Wednesday 16 October: only trade in town

Many, many people (myself included) predicted the USD would end the year lower than it began.

That prediction now looks in jeopardy. Currently 'long USD' is the only trade in town, as goeopolitical uncertainty collides with a strong US economy and an 'unwinding' off FED rate cut bets.

yesterday USD CHF trade is still in play. And it's a trade I'm content to be in. As you probably know, my preference is to trade according to fundamentals, which at the moment means short CHF, JPY or EUR. But, due to the uncertainty of the moment, especially china disappointment. Any of the currencies look shortable Vs the USD. Even the 'mighty AUD' looks like a good short (AUD NZD going down shows something isn't quite right).

Of course, anything could change at any moment... A 'dovish' FED board member suggesting more cuts are necessary could change the trajectory of the USD. But, for now. My suggestion is to look for USD longs Vs whichever currency you have the most short conviction in at that moment.

It could be GBP thanks to 'soft CPI' data.

It could be EUR if the ECB cut and sound dovish at Thursday's meeting.

It could be CHF due to the SNB being particularly dovish.

It could be AUD or NZD due to china concerns and a dovish RBNZ.

The currencies I'm finding most difficult at the moment are JPY and CAD.

Both I wound prefer to short but I have no confidence in the BOJ and the clarity of interest rate direction, plus it appears the 'carry trade' is currently not 'en vouge'.

The CAD is difficult due to it's proximity to the US and the volatile oil price at the moment.

Please feel free to email any questions: johnelfedforexblog@gmail.com