Weekly review.
Week staring Monday 29 January was certainly a down and up roller coaster for the USD. The week started with all eyes on Wednesday's FOMC meeting. Where chair Jerome Powell effectively ruled out any chance of a match rate cut. Strongly indicating May would be the month. In theory, this should have sent US yields and the dollar higher. But the opposite happened as yields rolled over and the dollar weakened. My take on this is that is was 'the market' saying it doesn't really matter if it's march or may, the fact is that next move will be a cut and the 'soft landing' is still on.
Then, on Friday, quite astonishing NFP numbers threw the cat amongst the pigeons. The FED are stressing data dependence. And if the data keeps coming in this good, May or even June could be too soon for a rate cut. The USD and yields rose accordingly and I will begin next week with a 'long USD' bias (can USD JPY have another crack at 150?).
In other news, the EUR started the week under pressure as concerns about Eurozone growth are starting to emerge. This could see the ECB cut rates sooner than June. A re-surfacing of the US regional banking crisis was (for now) swept under the rug. The AUD was under pressure thanks to a soft CPI print. And the BOE had its own interest rate meeting, it currently looks like the UK will be the last to cut rates. Which isn't a surprise as inflation is still far too in the UK. But it could mean the GBP is supported over the medium term.
On a personal level, it was a week that ended with a small loss. Choppy price action at the start of the week stopped one trade out. And two trades were manually closed, one before the BOE and one before NFP. I must stress that manually closing trades is not the norm. It is always preferable to let trades complete to allow the mathematics of the system to work.
Results for the week
Trade 1: USD JPY -1
Trade 2: USD JPY -0.3
Trade 3: NZD JPY +0.6
Total = -0.7
Total since start of blog = +23% (risking 1% per trade)
Feel free to email any questions: johnelfedforexblog@gmail.com