Weekly review

The week starting Monday 15 April was largely dominated by concerns over an escalation to the awful situation in the Middle East. The market was waiting for Israel's response following Iran's previous attack. Another contributing factor towards the negative environment was the FED's doubling down of a hawkish rhetoric at a time other central banks, the BOC, BOE and ECB in particular are starting to turn a little more dovish. The UK in particular, with inflation still too high, has a difficult balancing act of cutting rates as late as possible without slowing the economy too much.

In other news, America, Japan and Korea agreed to 'consult closely' on foreign exchange movement. Which indicates JPY intervention could be coming. Although, as ever, with the BOJ, nothing is straightforward. And conflicting comments suggesting some companies will be happy with a weak yen indicate that really, the BOJ is quite happy with the status quo. Ultimately, any 'jawboning' or actual intervention can be treated as a JPY selling opportunity.

On a personal note, I missed the one stand out catalyst opportunity of the week, a CAD short CPI trade. But I did place three 'interest rate differential' trades. A USD JPY long, stopped out due to JPY intervention talk. An AUD CHF long stopped out due to Middle East fears. And finally, once Israel had responded and the market deemed the matter (hopefully) closed for now, an AUD CHF long ended the week closed in profit.

Moving forward, if the VIX continues to fall, I maintain my view of trading hawkish central banks Vs dovish central banks. Plus there will be core PCE and GDP from the US. PMI's from Europe. CPI from Australia plus CPI and an interest rate decision from Japan, all of which could create 'catalyst' opportunities.

Results for the week:

Trade 1: USD JPY -1

Trade 2: AUD CHF -1

Trade 3: AUD CHF +0.9

Total = -1.1%

Total since start of blog = +19.7% (risking 1% per trade)

Feel free to email any thoughts or questions: johnelfedforexblog@gmail.com