Weekly review
The week starting Monday 6 January was 'the first week proper' of the year, as institutional traders returned to their desks, meaning you could place merit behind any moves. And it was a week full of activity.
The week began in a 'risk on' manner due to China positivity, unfortunately, it's currently difficult to have any faith in risk on moves borne out of 'china positivity' because recently, every move has reversed.
Early in the week there was also confusion about 'Trump tariffs', a report suggested the incoming adminstration's tariff plans were different to the one sold pre election, this had an adverse effect on the USD. but in a prelude to the potential volatility of the incoming adminstration, those reports were denied and 'normal service' resumed with the USD reversing losses.
Sentiment for both the AUD and GBP started to turn negative, thanks to suggestions the RBA may be about to turn dovish. The GBP may have a more deep rooted problem with concerns government policies will have an adverse effect on the economy. The correlation breakdown between UK gilds and the GBP is a concern for GBP bulls.
US data, ISM SERVICE and NFP, backed up the 'higher for longer' US rates narrative. NFP in particular caused a good news is bad news reaction, with stocks down and the VIX up. Interestingly, the JPY benefited the most from the 'risk off environment'.
If the risk off environment persist, does that mean the JPY and CHF are off the table as shorts Vs the USD? For me no, because there has been a recent disconnect between the currencies and the risk environment.
Finally, Fridays Canadian employment data gave the CAD a boost. Does that mean the CAD is longable? For me no, the data wasn't strong enough to reverse the underlying negative tide for the CAD.
In conclusion, barring any USD negative news, I'll start the new week with USD longs on my mind. Whichever currency to short will depend on the narrative at the time.
On a personal note, at the start of the week, I said I'm currently happy with 1 or 2 trades per week. I only traded once, a USD CHF long 'in the moment news trade' post ISM data. It did take a little longer to complete than you would expect an "in the moment news trade' to take. But it hit profit no the less.
By Thursday evening, with NFP on the horizon, I felt it was prudent to wait until Monday to trade again due to my ongoing scepticism of Friday 'price action'.
Please email any questions, every thought is valid: johnelfedforexblog@gmail.com
Results:
Trade 1: USD CHF +1.5
Total = +1.5%
Total since start of blog = +34.4% (risking 1% per trade).