Archives for July 2018

The market has priced in a 90% probability that the Bank of England will raise the interest rate on Thursday.  Expect the the GBP to be active this week in advance of the announcement, as we move into August trading.  With lighter volumes price can be more volatile and seemingly appear to be erratic.

Today we waited for the first round of U.S. economic releases before taking a short on the GBPUSD.  We entered with a 21 pip stop loss for a potential 43 pips to  our daily target at 1.3098 with a slightly stronger USD today than yesterday.  Price had clearly rolled over closing below yesterday’s high and was heading to test its Asian session high…which is retested a couple of times before moving lower.  As it headed to test its Asian session low, it spiked lower… through our daily target, the 1.3100 figure and right through yesterday’s low, then abruptly pulled right back up.  We closed at our daily target on the bounce upward.

Be careful on days of USD weakness as these are not likely to last in my opinion.  The U.S. economy is very strong and in President Trump’s words…”the envy of the world”.

Good luck with your trading!

 

After progress was made with trade tariff talks between the U.S. and E.U. yesterday, the USD was able to strengthen today against the majors.  As the GBPUSD continued to close beneath its Asian session lows leaving 2 bearish candles, the second of which had a long upper wick, a short was taken risking 13 pips for a potential 66 pips to our daily target at 1.3112.  Price moved lower and we locked in profit as it moved down.  We were closed as price spiked up hitting our profit stop after our second move lower.  The markets have been very volatile and I believe it is prudent to be more conservative locking in profits that to give them back.

There a few U.S. economic news releases early in the U.S. session to be aware of tomorrow including the Advance GDP q/q.

The GBPUSD will be interesting to watch as the market continues to expect a rate increase in the U.K. next week.  If this is not the case, will we see it plunge below 1.3000 ?

Good luck with your trading!

 

The markets were appearing apprehensive in advance of the Trump-Juncker meeting today regarding the tariffs between the E.U. and the U.S.

With the equity markets, USD and U.S. 10 year yield all down early in the U.S. session, the idea was not to trade the EURUSD short due to potential volatility, but to trade the EURJPY short as money flows moved to the yen.   The uncertainty in advance of the meeting was not helping either the the Euro or USD.

Both the EURUSD and the EURJPY set up nicely.  Risking 13 pips for a potential 46 pips to our daily target at 1.2942 we opted for the EURJPY short. We removed the risk from the trade quickly and continued to tighten our profit stop as price moved lower.  In just over an hour price moved down to our target and closed our trade.

On Monday, my least favourite day to trade, a short in the GBPUSD stalled at its Asian session low for a modest return.

The news of Prime Minister May taking personal charge of the Brexit negotiations (“soft Brexit”) with the E.U. may help market expectations but uncertainty  continues to weigh heavily on the sterling.

Good luck with your trading!

 

 

The U.S. economy continues to be very strong and Fed Chair Powell this week stated that gradual rate hikes were “for now” the correct approach.  President Trump’s late cycle stimulus and shift to more protectionist trade policies has helped the USD strengthen.   Since President Trump has now stated that he isn’t “thrilled” with the Fed’s policy to continue raising interest rates, the USD has suddenly lost it’s upward momentum…at least to end the trading week.  We will see where this goes next week as traders determine the implications and whether the USD is overvalued.

Today, following a bearish engulfing candle a USDJPY short was taken risking 10 pips for a potential 39 pips to our daily target at 111.98.  As the U.S. session got underway price quickly dropped to our target and the trade was closed.

The controversial remarks from the president have for the moment prevented the dollar index from extending beyond the 95.00 level.  As President Trump is not likely to put pressure on the Fed, the USD will likely continue to strengthen when the dust settles on his latest comments.

Good luck with your trading and enjoy your weekend!

 

 

Prime Minister May narrowly avoided defeat on the Customs Bill.  Brexit concerns and the stability of May’s leadership are weighing heavily on the GBP.  Renewed strength in the USD and a short setup in the GBPUSD enabled our entry, risking 20 pips for a potential 70 pips to our daily target at 1.3180.  Price moved steadily down before bottoming early in the U.S. session leaving 2 candles with long lower wicks.  The move up closed our trade… which had already extended past our daily target.

Fed Chair Jerome Powell today confirmed 2 more rate hikes are on the table for the U.S. this year.  The effects of tariffs is not yet clear for the economy.  Overall, USD strength is pervasive in the majors.  My preference will continue to be to short the EURUSD and GBPUSD at this stage, as setups appear.

Good luck with your trading!

 

It didn’t take long for the major world equity markets to move down, once President Trump announced a further $200 billion of trade tariffs against China.  An announcement that caused a knee-jerk reaction for both the AUDUSD and NZDUSD.  Trade war concerns which had abated this week are  again in focus…as the markets await China’s reaction.  In 2017, China imported $130 billion of U.S. goods.  The new 10% tariffs are scheduled to go into effect at the end of August.

The NZDUSD set up for an attractive short early in the U.K. session – risking 7 pips for a potential 28 pips to our daily target at .6787.  Price moved lower to our target where we exited well in advance of the U.S. session.

Despite significantly lower than anticipated crude oil inventories reported today, WTI dropped close to 5%.  An alliance between the U.S., Saudi Arabia and Russia may be the driver for a continued move down.  Libya is also talking about raising production levels.

A 25 basis point increase in interest rates in Canada today, could not prevent the USDCAD from moving higher and the 1.3000 level continues to be supportive.

In Britain tomorrow the “white paper” will be distributed and the GBP pairs will be prone to volatility as the market digests the Brexit implications.

Good luck with your trading!