Asian session doesn't give any clues about the health of the Chinese economy. The AUD

Weekly review.

The week starting Monday 10 June had a lot of information to digest. Starting with political uncertainty weighing on the EUR. Essentially, growing support for the far right in France caused negative sentiment for the euro. I must confess to ignorance regarding the inner workings of french politics, but it

Post BOJ thoughts.

As expected, the BOJ held rates. The JPY initially weakened, as there was no mention of a reduction in bond purchase. And my initial thought, pre press conference, was that a JPY short would be a very viable trade today. But during the press conference, it was confirmed a reduction

Post FOMC trade.

The preferred outcome of CPI and FOMC aligning didn't happen, as soft CPI was met with a rather hawkish FOMC statement suggesting only one rate cut this year. The FED reiterated a data dependent approach (as has been said all along) but ultimately it sounded rather more hawkish

CPI and FOMC on the agenda.

It's gearing up to big a big day in the market, as rather unusually, CPI and a FED interest rate decision are on the same day. It's been suggested the FED needs to see consistent prints of 0.2 or less month on month, before committing

Live trade.

Weekly review.

The week starting Monday 3 June began with a scenario we've not seen for a while: yields down =risk off. When yields are moving in a particular direction, it's important to form an opinion: why? and what are the implications? Recently, Yields down= risk on, due

Live trade (buy stop order).

Following the aforementioned 5min swing. I have set a buy stop order just above the recent high, given my misgivings about placing a trade on a Friday. I'd like the market to prove itself before entering a USD long catalyst trade. Email photo to follow:

NFP

It's hard work keeping up with the markets views. When the weather is changeable, there is a saying 'four seasons in one day'. This week the market has seen 'three scenarios in one week. Starting with out of the blue (unwarranted) stagflation fears, moving to,

ECB cut rates, with no further guidance.

As expected, the ECB has cut interest rates. In a rather unusual scenario, rates have been cut because they can, rather than because they have to. And with no further guidance on the future path, it has been deemed a 'hawkish cut'. Which leaves a bit of a

Digesting today's data.

There has been a lot to digest today. And a lot of mixed messages. Starting in the Asian session, poor data from Australia but positive PMI from China. From the US we had soft ADP data (soft landing positive) but hotter than forecast SERVICE ISM data (higher for longer positive)

Trade closed manually before BOC.

I have manually closed yesterday's NZD CAD trade for a profit of +0.7, to avoid holding risk before the BOC interest rate decision. My preference would be for a dovish statement to offer another CAD short opportunity. Of course, there is also US ISM service data to

Live trade.

Today there has been a risk off sentiment to the market, all of a sudden the word 'stagflation' has popped up as it does from time to time. Currently, I don't buy into the threat of stagflation and I believe the negative sentiment won't

NZD CAD

Photo of the NZD CAD 1hr chart I deem a little stretched. Of course, the chart could keep rising without a swing, which would mean a missed opportunity. But I'm in no rush to place a trade. It's only Monday, there are plenty of potential opportunities

ISM manufacturing slows more than expected.

Having unexpectedly been out of the house all day, I've arrived home to see US ISM manufacturing has contracted more than forecast, particularly prices paid. This is a 'bad news is good news scenario' and combined with last week's data, adds fuel to the

Weekly review.

The week starting Monday 27 May began with 'higher for longer' on the markets mind. Which caused mild concern as the VIX rose above 14 (although still not high by 'panic standards', a rapid move above 20 is the figure in my view when a risk

Disinflation on track: Live trade.

Core PCE on the agenda.

The 'soft landing narrative' will once again be put to the test today as the weeks main event is on the agenda, core PCE data from the US. The market is so sensitive to inflation data, the number will be scrutinised to the second decimal point. Any signs

Trade photo.

It's a 'soft landing risk on trade'. With a 24 pip stop loss and 36 pip profit target. The stop loss is behind three 15min swings. The risk to the trade is if the market has a change of heart at the US open. Or if

In line GDP and slightly higher jobless claims appease the market: live trade.

Today's data has taken a little of the recent fear out of market. US yields are dropping, the VIX has dropped a little and the S&P should like the news at the US open. The USD is suffering, but I'm not prepared to short

Higher for longer narrative takes hold.

There is a mildly negative sentiment in the air as the VIX rises above 14, bond yields are climbing and the S&P is negative as a realisation that a US cut may still be a little further away than hoped. And it's a narrative that'

Live trade: limit order

Tuesday 28 May

With no change to my preference of 'interest rate differential trades'. I'm currently waiting for support to hold, followed by a little push up (see photo). Then I'll be ready to short the JPY. Likely Vs the NZD, but (in my view) there is

The week ahead.

It's a quiet data docket today as most of the developed world is on 'bank holiday'. The Forex market is open, and often, you do find if there is a prevailing trend, the currencies often grind in the direction of that trend. Although there is nothing

Weekly review.

I found the week starting Monday 20 May a slightly frustrating week, as my bias for the currencies didn't quite align with the 'price action'. I felt a hawkish RBNZ should have seen the NZD stronger than it was. The AUD was fairly weak and I