No harm no foul (July 30th)

Nothing from what I was expecting took place.The FED was happy with the results, so was the BOJ and finally the EBA decided that everything is fine with the European banks (with some exceptions).

As a result, traders went back and bought the JPY and now the BOJ will have to find out ways to weaken the currency.

I closed one more Aud/Usd trade and closed the month with a profit of 2,53% which is better than expected and took a new long on Usd/Jpy that is under water now.

Concerning the Euro pairs we will have to wait and see if the market reacts to the stress tests that were announced just after the market close before traders have the chance to thoroughly read the statement.

The Yen pairs have a different issue. The BOJ did not announce the QE measures, traders were expecting to weaken the currency and jumped all, buying it back. As a result the JPY closed with a profit of 259 pips (most of it from Friday’s move).

The GBP remains under pressure (lost 183 pips this week) and the AUD shows some strength (particularly in the pairs I follow because it lost ground against the JPY and NZD). Both central banks (BOE and RBA) should announce reduced interest rates during this week that could (or not) affect the corresponding pairs.

The general idea (without specific instructions) is to wait for the Euro and GBP pairs to show signs of weakness in order to short them. I remain bullish for the AUD and a potential retracement (because of RBA) will give me the opportunity to go long again (ie long Aud/Usd, short Eur/Aud and Gbp/Aud). Concerning the YEN I expect to see the BOJ taking some underground action to weaken the currency but the pairs closed without wicks and the down move (Eur/Jpy, Gbp/Jpy and Usd/Jpy) could continue before seeing some reaction. The CAD finally lost some pips (106 as a currency) but the Usd/Cad closed 91 pips lower (ie stronger the CAD). Oil closed at 41,43 and compared to the open at 44,11 is a substantial loss. Gold closed at 1350,81, almost 28$ higher than the open.

Apart from the GBP and AUD interest rate statements, it is NFP week and important news are expected for the majority of the pairs.


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