Weekly review

Week starting Monday 9 December: The week began with positive news out of china, a pledge to support the economy no matter what it takes. And following the recent period of 'unconventional movement', it was very pleasing to see the currencies react in a 'standard risk on' manner. Negative sentiment for the JPY was compounded by reports the BOJ are reluctant to hike at December's interest rate meeting. And any brief thoughts of longing the yen were quickly squashed. Although I expect choppy JPY trading to continue until the BOJ eventually announce peak interest rates.

It was inevitable at some point, but still a surprise the RBA switched to a slightly more dovish narrative. The AUD initially weakened but the RBA still remain hawkish compared to other central banks and I was sceptical AUD weakness would continue. Which was baked up by positive Australian employment data on Thursday and it was nice to see the AUD end the week as one of the stronger currencies.

On the opposite end of the spectrum, the SNB cut rates by 0.5bp whilst saying negative rates are not preferable but they are willing to go there if necessary. The ECB also cut interest rates and MS Lagarde giving eurozone growth warnings should ensure the EUR remains on the back foot. Multiple analysts continue to predict a slow grind to parity for EUR USD.

Speaking of the USD, US data continues to show a strong economy, not too strong to dissuade the FED from cutting in December. But strong enough to ensure rates will remain higher for longer throughout 2025. And the USD continues to remain on my 'to long list'.

The BOC also cut rates by 0.5 in what cut be described as a 'hawkish cut'. USD CAD long remains on my radar, but it's difficult to short the CAD Vs other currencies if the USD remains relatively strong since the CAD often tracks the USD due to geographic proximity.

On a personal note, it was a week of just one trade. But the good news is, it wasn't through a lack of identifiable opportunities. More a case of not being at the charts at the correct time, as I felt the USD was longable throughout the week. And on Monday in particular, there is a case to say a 'risk on' trade was viable.

I'll begin the new week with an eye on USD long opportunities, plus with 'hope' the risk on environment continues, which 'should' bring AUD longs into play.

Results:

Trade 1: USD CHF 0 (closed Friday)

Total = 0%

Total since start of blog = +32.9% (risking 1% per trade).