QuantumLogicTrading

SELL EURUSD & GBPUSD HEDGE BUY AUD/ NZD: FED WILLIAMS SPEECH

TVC:DXY   US DOLLAR CURRENCY INDEX
3 months ago
  • Fed Willams was hawkish on the margin and much of what was said was in line with Dudley and Bullard today/ this week in what looks like an attempt to give the USD a support as it slipped and closed below the 2yr average today and struggles to find support despite 5-consecutive days of selling.

Trading strategy:

1. Given USD weakness I like GBPUSD             shorts at 1.32 if possible if not 1.318 is good enough (be prepared to hold for some time if the market moves higher 1-2wks possible), but more importantly given the dovish ECB minutes I like short EURUSD             at these high levels and after 5-days of back to back selling this looks like a good statistical level to sell into.

2. Possible hedges include short USDJPY             on the inevitable risk backdrop that is ever waiting to happen as US equities now struggle to cling on to making new records and the excitement of doing so - a bear is coming so long yen at good levels makes sense here. Also long the antipodes with the 6-9m high yield trend in mind and likely to continue (especially as poor USD data continues to weigh on the pairs especially given the above average employment report from both which may indicate signs of firming inflation too), whilst it has been tough (especially in aussie) this week, consistency/ sticking with the trade has proven profitable when buying dips as aussie or kiwi selling hasnt lasted more than 18hrs in reality and i expect this to continue with little reason to sell either now the biggest and only real risk e.g. RBNZ and RBA and then employment data has passed possibly as well as antipode bulls could have hoped. Given the AUDNZD             complex lower kiwi longs look better vs USD but technically we require a firm breakout from the 0.733 12m highs before any real commitment buying will or can be seen behind kiwi thus aussie given 120pips of free topside room looks more attractive though the RHS has remained illusive as yet.


Fed Williams Speech Highlights:

-FED'S WILLIAMS WARNS THAT WAITING TOO LONG TO RAISE RATES RISKS HARD LANDING OR EVEN -RECESSION
-WILLIAMS SAYS U.S. ECONOMY IS STRONG
-WILLIAMS SAYS RESTARTING RATE HIKES EARLIER ALLOWS MORE GRADUAL PACE
-WILLIAMS SAYS INFLATION ON COURSE TO MEET 2-PCT GOAL
-WILLIAMS SAYS U.S. ECONOMY IS GENERATING JOBS AT UNSUSTAINABLE PACE
-FED'S WILLIAMS SAYS WANTS GRADUAL INTEREST RATE INCREASES OVER THE NEXT COUPLE OF YEARS
-WILLIAMS SAYS NEGATIVE RATES IN THE U.S. WOULD HAVE BIGGER COSTS THAN BENEFITS
-FED'S WILLIAMS SAYS WEAKNESS ABROAD IS ONE REASON FED HAS NOT RAISED RATES AS FAST AS HAD EXPECTED
-WILLIAMS SAYS THERE IS VERY LOW RISK OF NEEDING TO GO TO NEGATIVE RATES U.S.
-WILLIAMS SAYS FED NEEDS TO TAKE AWAY THE 'PUNCH BOWL' OF LOW RATES
-FED'S WILLIAMS: WAGE GROWTH BEGINNING TO PICK UP
-FED'S WILLIAMS CALLS FOR RAISING RATES SOONER RATHER THAN LATER; DELAYING RISKS RECESSION
3 months ago
Comment: Update:

1. FED’S WILLIAMS: SEP RATE HIKE SHOULD DEFINITELY BE IN PLAY
- OK with uncertainty over exact timing
- Not in hurry to hike but can'€™t let the economy overheat
ddp922
3 months ago
Poor Usd data will continue to make eu rocket. Central banks are pushing the hell out of it right now
Reply
QuantumLogicTrading ddp922
3 months ago
I agree, employment aside data has been the worst in a while, CPI, PPI, RS GDP all missed miserably.. next week imo holds the key for USD given nothing tomorrrow + we have a pretty quiet week next week but GDP friday and Durable goods thursday nonetheess will be make or break for USD - lucky its end of week for USD bulls.

The bar has been set v v low though at 1.2% for GDP though the durables goods has been set alot higher at 2.9% and 0.2% vs -0.9% and -3.9% last time.. if GDP was to come in lower than 1.2 all hell would break loose and tbf i can even see USD selling if its a 1.4 figure given a way off 2%
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