Weekly Review

Memorandum of understanding (M.O.U) was the catalyst for the S&P to hit all time highs during the week starting Monday 25 May. Not that the S&P needed extra validation, it's now nine straight weeks of gains as traders have long since been pricing in a diplomatic resolution to the war (the positivity combined with AI earnings growth).

If the S&P has been resolute in its positivity these past couple of months, the currencies haven't been quite so sure. Tied more to the price of oil and rising yields. But the M.O.U eased tension, oil and yields rolled over and the currencies spent most of the week adhering to standard 'risk on correlation'.

The other narrative moving the currencies was good old fashioned interest rate speculation, noticeably in the USD, AUD and NZD.

Despite the overall positive mood, the USD started the week on the front foot, recent data re-enforcing the possibility of FED rate hikes. But Wednesday's 'below expectation' US data flipped the narrative and the USD spent the rest of the week on the back foot. The interest rate story was most noticeable in the NZD, a 'hawkish hold' propelled the kiwi, which was then given an extra boost when RBNZ commentary 'doubled down' on the hawkish rhetoric later in the week. Arguably AUD NZD short 'relative fundamental trade' could be classed as 'trade of the week' as a string of softer data from Australia tempered the RBA's own hawkish narrative. Although it must be noted that Australia's interest rate is still relatively high and the AUD remains on the 'to long list' in times of 'risk on'.

I'll begin the new week tentatively hoping for more of the same, with a bias for 'risk on' 'war reversal trades. And or, interest rate differential trades. But very aware that we are only one negative HORMUZ STRAIT headline away from being sent back to square one.

On a personal note, the M.O.U was good enough to be classed as the 'double confirmation' I was waiting for and I had a bias for 'risk on' trades. And following the RBNZ I had an eye for NZD long trades.

But I didn't quite find myself at the charts at a time I felt comfortable placing trades, only managing one 'NZD CHF long' on Thursday. Sticking to session by session trading, the trade was closed at break-even. The chart did move up to the initial profit target but my trade 'would' have stopped out due to end of day volatility, which remains prevelent, particularly in CHF pairs. There was perhaps an opportunity to re-enter the trade during the Asian or European session. But by the time Friday's North American session got underway I was too wary of an 'end of week pullback'.

Unfortunately, timings often don't align, all we can do is make the best decision we can, with the information we have at the time.

Let's see what the new week brings.

Results:

Trade 1: NZD CHF 0

Total = 0%

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