Weekly review

The week starting Monday 16 September had three central bank meetings. And each one added to the 'risk on' narrative in its own way.

The USD began the week on the back foot, as the market anticipated at 0.5bp rate cut from the FED. On Wednesday, a 0.5bp cut did indeed come, the overall message was positive and after a little uncertainty, the fact the FED is comfortable 'front loading' rate cuts into a fairly solid economy with falling inflation appeased the market. And the 'soft landing narrative' is well and truly back.

On Thursday, it was the turn of the BOE. And a cautiously 'hawkish hold' suggests no immediate need for more rate cuts, combined with generally consistent data from the UK, should keep the GBP on the 'to long list' for the time being.

Friday's BOJ meeting also added to the positive mood, as the BOJ doesn't appear in a hurry to hike rates again. Which could see the yen start to weaken if institutions re-ignite the short JPY carry trade, although, as we know with the BOJ...expect the unexpected.

All things considered, with the S&P hitting all time highs and the VIX below 17, I'll begin the new week optimistic 'risk on trades' will be viable, meaning long AUD, NZD, GBP... Vs JPY, CHF (possibly USD). And also, 'relative fundamental' trades could be an option, meaning, long 'hawkish' central banks Vs 'dovish' central banks.

On a personal note, it was a week of not quite getting my timings correct, as influences outside of trading kept me more occupied than I planned. And the one trade I did take (GBP JPY), I perhaps jumped the gun, and in hindsight, waiting for a swing to place the stop loss behind would have been prudent.

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

Results:

Trade 1: GBP JPY -1%

Total since start of blog = +27% (risking 1% per trade).