THE WEEKLY FX DRIVE THRU
The USD came back with a vengeance last week. All you have to do is look at the DXY chart below to see that there is a desire to own the greenback once again.
On the DXY weekly chart above, I have placed a few comments regarding my thoughts and target levels.
I decided on Friday last week to take profits on my RADAR and FUNDAMENTAL trades after U.S. retail sales numbers were posted. The longer-term POSITION trades are still in play and I am hoping for some larger moves in line with my FUNDAMENTAL views for 2016-2017. All in all a good week for trading, although I find myself writing this a great deal now, one has to be patient and wait more so then ever for trades to materialize and develop.
As I have said for over two years now, my approach is a ’Steady Eddie” one. My goals are very simply 10,000 pips per year for the 10 months of the year that I trade, which, breaks down to 1,000 pips a month. This month we are at 786 pips of net profit generated with 4,600 pips year to date.
Remember, the ice storms and power and ISP outages that I suffered here in Montreal in February?
The PREMIUM SERVICE account was reduced to zero pips as a result of that; look where it is today, back on target: – How?
- High probability trading
- Taking a longer-term wider stop perspective during the continual chop fest and range bound trading conditions.
All of this has contributed to the “Lazarus” effect!!
My G20 aka “G” trades have yet to be added to my broker account. I am so conscious that my 1.0 trades had great entries at range extremes but now that we have pulled in from the limits I am like a spoilt child that has “spat his dummy out” because I can’t have those great entries once again. They will appear soon.
THE FX MARKET PLACE:
LAST WEEK’S NEWS – MY THOUGHTS:
From my perspective last week was all about continued USD strength. There is once again a wish / want / desire to own the USD.
After Mark Carney (Part-time JCB operative) at the BOE, the RBNZ with governor Graeme Wheeler must be the second most annoying central bank with mixed messages that confuse the crap out of traders.
Not that this has changed, but he is now worried and emphasizing Auckland property prices. Is it just me, or did we not hear the same rhetoric from Glenn Stevens at the RBA a couple of months ago vis-à-vis the Sydney housing issue.
I think 4-6 weeks later the RBA were running to hide under desks on Prozac as the boom / bust / bubble hit home and now we are looking beyond a surprise rate cut that happened this month for at least one more very soon and maybe another before the end of the year.
Is the same going to happen with the RBNZ?
Last Tuesday’s presentation of the stability report which had a hold on rates, was what I can only describe as the most laid back, boring, watching paint dry event Yup it was stable alright, the damn RBNZ team were fecking rigid it was that stable. Nothing against accountants, but you know what I mean; when you get the desk sucking, pen pushing, jotter blotters in charge even the most tea-total observers must be considering at least just one drink of alcohol to get me through?
From a trading perspective of course, not for the first time, Wheeler screwed up my open trades for 36 hours or so.
Overall, the goal with the RBNZ is to send the NZD weaker. I think that you need to be patient with this currency moving forward. I am constantly re-assessing my longer-term objectives with this currency, but I do feel sub. 0.6000 is on before the end of 2016.
I basically listened and observed the huff ‘n puff out of Carney. As a precaution, I exited a EUR/GBP trade with +50 pips given that he (Carney) is a misleader of the markets.
What surprised me about the BOE data release was that were no dissenters, all the MPC members voted in harmony. The result of this was a spike, then fall, then spike and then fall again with most GBP related pairs, followed by the return to the range. My fear was for a dissenter amongst the ranks so I closed my EUR/GBP as a precaution…argh!!
I am now looking to re-enter if possible above 0.7900.
U.S. RETAIL SALES and PPi:
Surprisingly good numbers; I was expecting weaker numbers as confidence as spending in the U.S. (the ultimate consumer spending society in the world), I thought may have been hit my higher gas (petrol) prices as WTi has inched higher of late. Apparently not put off, the numbers were really good and have bucked the trend of recent U.S, economic data, which, I would describe as weak.
