Weekly review.
Week starting Monday 19 August was all about the USD. The dollar spent most of the week on the back foot in anticipation of chair Powell's Jackson Hole speech, where it was widely anticipated an imminent US rate cut would be confirmed. The USD weakness did briefly pause post Thursday's PMI data, which showed the US economy is in a good place. But during the speech itself, Mr Powell didn't disappoint the market, all but confirming a September rate cut and suggesting the FED would do what it takes to ensure the jobs market remains strong (essentially saying more cuts will come if necessary). USD weakness continued and I'll begin the new week looking for short dollar opportunities with a stop loss behind 1hr swings.
I think it should be noted, with the USD appearing to be on the precipice of a weakening cycle, we have been here before and it would only take a couple of pieces of 'soft data' or inflation surprisingly rising for panic to set in again, the dollar would then strengthen. But for now, 'risk on' USD shorts appear to be the order of the day.
In other news, despite the risk on environment, the JPY was strong as USD JPY longs are unwound. And with the BOJ still touting another potential rate hike, there is a case to say USD JPY shorts are an option. But personally, I would rather stick to the go-to 'risk on' currencies (GBP, AUD,NZD).
The GBP had a good week as UK PMI data keeps the pressure of the BOE cutting rates again. Contrastingly, soft PMI data from Europe may mean further ECB cuts are necessary. Although it didn't stop EUR USD's march to year to date highs.
On a personal note, it was a slightly strange week. Have spent 24hrs travelling, I missed Monday. Then by time time I felt confident in a USD short, It was stopped out by the post PMI, pre Powell strength. With hindsight I could have placed an 'in the moment' short USD trade post Powell. But rushing around on uncle duty and still a little jet lagged, it was an opportunity I missed.
Feel free to email any questions: johnelfedforexblog@gmail.com
Results for week:
Trade 1: AUD USD -1
Total= -1%
Total since start of blog = +26.1% (risking 1% per trade)