Weekly review

Monday started with an air of positivity, a soft landing narative was in play, the JPY strength from yield curve control was reversing. A 'risk on' trade was certainly an option but I felt the yen had weakened a little too much and I wanted to wait for a pull back before feeling confident in placing a trade. In Tuesdays Asian session, Australia held its interest rate, which weakend the Aussie but I didn't think it was tradeable because ultimately they still have a mildy hawkish bias, indicating that more rate hikes are still to come. Come the US open on Tuesday, the JPY was still weak and the narative was still the same. With the USD JPY power breaking up on the 1hr chart, I felt the cause and momentum were enough for a USD JPY long trade. A surprise announcement by Fitch, downgrading US credit was announced at the market close on Tuesday. This gave the JPY some strength ( as you would expect in a potentially negative environment) and took my trade to its stop out point. I don't mind that though, trades getting stopped out by a surprise announcement are part and parcel trading. I still think it was the right decision to short the JPY at the time I took the trade. Regarding the downgrade, I read a couple of articles saying that ultimately it would be largely ignored by the market. By early Wednesday morning (06:00 UK time) I felt the JPY strength was too prominent too ignore and I placed a 'risk off' AUD JPY trade. Even though I didn't think the negativity from the downgrade comment would last, I felt there was enough momentum for a trade. Wednesday's US brought more solid data from the US, this time ADP jobs coming in much higher than expected, once again showing the US economy is on good shape. On Thursday it was the BOE'S turn for an interest rate meeting. Raising rates by 0.25 BP, which mildy dissapointed pound bulls. But with more hikes still to come for Britain, I still think the GBP is an attractive long option when the time is right. On Friday it was all focus on NFP, the headline number came in softer than expected, this created a bout of short term dollar weakness which I felt was tradeable for a Friday afternoon 1:1 USD short, I place a GBP USD long trade which I closed out at towards the end of the day for break even. Late on Friday, the S&P staged a sell off, which according to articles I've read was caused in correlation to Apples share price dropping, although earnings per share came in above expectations, sales of I phones are down. I don't expect this news to have a lasting effect. Which brings us to next week. There is a lot of uncertainty at the moment, are the fed done hiking? Is the downgrade story forgotten about now? I'll start the week thinking any large 4hr up candles on the JPY charts, in correlation with positive risk, could bring short JPY opportunities.

Results for the week:

Trade 1:  USD JPY   -1

Trade 2:  AUD JPY  +1.5

Trade 3   GBP USD    0

Total=  0.5%

Total since start of blog =+2.5%