Weekly Review

The week starting Monday 9 March could be described as 'a week of two halves'.

The week began with another 'opening gap lower' but similar to the previous week, that initial negativity didn't continue, thanks to suggestions the US IRAN war would soon be over, combined with an announcement that oil reserves would be used to stabilise the price of oil. This led to a 'risk on' environment on Monday, which carried over into Tuesday.

By Wednesday, the tide started to turn, IRAN are not playing ball with President Trump's ideas. The straight of Hormuz briyng closed is starting to become an extremely big worry for the market, if the straight is closed for months and not weeks, the concern is a big inflation shock could seriously put the 'soft landing narrative' at risk. There is already talk that the UK and Europe might be raising rates next rather than cutting and the dreaded 'stagflagion' word has reared its head.

We have a slue of interest rate meetings this coming week, given the circumstances It will be difficult for central banks to give forward guidence. But we might get some clues about how real the possibility of rate hikes is.

In other news, with USD JPY returning to a previous 'intervention price', on Friday we got the inevitable BOJ 'jawboning', which gave the JPY some extra 'risk off momentum'. Until then, the yen once again struggled to strengthen in the negative environment.

The BOE has long been walking an inflation tightrope and Friday's 'soft' GDP data could leave the UK in a precarious position if interest rates have to be raised. But it isn't just the UK, all countries relying on imported oil will be watching the Hormuz straight narrative with baited breath.

On a personal note, it was a week of two trades. Arguably, there was a 'risk on' opportunity on Monday but I chose to wait for a litte more confirmation. By Tuesday I felt confident in the 'risk on' environment, placing an AUD CHF long which hit profit.

As the tide turned, I felt like I missed a risk off opportunity on Thursday but by Friday's US open, I could only envision a negative end to the week, placing an AUD JPY short 1:1 trade, which also hit profit.

I begin the new week thinking the path of least resistance is 'risk off' but I'm also prepared to trade positive headlines long. I also note that currently, it's the USD having the most binary reaction to the headlines, meaning it's the most correlated to the risk environment.

All eyes on the price of oil as we begin the new week.

Results:

Trade 1: AUD CHF +1.5

Trade 2: AUD JPY +1

Total = +2.5%

Total since start of blog = +57.1% (risking 1% per trade)