EUROZONE – NOT AN EXPERIMENT JUST A F**K UP

THE WEEKLY FX DRIVE THRU

INTRODUCTION:

As we all know and recognize, trading is about consistency, banking $$$, making pips and longevity through effective RISK MANAGEMENT, POSITION SIZING and trading with a TRADE PLAN.

When you break it all down into its main constituent parts it’s actually very simple and straightforward. I have pages and pages referring to the above points on a multiple of PDF documents inside the PREMIUM SERVICE website. I read a few the other day to refresh the validity of the content and I must say albeit that some articles were saved from 2010 and earlier, they are still as relevant today as they were when they were initially posted.

Trading is basically a formula that needs “tweaking” every now and then but basically it is repetition based around a proven formula.

Basically, at the outset of 2017. I tweaked (so to speak) to accommodate “THE DONALD”.

After a couple of sticky weeks in January, and reviewing my TRADE PLAN for 2017, I am still in trade transition mode but I am now banking more $$$ and pips.

As mentioned recently, I continue to establish CORE POSITIONS for my longer-term trades in e.g. EUR/USD and GBP/USD, and I am happy with the progress so far. I now just need the March 15th FOMC meeting out of the way, so that I can complete the longer-term transition outlined a few weeks ago to PREMIUM SERVICE subscribers by the end of Q1.

I have virtually ignored my day trading trade styles of FLASH and RADAR trades throughout this process. This has been deliberate, based upon the fact that in his earlier days as President, “THE DONALD” created chaos and disorder in the markets and frankly whilst I sit over my screens, I have numerous trades open at any one time and the inclusion of short-term trade styles would just create frustration and annoyance.

After the FOMC meeting, I am hoping like most traders that trading will have a greater clarity moving forward. This should enable a greater trading confidence using the smaller minute charts.

Moving on…

Last week was a strange week. I was caught up in the emotion of the “State of The Union” address by “THE DONALD”, at the end of the day it was a 100% Presidential address, even hard line opponents had to applaud on some bi-partisan pledges. Now… whether “THE DONALD” or the Republican Party allow some of the pledges to stand is debatable, but what I will say is that “THE DONALD” has one obvious trait like “MAGGIE”, and that is – he does what he says he is going to do.

From a trading perspective, no fireworks and the markets will always buy promises made, regardless of who says it.

There was a lot of FED speak last week ending with Janet Yellen and Stanley Fischer. It was all very positive to moving US interest rates higher sooner rather than later. Even the doves were more hawkish; the most noteworthy in my opinion was Lael Brainard.

On Friday, both Yellen and Fischer basically all but said the FED will normalize and raise rates at the March meeting. It was so clear; the markets cannot be surprised. The only annoying factor was that when Yellen finished her Q&A some profit taking took place and the DXY fell lower…. argh!!

DXY DAILY 05032017

It was fascinating to see that in 4 days the market sentiment for a FED rate increase on March 15th moved from 38% to almost 90%. Crazy, and it just shows you what we are dealing with. Very reactionary… almost TRUMP LIKE.

The commentary kept the USD bid most of the week. I must admit though as the TRUMP administration and possibly soon to be “Presidential currency manipulator Donald” want the USD weaker, I was waiting upon the tweet to stop the DXY move higher in its tracks. It never happened, TRUMP was so busy with White House leaks, FBI cover ups, Russians in da house and Jeff Sessions having vodka shots, he was probably 100% contained flying from crisis meeting to crisis meeting trying to keep the syrup in position (SYRUP = Cockney rhyming slang – “syrup of fig = wig”).

Apart from the US news the bigger news to dominate the wires related to the UK and the EUROPEAN UNION.

In the UK, Theresa May is starting to feel the pinch on BREXIT and its potential fallout. The PMi data this week was mixed but they were over shadowed by the House of Lords amendments to the BREXIT bill and the Scottish Parliament wanting another shot at a referendum on remaining part of the UK.

The key support level of 1.2260; the 61.8% Fibonacci level of the 1.2706/1.1987 move, was broken after offering stubborn support opening the way lower for a test of the psychological 1.2000 level and then the October 2016 low of 1.1841.

