Michael Bridgman

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!

The USD was weaker today and oil traded at 3.5 year highs.  After making a second lower high in the U.K. session with a reversal pattern, a short was taken on the USDCAD risking 14 pips for a potential 64 pips to our daily target.  This was clearly a counter-trend trade but fundamentals, technicals and an inexpensive stop loss made the trade attractive.

The pair came down vertically and bounced at yesterday’s low taking us out just above of our daily target.  With any counter-trend trade, the idea is to take minimal risk initially and get the risk out of the trade quickly as price moves in your favour.  Secondly, you’re less likely to make as much on a counter-trend trade, so when price shows signs of reversing, either lock in more of your profit or close the trade.

If NAFTA talks continue to go sideways, the Canadian economy could slow substantially and the “R word” could get mentioned by the Bank of Canada.  As Saudi Arabia and Russia produce more oil, the price of WTI is likely to come back down from its highs… but we will leave that one to oil traders.  The 1.3400 figure hasn’t been taken out yet, but that doesn’t mean that 1.35oo isn’t a longer term target for some.

North America has two holidays next week – Monday for Canada and Wednesday for the U.S.  Tomorrow may be active as we close mid-year trading.

Good luck with your trading!

 

 

 

 

The EURUSD peeked above its Asian high as the U.K. session got underway and quickly reversed with a bearish engulfing candle back to trend.  A short was taken risking 20 pips for a potential 68 pips to our daily target at 1.1584.  Price moved down to test its Asian session low and yesterday’s low before descending further.  With lower wicks forming on the candles, we tightened our profit stop further to just above the high of each previous candle and it was hit before the U.S. open and a further move down to our daily target.

The commodity pairs were also simultaneously hit with a temporary buying spike.  This is the reason for locking in profits as the market moves in our favour…especially if long wicks are forming. Keep in mind that news can come into the market and cause a complete reversal and hit deep stops.

Good luck with your trading!