Pros REER based TRY undervaluation: 47% National Bank stepped in to protect TRY Key to this position: limited market volatility and risk-on sentiment It is relatively expensive to short the TRY Cons Long-term fundamentals gloomy for Turkey
Cons - USD in a bullish trend - Interest rate differential favors USD carry trades - 85% of retail traders are short USDCHF (myfxbook, 05/28) Pros - sensitive market sentiment favors CHF (Italy, Turkey, Trump negotiating N-Korea) - CHF is volatile around the 200 EMA, diverged from it - 38.2 Fib retracement is an obvious target
Pros: Fundamental view: USDNOK spot price overvalued by 42% (Citi's WERM model based on Real Effective Exchange Rates) Technical: - Top of downward D1 channel - Big shadow on D1 candle Cons: - ahead of NFP data (big volatility) - retail traders position: 76% are short on USDNOK
PROS The dollar is getting stretched ahead of NFP data RR is 1:2 Resistance reached at 95 level CONS Safe haven appeal of $ in recent turmoils Risk of very strong NFP
Positive company earnings are priced in, corp. tax cut effects same. Fixed income yields are on the rise, in the past 5 years a break below the 200 MA brought 8-10 percent corrections.
Simple risk-reward trade Return to MA Volume is dropping while trend is bullish
USD is gaining back strenght, $ being a target for carry trades especially against negative interest rate currencies.
With a back and forth trade tariff battle forming thanks to Trump administration, I see a high probability selloff coming in global equities. Massive divergence from MA's is the technical play.
From currency side, the greenback is in a bearish trend following years of appreciation. Gold is an instrument tied to USD and with possible inflationary pressures, I am positioned for XAUUSD moving higher.
ECB is in wait and see mode for now which means equity markets in Europe need to rise without further stimulus expected in the near term. If macro data will outperform the brake above 10500 points in GER30 is possible, even though weekly price action is bearish.
Pound is continously dragged down by Brexit fears and soft BoE comments, hence the larger trend is still bearish. However CPI 's are picking up in the UK limiting the space for further dovishness of the Bank of England. Note: not a particularly high probability setup. Recent high volatility can lead to a quick stop out or a T/P reach.
Correction on commodity markets + strong jobs data supports AUD however ahead of the 0,79 (AUDUSD) big figure technicals might force institutional investor to lock in some profits from AUDUSD longs. Technical resistance: 100 weekly EMA, downward channel since 2013.
Some fundamentals: + Norwegian inflation is at 3.3% (little or no room for monetary easing) +Price of Brent recovering + Massive current account surplus -Huge drop in GDP growth to 0,1% - Deteriorating consumer sentiment
The momentum is still strongly BULLISH in Aussie pairs, so I entered position for a short test, purely for technical reasons. Oil fluctuations will probably rise ahead of Doha and EIA inventory data, I also expect volatility in commodity dollars to pick up. Chinese GDP figure on Friday is also a risk factor, some AUD profit taking might occur. RR: 1:3 Stopping...
Fed is strongly divided on monetary policy but even 2 rate hikes are below market expectations. Kiwi $ is an attractive currency for carry reasons also. Techically for the NZDUSD long position to work out the 0,6760 support needs to hold (double bottom formation) + bullish candlestick formation has to appear. Without these two conditions not entering this...
With oil prices rebounding flow towards commodity currencies was evident. While guessing Crude oil tops is pointless, after 11 weeks and more than 11 % appreciation loonie might be at a resting point. The Canadian government is to anounce its fiscal stimulus, I believe most positive factors are already priced in, hence I am trying to go long at the weekly 61.8%...
The two instruments are very different in nature, XAUUSD (g o l d) bullishness was explained this year by negative investment sentiment. Hovewer markets turned risk on since mid Feb' and gold still rises. Either stockmarkets or g o l d investors will have to suffer losses in the near future, especially as both are at technical resistances.
German Dax index was ahead of the 10.000 point big figure, after a false break turns down heavily...