Weekly Review

A tech sell off dominated the headlines during the week starting Monday 2 February. Not long ago I was celebrating the fact earnings season was slipping under the radar, that came to a halt as Microsoft's AI spending came under scrutiny, the theme continued this week with Amazon and Alphabet, the theory being companies are spending so much that it's going to take longer than previously thought to see any AI related returns, denting market sentiment. The NASDAQ fell, taking the S&P and the DOW with it, US yields also dropped in an old fashioned stocks down, yields down = risk off environment.

The USD appeared to be the main beneficiary, despite its own slightly soft data as sentiment for the JPY remained subdued, intervention chatter waned and the governments fiscal outlook undermines potential BOJ rate hikes. It will be interesting to see how the yen reacts to the outcome of the election.

In other news, the ECB passed by uneventfully but we did get some interest rate speculation moves from the AUD and GBP. The RBA rate hike with hawkish rhetoric gave the AUD strength and a slightly dovish hold weakened the GBP. Speculation the UK prime mister is under pressure also has growing potential to weigh on the pound.

Friday bought a big 'risk on recovery day' and I'll begin the new week assessing whether the positivity can continue or whether it was a short lived bout of profit taking.

On a personal note, it was a positive week of three trades. Early in the week, feeling the USD JPY recovery had room to run, I placed two USD JPY longs.

I didn't get involved trading during the height of Thursday's AI negativity, arguably there was a risk off trade to be had but I wasn't so sure.

On Friday, I jumped on the recovery, with a ''risk on' GBP JPY long, feeling that in the positive environment the pounds weakness was likely to reverse. The trade was closed in profit before end of day.

I'm 'tentatively hopeful' of more JPY short trades post election. But the delayed NFP and the AI narrative could have a big say on proceedings this upcoming week.

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

Results:

Trade 1: USD JPY +1.5

Trade 2: USD JPY +1.2

Trade 3: GBP JPY +0.8

Total = +3.5%

Total since start of blog = +52.8% (risking 1% per trade).