Weekly Review

As has been the case for most of 2025, the week starting Monday 15 December was one clouded in uncertainty.

Not too long ago, a benign US CPI print combined with what could been deemed a 'goldilocks' NFP print, following on from last week's FED rate cut, would have induced a sustained period of 'risk on'.

But this is 2025 and AI valuation concerns, soft data from China and a general uncertainty surrounding the validity of recent 'shutdown skewed' US data, throw in the possibility of 'year end positioning' and it all made for (for me at least) a difficult trading environment. 'Catalysts' weren't sustained, the AUD spent most of the week on the back foot (I still maintain it 'should' be the strongest currency). The GBP did its 'weaken only to strengthen again following soft data'. Although a 'hawkish cut' did provide a valid reason to consider longing the pound moving forward (not as many future cuts as the market previously thought?).

All of this and I haven't even mentioned the JPY yet..... In the lead up to the BOJ, all the talk was a rate hike was coming. So it was perhaps a little perplexing as to why the JPY was so weak, particularly as the S&P was failing during the early part of the week.

When the BOJ meeting did arrive and a hike was delivered, the JPY continued to weaken, especially when govoner UEDA wasn't particularly forthcoming regarding the timings of any extra rate hikes. Even 'verbal intervention' couldn't stem JPY weakness.

All in all, the fact that the two currencies on complete opposite ends of 'the risk spectrum' (AUD and JPY), were the two weakest currencies sums up the uncertainty of the moment.

But I'll begin the new week looking for a JPY short trade on pullbacks creating 'nice support'. There may just be an opportunity before liquidity drops on Christmas eve.

The risk to any JPY short trade will be 'intervention', either verbal or actual. It seems actual intervention is inevitable at some point. The likelihood is it will come following 'soft US data' and or during low liquidity.

On a personal note, I was perhaps a little too reluctant to place a JPY short trade early in the week (due to my thoughts of potential JPY pre BOJ strength). Choosing insead to trade AUD USD long post NFP, the trade stopped out quite quickly as one of those unsustained moves.

Unfortunately, due to other commitments I missed the week's best opportunity, Friday's 'JPY short post BOJ' trade. I did kick myself a little bit but we move forward.

Let's see what the new week brings.

Results:

Trade 1: AUD USD -1

Total = -1%

Total since start of blog= +47.3% (risking 1% per trade).