Weekly Review
When speaking about the week starting Monday 1 June, the only place to start is at the end. Friday's NFP headline number (almost double the forecast) caused incessant USD buying. And when coupled with the overall US / IRAN stalemate, the prospect of FED rate hikes caused an overall 'risk off environment'.
In fairness, it was a narrative that has been building all week. During the second half of the previous week, the USD weakened on positive war rhetoric and softer data. This week it was the opposite, war stagnation and solid US data. By Wednesday, the USD was in full flow, only occasional positive war headlines providing a brief bump in the road of dollar strength. President Trump's suggestion we should all 'sit back and relax' or his suggestion negotiations are in the final stages, ultimately falling on deaf ears, at least as far as 'currency movement' is concerned.
Disappointing BROADCOM 'forward guidence' added to the week's negativity. Is the positive AI earnings story, (which has helped prop up risk sentiment lately), about to crack?
The risk environment 'outlier', in terms of currency correlation, was the CHF, which aside from Friday, spent most of the week on the back foot. Which I put down to SNB interest rate likely to remain at 0 for quite some time, plus the SNB's overall preference for a weaker franc. When (if) market sentiment turns positive, the CHF could be a very good short option.
As we move in to the new week, it's difficult to have a bias for anything other than USD long. The caveat being that at any moment, positive war news could re-flip the narrative. But I get the sense the market is grinding tired of being dangled carrots. And I suspect it would have to be very positive, verified news.
On a personal note, it was a positive week. But it could be described as a messy week.
On Tuesday I was still behind the previous week's positivity. Placing a NZD JPY long, which was closed before end of day for a small loss.
By Wednesday I'd switched bias to USD long trades. Waiting until Thursday's European session to place a NZD USD short trade, which stopped out following a positive comment from the president. I then re-bought into that positivity, placing a AUD CHF long trade during the US session. Which was closed for a small profit before end of day.
Finally, I usually think it's prudent to wait until after the open before trading the US session. But there are occasions when the news is so strong you can only envision price going in a particular direction. Very soon after NFP, I placed an 'in the moment' news trade, the first of that type of trade in a long while. AUD USD short. The trade didn't take long to hit the profit target. If I'd been at home Friday afternoon, I think there could have been another USD long trade to have been had.
(It's not often you get a big move like this but still get to place the stop loss behind a swing).
Like I say, a bit of a messy week. But at least it highlights the benefit of using a higher risk / reward ratio.
Results:
Trade 1: NZD JPY -0.3
Trade 2: NZD USD -1
Trade 3: AUD CHF +0.3
Trade 4: AUD USD +1.5
Total = +0.5%
Total since start of blog = +54.2% (risking 1% per trade).