Weekly Review.
The week starting Monday 31 September began with Chair Warsh's JACKSON HOLE speech ringing in its ear. I for one felt USD strength would 'kick on' following the speech, but it didn't really transpire that way. In fact, the week as a whole had a collection of catalysts without conviction.
When I think about it, leading up to Jackson Hole, sentiment for the dollar had turned negative. Softer data, the recent treasury buy-back announcement and a hope oil would soon be flowing through the Hormuz strait all led to the possibility of no further FED hikes this year. But chair Warsh, ongoing US / IRAN escalation, and very hot NFP data creates uncertainty, the US PRESIDENT having his say on the future rate path creates even more uncertainty.
A September hike is back up to around 60%. The focus now turns to US CPI data, in the hope it will provide more clarity regarding FED policy and the direction of the USD.
The USD wasn't the only currency stuck in the middle this week, a hawkish hold from the BOC gave strength to the CAD. Only to be tempered by Fridays soft Canadian employment data.
The RBNZ lived up to the market's expectations with a rate hike, but forward guidence pushes any future rates hikes to December rather than October. The NZD suffered as a consequence. But when all's said and done, the RBNZ still leans hawkish, which should support the NZD over the medium term.
BOJ intervention fears resurfaced, USD JPY dropped dramatically from 160. Which skewed the USD picture even more. It's difficult to judge whether an Imminent rate hike (or rate hikes) will provide long term support for the JPY. Or once the dust finally settles, will the 'short JPY carry trade return?'.
We got hawkish talk from the BOE, indicating a rate hike is very much on the table. Fom me, the GBP remains a candidate for a long in a risk on environment.
Inflation in Switzerland ticked a little higher. From what I've read, the data doesn't change the SNB'S outlook and I continue to think fundamentals favour a CHF short trade. It's just a case of getting the timing right.
All in all, I found the first week of Q3 to be a bit messy. I don't begin the new week with a clear bias, except for a mild eye on CHF short trades at strong support.
On a personal note, It was my first negative week in a while. I placed two trades, one stopped out and one was closed for a small profit.
On Monday, I tried to anticipate another leg of USD strength following on from chair Warsh, the trade stopped out as the day as a whole was a bit of a nothing day, perhaps due to quarter end.
On Tuesday, I felt that the NZD weakness post RBNZ was overdone and I attempted a NZD CHF long, which was closed for a small profit before end of day.
Arguably, there was a CAD long opportunity following the BOC. JPY long opportunities following the bout of yen strength. Maybe the GBP was longable after the BOE'S Mr Pill spoke. Perhaps AUD NZD was a long opportunity following the RBNZ. Rightly or wrongly, I just couldn't find enough conviction at the times I found myself at the charts.
*Please note, I'm currently in Croatia for my 'soon to be sister in law's wedding'. I'm unable to trade on Monday or Tuesday (Monday is labour day anyway so it might be a quiet day). I hope to be trading from Wednesday to Friday.
Dubrovnik is a lovely place by the way.
Let's see if US CPI can move the USD needle in one direction or another.
Results:
Trade 1: USD CHF -1
Trade 2: NZD CHF +0.4
Total = -0.6%
Total since start of blog = +72.8% (risking 1% per trade).