Weekly Review

Tense but directionless is a description I read about the week starting Monday 18 May. And I think that sums it up perfectly. At least in terms of the currencies (the S&P once again, in the main, impervious).

I thought the USD yields story was going to 'push on' (strengthening the dollar). And during the early part of the week it looked that that would be the case. But USD strength was curtailed by positive war headlines, particularly president Trump's 'close to the end' comment. Unfortunately, any market positivity was then curtailed by pushback from IRAN. And then any negativity was curtailed by a positive comment. This 'doom loop' persisted all week, making it very difficult to have any confidence in the direction of the currencies. To the point where I now need to see 'double confirmation', meaning, for a 'risk on' trade, a positive comment from America, backed up by a positive comment from Iran.

For a 'risk of' trade, signs of 'continued stagnation' backed up by the VIX going above 20.

If recent weeks are anything to go by, it could be a while before either scenario plays out.

In other news, a policy endorsement from the IMF, plus attempts to quell the cost of living, seemed to support the GBP, despite soft data.

In Australia, soft data dented sentiment for the mighty AUD, perhaps recent rate hikes are filtering through, will the RBA turn a little more dovish?

And of course, consistently running in the background we have the BOJ, the, will they / won't they / should they / shouldn't they (raise rates). And the threat of intervention remains a thorn in any trade's side, particularly with USD JPY once again nearing 160.

I'll begin the new week in a little bit of limbo, waiting for that 'double confirmation. Ultimately, clinging on to hope that the HORMUZ STRAIT, fully re-opens soon.

On a personal note, it was a disappointing week. Early on, when it looked like the USD 'higher yields' story was going to dominate. I placed two GBP USD short trades. The first closed before end of day for a small loss. The second went straight to the stop loss following president Trump's 'final stages' comment'.

Once the 'final stages' comment ultimately turned out not to be fruitful, it was then I decided that 'double confirmation' was required (in either direction).

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

Results:

Trade 1: GBP USD -0.4

Trade 2: GBP USD -1

Total = -1.4%

Total since start of blog = +53.7% (risking 1% per trade)