Thursday 26 September.
US GDP and jobless claims data shows a healthy US economy and the risk environment remains positive. Chair Powell's speech passed by without monetary policy comments and the market continues to focus on the soft landing narrative and China's attempts to stimulate it's economy.
The SNB cut interest rates by 0.25, in line with expectations, the franc has been relatively unmoved but remains on my 'to short list' along with the JPY and USD, depending on whichever currency is the weakest in the moment.
The JPY weakness has been particularly unabating this week, which is a welcome sight. And as things stand, it should remain weak for the foreseeable. Although, the weaker the yen gets, there will at some point be the inevitable 'verbal intervention' from the BOJ.
My current thoughts for potential trades are...
First choice: JPY or CHF short as a 'rsk on' trade (or USD if the dollar is crashing Vs the yen and franc). My preferred currencies to long as a 'risk on' trade are currently AUD, NZD or GBP....but, there are times it's very viable to long the EUR, CAD or USD vs the yen or franc.
Second choice: Relative fundamental / Interest rate differential trade...which could be any concoction of...
AUD, NZD, GBP ...long
Vs
CAD or EUR... short.
For now, although it's very tempting to continue to trade the JPY short, I'm going to wait for a sideways move or pullback before feeling confident, especially as it's quarter end, which could see some profit taking into the weekend.
Feel free to email any questions: johnelfedforexblog@gmail.com