CORE RETAIL: Actual 0.8% – Expected 0.6%
RETAIL SALES: Actual 1.3% – Expected -0.3%
CORE PPi: Actual 0.1% – Expected 0.1%
PPi: Actual 0.2% – Expected 0.3% (slight miss)
Looking back over the week it was the same old same old but the directional move of the USD actually stabilized the markets, some uncertainty was removed as traders appeared to get on board with the fact that the DXY was over sold and that some sort of retracement was required. That may be a rather over simplistic view of matters, but I came from the “keep it simple” school of trading and understanding market fundamentals and correlations.
WHAT’S BIG ON MY MIND:
THE BULLY BOYS ARE OUT REGARDING THE BREXIT
As most of you regular readers will know, I am dual citizen, UK and Canada.
Having only lived here in Montreal for about 10 years, I have more friends back in blighty and I keep in touch on a regular basis by SKYPE, FACETIME, email and telephone.
I am constantly being advised that the BREXIT / REMAIN vote will be close. Many friends also tell me, that they hear of people wanting out of the European Union much more so than having conversations talking about staying within the EU.
Is this normal? I am not sure I know what is normal anymore when the likes of the US Presidential race is nothing more than a circus. Basically it is reality TV regurgitated in its worst format for an alleged world leading economy, with the world looking on, it’s a farce, in my opinion. To think that the U.S. has the damn nerve to go around the world to non-democratic countries saying “do it the way we do it, it is the best democracy ever”. Are you kidding me? Is that some kind of joke? One thing that is for sure is that the true colours of the U.S. are being shown to all and sundry. Massive uncertainty for the world economic environment lies ahead.
Whether you like what is happening or not, the fact that the GOP (Republican) hierarchy are basically saying to voters vote the way we tell you because you are all ignorant of the facts and stupid, is hardly an example of a democracy. So normal, to me requires a re-definition in the dictionary because what I thought was normal is nothing like it at the moment.
Getting back on track…
I think matters will intensify in the UK moving forward now for a number of reasons.
- TV debates are beginning this week. There are three scheduled on the BBC – 19th May, 15th June and 21st
This by themselves will allow voters the opportunity to see close hand the key points and allow comparisons of viewpoints. Do not expect a Donald Trump spoiled brat approach of he said / she said and he said it first, style of debate. The UK is not Disney for adults.
- Voices from the EUROZONE are getting louder. I think that the realization that the EZ could take a giant step backwards is scaring the crap out of thinkers (there aren’t many of those in the EUROZONE as we know). The effects inside the EUROZONE would be catastrophic. Anyone who says not…just think about it in a little detail.
CASH…money into the EUROZONE
STABILITY in EUROPE
TRADEAll of the above are uncertainties for the UK and the EUROZONE. This has NEVER been done before so it’s all a little bit of guesswork.
Whilst referencing the EUROZONE the biggest concern that leaders inside must be worrying about is the CONTAGION effect. If the UK votes BREXIT, will other member states be forced into similar referendums?
- We are starting to see more extreme claims from both sides vis-à-vis what would happen if a BREXIT would be voted for. Obviously the REMAINS make it look like Armageddon and the BREXIT make it look like a rose garden of limitless opportunity. This attracts media attention and the headline grabbing statements certainly opens up more qualified debate.
- Like school children MP’s in the UK have lots of holidays. They break from Parliament from the 26th May until the 6th June and then again from the 15th June until the 27th These breaks mean that increased focus on the issues will be front and centre as the usual MP day-to-day routines are abandoned.
The REMAINS have called in the big guns like the IMF to lobby on their behalf as well. Some have said it is a little bullying in the approach taken on the basis that wild statements without any supporting data are being thrown at the electorate, such as no follow up on examples of impact.
- House prices will plummet
- Financial Markets will be in chaos
- The UK world stage status will change?
- The impact of a BREXIT is not pretty bad but very bad… the IMF has dire thoughts over this.
