Weekly Review.

The week starting Monday 25 August ended where it began, with roughly an 85% likelihood of a September FED rate cut.

There was a lot of external noise in-between. But all the while, the currencies 'movement' remained fairly muted.

Given the reaction to chair Powell's speech the previous Friday, I was quite surprised by the USD strength on Monday.

Throughout the week, we did get a few 'events', namely Mr Trump 'firing' FED member cook, whilst simultaneously stirring the tariff pot. The firing of COOK is an interesting one as it brings into question the FED's independence and is a scenario that could rumble on for a while. We also got 'discouraging' forward guidance from NVIDEA. On another week, all of these narratives would have 'likely' spurred 'sour sentiment'. But any moves were muted, which I put down to many traders being away on 'summer breaks', the fact the VIX hovered around 15 all week (despite the negativity) backs up this theory.

In other news, we did a bit of 'action,' on Monday when political uncertainty in France weakened the EUR. And on Friday 'in line with expectations' US PCE data (eventually) weakened the USD. The theory being inflation is still benign enough for the FED to cut rates in September.

Finally, 'soft' CAD GDP data keeps a BOC September rate cut firmly on the table.

On a personal note, I only really perceived two opportunities all week, the EUR weakness on Monday (which I didn't trade) and the USD opportunity on Friday (GBP USD long). Although that was a tricky one because the dollar did initially strengthen on the headline. We only saw the 'true reaction' once the US market opened.

Throughout the week, I did find myself a little frustrated with the lack of my perceived opportunities over the last few weeks, I'm very intrigued to see if volume picks up once 'institutional traders' return to their desks.

I begin the new week with my 'risk on' bias in tact (particularly following weekend news of a supreme court tariff ruling). But I suspect the narrative surrounding the US jobs market could play a big role this week.

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

Results:

Trade 1: GBP USD +1.2

Total = + 1.2%

Total since start of blog = +43.7% (risking 1% per trade).