EUROPE, was once again dominated by the French elections. I am using EUROPE and all things happening there as my “SOAPBOX” article this week so I will save my comments, views and thoughts for later.

More…

THE WEEKLY FX DRIVE THRU – LIVE webinars.

Now up to #7 this Monday. The software still gives me the creeps at times but I am now more comfortable with the content and the time 30-35 minutes in length.

#7 is on Monday 6th March at 5:30PM

  • To attend live – you need Google Chrome as a browser.
  • You cannot view on smart phones or tablets, only Laptops and Desktops.

The “LIVE WEBINAR” link is below: –

http://bit.ly/drivethru-live

If you cannot listen live you can check out my You Tube channel,
Scott Pickering Weekly FX Drive Thru for a freshly posted copy of the webinar, usually, within a couple of hours of its completion.

Here is the link for my you tube channel, when I get too 100 subscribers (if I get there) I can have my own personalized shortened link. If you like the style of my webinar, please subscribe. The benefits are that as soon as a new webinar is posted you are emailed.: –

https://www.youtube.com/channel/UCV-9VDnNkHjTPBzKqLqCGJw/videos

Finally, in this section…

The March winner of the “FREE 10-week PREMIUM SERVICE” subscription was
brian*******@gmail.com

By the time this blog is posted Brain should be loaded up and ready to go.

If you would like to be in the monthly draw to win a “FREE 10-WEEK SUBSCRIPTION” to the PREMIUM SERVICE, valued at CAD$1,000.00, all you have to do is subscribe to receive this FREE NEWSLETTER on my website www.weeklyfxdrivethru.com  On my welcome page just below my cube logo is where you complete your subscription.

 

THE FX MARKET PLACE – LOOKING FORWARD:

ECONOMIC DATA RELEASES:

 

ECON DATA 05032017

MY THOUGHTS ON THE WEEK AHEAD:

Several items catch my eye this very busy week: –

  1. USD: Obviously, the star of the week for US data is Friday’s Non-Farm payrolls. No doubt should the number be a blow out one can consider a FED rate hike the following week nailed on.
  2. AUD: Down under we have Retail Sales and the RBA Rate statement to start the week off. The AUD has sold off of late following poor Cap Ex and GDP data. I am not expecting a change in interest rates but the commentary will be interesting to read to see is the RBA still neutral.
  3. GBP: The Tory party (UK Government) budget is released Wednesday.
  4. EUR: Draghi has a press conference this Thursday and there will be massive attention placed upon what he doesn’t say maybe rather than what he does say vis-à-vis tapering the Quantitative Easing monthly amount given the fact that EUROZONE economic data is now starting to show recovery.I think he will play everything down citing EUROZONE political risks and that any recovery is fragile.

    Whether he will get away with this approach is debatable… we shall see what he does.

  5. CAD: Jobs data released at the same time as US NFP. The BOC kept rates on hold last week. Jobs data has been very mixed of late with part-time workers blurring the data somewhat, so this release should show a trend… good or bad.As always bear in mind it has been news rather than economic data moving the markets so check twitter for tweets from “THE DONALD” and be aware of the BREXIT and EUROZONE possibility to deliver geopolitical news at any time totally unannounced.

 

USD MAJORS – “IMMEDIATE” SUPPORT & RESISTANCE with TREND:

TCHART 05032017

The charts below contain commentary (my thoughts and views), these are the USD major charts that are reflected in the spreadsheet above.

EUR/USD:

 EURUSD D 05032017

 

GBP/USD:

 GBPUSD D 05032017

 

AUD/USD:

 AUDUSD D 05032017

 

NZD/USD:

 NZDUSD D 05032017

 

USD/CAD:

 USDCAD D 05032017

 

USD/CHF:

 USDCHF D 05032017

 

USD/JPY:

USDJPY D 05032017

 

THE SOAPBOX: 

EUROZONE – NOT AN EXPERIMENT JUST A F**K UP 

For the second week running, I could have made the title of the soapbox this week: –

FFS…  THIS IS A BLOODY NONSENSE

Tempted as I was, I decided to go with something more mainstream that Google would appreciate from an analytics perspective.

