Weekly Review
USD selling was practically relentless throughout the week starting Monday 19 January. A return of the post liberation day 'sell America' trading environment hit stocks bonds and the dollar. The initial catalyst was the president's threat of more traffis on European countries, an attempt to gain leverage in Greenland. Causing a breakdown in the standard correlations we are used too, the AUD and NZD gained during the initial risk off environment. And thanks to its own issues, the JPY didn't strengthen when the market was 'risk off'.
The AUD and NZD strength whilst the environment was fraught could be attributed to a number of things, traders sought the relative 'safety' of two islands largely shielded from the chaos. Plus, both countries released positive data throughout the week, for the RBA in particular, the prospect of a 'rate hike' is back on the table.
By mid week, the Greenland tension 'de-escalated'. But sentiment for the USD remained subdued as as US data continues to come in 'just soft enough' to warrant thoughts of a soft landing'. And in the lead up to the BOJ meeting, there was a case to say 'take your pick' for either a USD or JPY short trade.
The BOJ once again held rates and once again didn't provide clarity on the timing of the next rate hike. Compounding JPY weakness. Only for the MOF to 'seemingly' step in with intervention, gaining a sharp bout of strength to the yen. Whether the MOF did intervene, or whether it was market jitters in anticipation of intervention is unclear. But the playbook remains, once any bouts of JPY strength peters out, 'short JPY trades' are on the table.
In other news, it was a solid data week for the UK, keeping the GBP on the 'to long list'. Earnings season once again is slipping under the radar, long may that continue. And the price of gold continues to make headlines, maybe there is an overdue case to add XAUUSD to the list of tradable currencies?, something I will give thought to.
For now, I'll begin the new week with a tentative 'risk on' bias, keeping a keen eye on JPY and the MOF's tolerance. Plus I'll keep a keen eye and the DXY.
On a personal note, it was my first four trade week for a very long time.
A NZD JPY long, which was eventually closed for a very small profit pre US CPI data. It was one of those that 'looks like' I should have let the trade run. But I still say it was the right decision to close the trade early ahead of data.
Due to my personal calender, I then found myself 'anticipating' a positive environment due to 'Greenland de-escalation'. A GBP CHF long, which stopped out and a EUR USD long, which hit profit. The EUR USD trade was particularly bold as it required trading through red flag US data and the trade could very easily have gone the other way.
Finally, once Friday's ISM data wasn't 'hot', I felt it could be a springboard for USD weakness to continue. I placed GBP USD long trade which hit profit.
Results:
Trade 1: NZD JPY +0.3
Trade 2: GBP CHF -1
Trade 3: EUR USD +1.5
Trade 4: GBP USD +1.5
Total = +2.3%
Total since start of blog= +48.8% (risking 1% per trade).