Thursday 29 October.
Goodness me, there has been a lot going on this week. Obviously we need market moving events to create opportunities. But this week I've found that it's been difficult to form a lasting conviction, due to another event only being a few hours away.
As a recap, let's have a look at the week so far.
Last week's EUR weakness theme filled over into Monday and Tuesday, it was for me, the only potential trading opportunity.
The week's main events started on Wednesday, beginning with the RBNZ and inflation data from Australia (which came in higher than forecast, which, in theory , 'should' Keep the AUD supported.
The RBNZ, held interest rates, giving guidance hawkish guidance. The market expected a rate hike, which is why the NZD weakened on the decision. But the 'hawkish guidance' made it difficult to have confidence the NZD would continue to weaken. For continued NZD weakness, we needed a hold with neutral / dovish guidance.
Next up, the BOC. Not long ago, the BOC was one of the more dovish central banks. But sentiment has slowly been turning positive for the CAD. And ordinarily, a hike with hawkish guidance, would create a good long opportunity. But the problem with the BOC meeting is that the FOMC meeting and mega cap tech earnings were due only a few hours later.
The FED didn't hike, but it seems a December hike is well and truly on the table. And as long as that remains the case, the USD 'should' remain supported.
Similar to last week, earnings have affected specific companies. But not really had overall risk environment Implications. I think the bottom line is that earnings haven't been good enough to truly boost sentiment. But they also haven't been negative enough to cause an S&P 'sell off', which was a very real risk.
Then came the ECB. A hold with hawkish guidence, which has given the EUR respite from the recent negativity. But I'm sceptical how long EUR strength will last and I think today's 'bounce' could turn into a EUR short opportunity.
Finally, coming UK we have the BOJ. We know the BOJ are still on a hiking Cycle. But the BOJ are notorious for disappointing JPY Bulls. And any sign of 'kicking the can further down the road', could create a JPY short opportunity. But conversely, any suggestions a rate hike (or hikes) is imminent, the JPY could strengthen considerably.
As things stand, I've only placed one trade this week (Monday's EUR AUD). There might just be one more opportunity before the week closes, which I currently think could be either a EUR short, or a post BOJ JPY trade (in either direction).
Please feel free to get in touch with any questions.