Weekly Review

A number of events conspired to ensure a generally positive risk environment during the week starting Monday 3 August.

Perhaps the biggest driver was company earnings expectations, specifically regarding AI capex. It's currently thought that tech companies will see a return on the amount of money being spent, this narrative propelled the S&P to a fresh all time high on Tuesday.

A batch of softer US data also supported the risk environment, at the moment we are in a 'goldilocks zone' of US data releases, down to a 46% chance of a September rate hike, it could well transpire that there won't be another hike before year end, which would further boost the 'risk on soft landing trade'.

The final piece of the positivity jigsaw was a fall in the price of oil. The war narrative is still 'messy' but for the time being, the market anticipates the Hormuz strait will re-open soon.

As things stand, I'll begin the new week with a mind for risk on trades. Continued soft data has put the USD on my 'short radar'. And I also consider the JPY a potential short, especially if the previous week's intervention strength continues to unwind. But I consider USD and JPY shorts to have a little more risk to them than CHF short trades, I still consider the CHF to be the currency that has the least going for it.

Of course, very positive US data, fresh war escalation or a reassement of tech earnings could switch the narrative to negative at any moment.....Or, considering just how disappointing Fridays NFP data was, there could become a point US data becomes 'too soft' which would create growth fears.

In other news, arguably, in recent weeks AUD NZD has been having moments it becomes tradable as a 'relative fundamental trade'. This week, positive AUD data sent the chart higher, contrasting last week's positive NZD data sending the chart lower. I still consider both currencies to be at the top of the 'risk on pile'.

The CAD had a particularly good Friday, thanks to postive jobs data contrasting with NFP. Although I am a little skeptical how long CAD strength will last, especially if the price of oil continues to fall.

On a personal note, for the first time in a very long time, I hit the giddy heights of five trades. All of the trades were based on my belief the market was 'risk on'. Although it was pleasing to place five trades, it could be described as a messy week.

Mondays NZD CHF was closed for a small profit. Tuesday's AUD CHF stopped out. Wednesday's NZD CHF was closed for break even. Thursday's NZD CHF was closed in profit.

And on Friday, given the disappointing NFP number, I switched from CHF to USD short. Placing a USD CAD short, in an attempt to take advantage of the CAD momentum at the time. The trade was eventually closed for a small profit.

Let's see what the new week brings, in an ideal world, another 'soft US CPI print' will further boost risk sentiment.

Results:

Trade 1: NZD CHF +0.5

Trade 2: AUD CHF -1

Trade 3: NZD CHF 0

Trade 4: NZD CHF +1

Trade 5: USD CAD +0.3

Total = +0.8%

Total since start of blog = +63.9% (risking 1% per trade).