The week starting Monday 15 September was a week of two halves for the USD.
Sentiment for the dollar has been growing more and more subdued in anticipation of a faster pace of rate cuts. And USD selling continued during Monday and Tuesday, in anticipation of a 'dovish' FOMC outcome.
Perhaps the market was a little over zealous though, although the FOMC did indeed provide a rate cut, combined with a much more dovish rhetoric than a few months ago. Mr POWELL'S balanced approach disappointed USD bears. The USD and US YIELDS rose for the remainder of the week.
Ultimately, the concenciuos appears to be that it was a final hurrah bout of USD strength, before weakening into year end. I would tend to agree with that narrative, but I'll let the USD itself and US YIELDS suggest whether the dollar is longable or shortable this coming week. It'll be interesting to see if the US 10 YEAR can get back above 4.2.
All things considered, the market liked Mr POWELL'S narrative suggesting the US economy is in good shape, (for now) the softening labour market is not too much of a concern and the 'soft landing' native remains as the S&P continues to push all time highs. Which means the JPY 'should' be shortable. I say 'should' because the BOJ held its own rate meeting this week. The interest rate 'hold' was initially seen as hawkish. But a toning down of rate hike expectations during the press conference saw JPY gains reverse. And (for now) I continue to view the JPY as a short possibility.
The other currency usually associated as a short in a risk on environment (the CHF) continues to be stubbornly strong. Possibly hanging on to the coat tail of the EUR, but it does appear the CHF has it's own underlying fundamental strength. And my mind keeps wandering back to the article I read a few months ago about the SNB benefiting from relativity high holdings of gold. It does make sense as the price of gold continues to skyrocket.
There were two other rate decisions of note this week . A BOC cut and a BOE hold. Both with very limited forward guidance, which leads me to assume my status quo thoughts of more cuts sooner from the BOC and more cuts but at a slower pace from the BOE. Although the CAD did have a surprise boost from 'tariff talk' on Friday. And UK fiscal concerns continue to keep any GBP positivity on a knife edge.
On a personal note, it was a week of three trades. Unusually, two in one day when I tried to the advance of negative CAD sentiment and positive UK data on Tuesday, with two GBP CAD long trades. One stopped out and one hit profit.
I then placed a JPY short, post BOJ press conference, when I felt the initial JPY strength would reverse. The trade was eventually closed at break even following a meek US open.
I begin the new week with a tentative bias for risk on trades. Whether the USD takes part as a long or a short is up in the air.
Results:
Trade 1: GBP CAD -1
Trade 2: GBP CAD +1.5
Trade 3: AUD JPY: 0
Total = +0.5%
Sentiment for the dollar has been growing more and more subdued in anticipation of a faster pace of rate cuts. And USD selling continued during Monday and Tuesday, in anticipation of a 'dovish' FOMC outcome.
Perhaps the market was a little over zealous though, although the FOMC did indeed provide a rate cut, combined with a much more dovish rhetoric than a few months ago. Mr POWELL'S balanced approach disappointed USD bears. The USD and US YIELDS rose for the remainder of the week.
Ultimately, the concenciuos appears to be that it was a final hurrah bout of USD strength, before weakening into year end. I would tend to agree with that narrative, but I'll let the USD itself and US YIELDS suggest whether the dollar is longable or shortable this coming week. It'll be interesting to see if the US 10 YEAR can get back above 4.2.
All things considered, the market liked Mr POWELL'S narrative suggesting the US economy is in good shape, (for now) the softening labour market is not too much of a concern and the 'soft landing' native remains as the S&P continues to push all time highs. Which means the JPY 'should' be shortable. I say 'should' because the BOJ held its own rate meeting this week. The interest rate 'hold' was initially seen as hawkish. But a toning down of rate hike expectations during the press conference saw JPY gains reverse. And (for now) I continue to view the JPY as a short possibility.
The other currency usually associated as a short in a risk on environment (the CHF) continues to be stubbornly strong. Possibly hanging on to the coat tail of the EUR, but it does appear the CHF has it's own underlying fundamental strength. And my mind keeps wandering back to the article I read a few months ago about the SNB benefiting from relativity high holdings of gold. It does make sense as the price of gold continues to skyrocket.
There were two other rate decisions of note this week . A BOC cut and a BOE hold. Both with very limited forward guidance, which leads me to assume my status quo thoughts of more cuts sooner from the BOC and more cuts but at a slower pace from the BOE. Although the CAD did have a surprise boost from 'tariff talk' on Friday. And UK fiscal concerns continue to keep any GBP positivity on a knife edge.
On a personal note, it was a week of three trades. Unusually, two in one day when I tried to the advance of negative CAD sentiment and positive UK data on Tuesday, with two GBP CAD long trades. One stopped out and one hit profit.
I then placed a JPY short, post BOJ press conference, when I felt the initial JPY strength would reverse. The trade was eventually closed at break even following a meek US open.
I begin the new week with a tentative bias for risk on trades. Whether the USD takes part as a long or a short is up in the air.
Results:
Trade 1: GBP CAD -1
Trade 2: GBP CAD +1.5
Trade 3: AUD JPY: 0
Total = +0.5%
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.