I find myself constantly bashing the EUROZONE. In principle, I suppose it’s a great idea but in the real world it is just a poor constituted fuck up. It is doomed, not a question of “if” but “when”.

Last week the EUROPEAN COMMISSION released a white paper outlining 5 scenarios for the future of the EUROPEAN UNION. This emanated from the desk of the EUROPEAN COMMISSION President, Jean-Claude Junker. It was a classic effort from the desk sucking, pen pushing, jotter blotter from Brussels. As you can imagine I was over this like a rash, or a rat up a drainpipe.

I do not want to replicate the paper you can search on google to find it but it had interesting section titles as follows: –

  • Carrying on
  • Nothing but the single market
  • Those who want to do more
  • Doing less more efficiently
  • Doing much more together

Sounds great. As an overview from my perspective it was released in time for the 25th March 60th anniversary of the EUROPEAN UNION previously referred to as the COMMON MARKET. It is obviously intended to try and focus and harmonize the remaining members following the UK’s decision to EXIT.

On first glance, it looks real enough, the EU challenges show no sign of abating. He alludes to the fact the EU is a balancing act as many Europeans consider the EU and EUROZONE too interfering.

You can read it yourselves, but Junker still misses the point. He approaches the EUROPEAN UNION and EUROZONE purely and simply from the view of job protection for the boys and girls in Brussels. Basically, the gravy train continues. He wants continued governance from Brussels, there’s about 10,000 additional jobs, expense accounts and big pay checks with index linked pensions and private health benefits.
Tighter financial controls. Controls of single currency member’s budgets.

No change. He wants to secure the very things that piss people off. Remember the fruit-case from Brussels who went above the Irish government to fine Apple for tax avoidance, even though the deal was done for Apple by the Irish government utilizing Irish tax rules. WTF, has this got to do with some pen pusher in Brussels? This is the type of interference that pisses people off so I am gob smacked that Junker has done nothing to distance the bureaucracy of Brussels from an individual country’s sovereignty.

Many American political and economic commentators still refer to the EUROPEAN UNION and EUROZONE as an experiment, this must wind up Brussels officials like you cannot imagine. It’s been in existence for 60 years in one form or another, so even I think the term “experiment” is a bit rich. Having said that many American commentators think EUROPE is a country and GERMANY is its capital city! Joe Kernan (CNBC) springs to mind with most EUROZONE gaffs, I still don’t think he understands that IRELAND and NORTHERN IRELAND are two different counties with different currencies. It beggars belief he is still on TV… never mind prime time business TV.

So; when someone asks, is the EUROPEAN UNION learning from the BREXIT and forging a more inclusive way forward to include those who feel that Brussels is too interfering? Bollocks to all that let’s march on as before appears to be the mantra.

It would appear to me nothing learned, just protect the bureaucracy.

How long does the EUROPEAN UNION last.?

If Marine Le Pen is elected as the new French President it will implode and the single currency will be at 0.0050 or less in a few days. It will be a crisis to beat all crises and even the biggest can in the world to kick down the road just wouldn’t do.

The pollsters openly state that Marine Le Pen will win the first round of voting. However, she will lose the second ballot.

Here are my thoughts…. amuse me for a paragraph or three…

Marine Le Pen (National Front) is what can be termed a populist candidate. Like “THE DONALD” she has a fixed number of supporters that will support her no matter what. Her voting base is NOT going down. It only has one way to go.

The others: –

  • Benoit Hamon – Socialist
  • Emmanuel Macron – En Marche
  • Francois Fillon – Republican
  • Jean-Luc Melenchon – The Left Party

The above four candidates will fight it out amongst themselves to see who goes up against Le Pen in the second ballot according to the French press.

The question is how many of the voters whose candidate is not going through to round two will vote for Marine Le Pen?

Is it feasible? Is it possible that Le Pens voting bloc in the second ballot will increase? I would say yes.

The question is by how much?

