Tuesday 17 December

PMI data on Monday (particularly US and UK) highlighted 'still high' service sector inflation, ensuring the FED and BOE are likely to maintain a cautious rate cut approach. And keeps the USD and GBP on the 'to long list'. Backed up by today's US retail sales data and UK employment data.

Conversely, lower than forecast Canadian CPI data is likely to mean the BOC must continue cutting rates. And the CAD remains on the 'to short list'.

Unfortunately, I once again find myself arriving at the charts an hour too late. And I'm currently waiting for a place I feel comfortable with to put a stop loss.

Also, nothing has changed to alter my view the swiss is a good short option. It's just that the CHF is currently 'pulling back' a little too strongly to enter a trade at the moment.

Would I trade anything else other than a combination of USD / GBP Vs CAD / CHF? Arguably you could trade the USD or GBP long against anything. But the EUR remains fairly stubborn. The JPY remains choppy with the BOJ likely to switch the narrative at any moment. And I still maintain the AUD 'should' be stronger than it is. There is a case to say the NZD is shortable due to rate cut expectations but NZD USD is currently at strong 4hr support.

EUR GBP 'short' is fundamentally a very viable option. But the chart itself has a very low ATR and has a tendency to 'reverse from its lows'. especially if EUR USD is at support.

Would I short the CAD or CHF against anything other than USD or GBP?

Based on fundamentals I think the AUD 'should' be stronger than the CAD, but whilst the USD is strong, the CAD is likely to maintain an element of strength Vs the other currencies due to geographical proximity to the US.

The CHF is arguably shortable against any of the currencies as a 4hr support and resistance trade. But it would require the VIX to drop and today's CHF strength to look like it's reversing.

Feel free to email any questions....it's a difficult period and any thought is valid: johnelfedforexblog@gmail.com