I can rabbit on here for pages about this subject.
I do love and respect the fact that cross party lines have gone when it comes to the debate. This is true democracy at work and most if not all MP’s in the UK are asking their constituents their thoughts, rather than just trying to be a part of the sound-byte TV agenda that many politicians like to feature in.
The fact that you can have two opposition leaders fighting the same fight on the same sides so passionately is great to watch.
Without doubt moving forward news about the BREXIT will intensify and whilst the vote remains tight, the last one I have seen says:
STAY (REMAIN) 46%
LEAVE (BREXIT) 43%.
I believe that uncertainty will dominate the Forex market as we edge closer to the June 23rd voting date. At the end of the day it is all about RISK as we get closer to the referendum date.
It’s about your own RISK appetite. Mine will be quite low; I will NOT be trading the GBP/USD at all. The only trades GBP related I have at the moment are EUR/GBP and GBP/NZD. I do not intend to add further GBP trades other than a GBP/CHF trade which is inverted to the EUR/GBP.
The GBP/NZD is more about the NZD than the GBP. My fundamental views on the New Zealand economy are poor.
The EUR/GBP is a trade based upon the fact that I believe that when a push comes to a shove, the UK will vote to REMAIN. This will sky rocket the GBP/USD and should send the EUR/GBP lower towards 0.7000.
We are now in mid-May about 5 weeks away from the vote. If you are not already thinking about how you will manage the 23rd of June from a trading perspective, it will soon be time to do this.
There will be sound-bytes from all over, as every area in the globe has an interest in the outcome. It should be fun moving forward.
COMING UP THIS WEEK:
THIS WEEK’S FOREX NEWS THAT INTERESTS ME:
(There are many more news items related to the Forex Market other than the ones listed below. These are the ones that interest me. You can go to www.forexfactory.com and www.tradingeconomics.com for a more comprehensive lists of all news events that are Forex related).
MONDAY: AUD – Monetary Policy Meeting Minutes.
TUESDAY: USD – CPi and Core CPi.
TUESDAY: NZD – GDT (Dairy Auction prices) and PPi.
WEDNESDAY: USD – FOMC Meeting Minutes.
WEDNESDAY: AUD – Employment Data.
THURSDAY: GBP – Retail Sales.
FRIDAY: CAD – Core Retail Sales and Retail Sales.
THE USD MAJORS – MY THOUGHTS (A REVIEW):
(In this section I have as usual kept my charts as minimalist as possible. With regards to charting in my opinion less is more!! I hope that they are clear. All readers regardless of level of experience should be able to follow my thoughts from my comments to the levels on the charts with ease)
My comments are contained on the charts.
EUR/USD – Weekly Closing Price: 1.1306
GBP/USD – Weekly Closing Price: 1.4362
AUD/USD – Weekly Closing Price: 0.7267
NZD/USD – Weekly Closing Price: 0.6770
USD/CAD – Weekly Closing Price: 1.2932
USD/CHF – Weekly Closing Price: 0.9755
USD/JPY – Weekly Closing Price: 108.64
MY CLOSING THOUGHTS:
We have had some directional trading again courtesy of the USD strength.
This is not the time to get carried away. Last week I mentioned 6/7 high profile events due to occur in the next 60-90 days. Any one of these could stop the DXY in its tracks and force a swift reversal.
We have FOMC minutes this week, which will bring all sorts of numpties onto TV via CNBC and BLOOMBERG. Where these people come from and how much credit you can give to their opinions is debatable. Not one of them is held accountable and the vast majority have no skin the game, as we say.
I have often thought of placing one of my labs (Ozzy or Aoife) on periscope, asking them questions about the FED and the markets in general, and gauging responses based upon a blink of the eye for a “YES” to a specific question should they agree. In all honesty, they could not be any worse than the fruit bats we have on TV at the moment, after all it is just a 50-50 guess!
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.
The Pip Accumulator
DATE: 15h May 2016
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