Weekly review.

The week starting Monday 3 June began with a scenario we've not seen for a while: yields down =risk off. When yields are moving in a particular direction, it's important to form an opinion: why? and what are the implications?

Recently, Yields down= risk on, due to the prospect of a soft landing. But out of the blue, the market had a flash of concern about potential 'stagflation', which would likely mean a 'hard landing'. Hence the yields down= risk off period at the beginning of the week.

For time being, the US economy is doing too well to warrant 'stagflation fear' and I believe when arisen, it should be treated as a potential opportunity to buy risk.

By the middle of the week, as anticipated, the BOC cut interest rates and sounded relatively dovish, combined with 'goldilocks' ADP jobs data from the US seemed to appease market fears and the soft landing narrative returned. Although it didn't last long, thanks to a 'hot' NFP number with higher wage growth. The Market ponders if US rates are even restrictive enough, and just like that, 'higher for longer' became the talk of the town again.

In other news, The ECB also cut rates, but a reluctance to give forward guidance combined with an improved GDP forecast led to the rate cut being deemed a 'hawkish cut'. And the AUD and NZD had a rough week as the price of commodities fell.

On a personal note, it was a week of two trades, I felt the CAD was going to be shortable all week. And placed a pre BOC, NZD CAD long. Then on Friday, I felt the NFP number justified a USD long. And once again I've placed a trade on a Friday that stopped out. I stand by the logic of the trade: hot NFP with higher wage growth being USD supportive. Should I have left the JPY alone and traded a risk on currency instead? I don't think so because I didn't feel comfortable shorting a higher yielding currency in a higher for longer environment. Should I not have traded the USD long? I stand by the data being strong enough to propel the USD for at least a few hours. Should I have waited for more confirmation than a 5min swing? Possibly, but I suspect that on any other day then a Friday, the trade would have a good chance of hitting profit.

All in all it adds to my growing thoughts of not placing a trade on a Friday.

I begin the new week, still with CAD shorts on my radar. Plus, barring any 'stagflation fears' JPY and possibly CHF shorts.

Wednesday's CPI and FOMC meeting are the main events of the week and could shape the markets mood for the rest of the month.

Results for week:

Trade 1: NZD CAD +0.7 (closed pre BOC)

Trade 2: USD JPY -1

Total= -0.3%

Total since start of blog= +23.7% (risking 1% per trade).