Weekly review

I only placed one trade this past week, which was on Monday, a GPB JPY long. The yen weakened Monday, after an announcement about raising the national minimum wage. This signals that Japan's long term fear is still disinflation, therefore any interest rate hike or change in policy is still likely not to be forthcoming. I couldn't see any other clear trading opportunities of note and it became a waiting game, waiting for the central bankers speeches at Jackson hole. There was PMI data released, which came in soft across the board, creating a bit of bad news is good news because a slightly softening economy is what central banks need to see before pausing or cutting interest rates. But because all the focus was on Friday's speech by fed chair Jerome Powell (which was by and large expected to be hawkish) I didn't feel comfortable placing a 'risk on' trade into the event. When Friday eventually came round, the USD whipsawed on chair Powells speech, initially, it appeared that the data dependent approach was seen as dovish for the dollar, but the market soon realised that all in all the speech was more hawkish than dovish and the dollar weakness reversed. Later in the day Christine Lagarde had her say, and also towed the hawkish line, even though there had been rumours that she would talk about an interest rate pause. Which leaves us pretty much 'as you were' with the probability of rates staying higher for longer, and in the US in particular, there is still the possibility of more hikes. Which means I'll start next week with the view that the dollar is still longable and I'll be keeping an eye on the DXY and yields.

The main lesson to learn from this week is patience, as I said, i only placed one trade. I think a lot of traders get impatient if there isn't a trade for a day or two, and end up taking trades they don't have complete conviction in. It's a case of having confidence in your system, sticking to your principles and ultimately realising that there will soon be other trades around the corner.

Results for week:

Trade 1   GBP JPY  +1.5

Total since start of blog = +4%