Should Le Pen appeal in the final stages to those voters disillusioned with Brussels, who look across the English Channel to see a free UK without the constraints of the EUROPEAN UNION hanging over it as an option worth considering it is no longer a slam dunk. In fact, it’s far from a slam dunk decision. It may be unlikely but it is nevertheless a possible outcome that Le Pen could win.

Should this happen, there will be no more EUROPEAN UNION, no more EUROZONE. As A founder member with Germany, I just could not see how the EU could continue. This would be a crisis, in fact, it would re-define the word.

To think that after 60 years in existence the EUROPEAN UNION is still so fragile beggar’s belief. It should by now have been unified and integrated to such an extent with all countries populations prosperous that the thought of leaving the UNION is not even an agenda item.

Politicians and self-serving bureaucrats have milked the EU for all they could benefit from at the expense of building solid foundations and creating policies to unite, grow, influence and stabilize the continent.

What we have now is due to the fact that politicians are only interested in popularity through votes and the bureaucrats with pensions and expense accounts. There was never a credible long term view with key success factors built in to measure actual success.

The EUROPEAN UNION has failed to unite governments never mind the EU populations on many levels at different times, such as:

  1. Defence and Security
  2. The Social Chapter
  3. Banking
  4. Taxation
  5. Debt Management and Controls
  6. Fiscal Planning and Constraints
  7. Immigration and Border Controls
  8. Freedom of Movement
  9. Food Planning (Agriculture)
  10. Health minimums
  11. Education minimums

The list is endless.

I know that I am always very critical of the EU and its workings. But it has just not evolved. It never matured or aged in such a way to grow, unite and bond members. It thrives on a fragmented approach to most topics. The problem that creates this is narrow minded politicians with a short time frame in office and poorly managed and focused centralized operation in Brussels, which in my opinion is self-serving rather than actually doing anything meaningful or long that they could be proud of.

Without doubt there are wins, but are they big wins? From my perspective, it’s just interference that is poorly managed or directed. The Apple case is one in question. An upstart from Brussels is in interfering in a sovereign states tax affairs.

It is somewhat similar to the Quebec governments language police who cautioned an Italian restaurant for the numbers of times it wrote PASTA on its menu.

For God’s sake people are paid good money for these jobs that could save lives. PASTAGATE as it is now known showed how protectionist, out of touch, mis-managed Quebec as a province is. “People can die waiting to see a Doctor, but we will not accept PASTA written on an Italian restaurants menu. Absolutely bloody ridiculous and it cannot be defended. What is the French word for PASTA?

Brussels is on the same path maybe not quite so stupid in delivery as Quebec, but they are on the same road.

Basically, I always return to two basic issues.

  • 19 countries in the EUROZONE basically using the same cheque book does not work.
  • A mix of all the different cultures has created mistrust throughout the ages and makes harmony, unification on a common purpose practically impossiblePlus:

Poor countries cannot afford what the rich counties can afford. Some countries benefit from natural resources others don’t, it is just not a level playing field and one size does not fit all.

Trading the single currency over the coming year should be quite a ride. I am bearish and see a test of parity possibly on the cards. It will not be a straight move lower as some have predicted. We should in my opinion push and pull our way lower.

We have major headwinds in the EUROPEAN UNION: –

  • Elections in FRANCE
  • Elections in GERMANY
  • Elections in HOLLAND
  • The UK BREXIT to deal with “cleanly”
  • ITALIAN Bank debt to sort out and fix
  • GREECE bailout Act IV

There is so much uncertainty in that list above, the single currency should move lower.

With a US FED raising rates we have divergent policies between the hawkish FED and the dovish ECB. Mario Draghi simply cannot afford to stop supporting the single currency given the uncertainties ahead and Janet Yellen has now indicated in the clearest language possible that the FED is embarking on a rate rising monetary policy program.

 

CLOSING THOUGHTS:

Nothing more to add here, I have said enough except,

As usual…

Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.

Take care, have a great trading week.

Scott Pickering
The Pip Accumulator
Twitter: @pipaccumulator
http://weeklyfxdrivethru.com/disclaimer/
BLOG VERSION: #52 FOREXTELL
DATE: 5th March 2017.

 

 

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