I am back.

Am I refreshed and raring to go?

Well to be honest, I did trade through late July and the first couple of weeks or so in August this year which is something that I haven’t done since 2010, maybe 2011… a long time ago anyways. So I wasn’t 100% dis-engaged through the summer. At times, in fact most of the time it was as boring as watching paint dry but out of the summer doldrums came a pip performance in August of +1,743 pips. I am as they say in 1980’s English Football language over the moon!

However the euphoria of the summer trading was short lived as I took long-term position trades off the table earlier this month as these trades were getting away from me, basically, USD longs against the cable, long term view or not they were starting to concern me and as regular followers will know, I am not a huge fan of trading the GBP currency.

Moving on…

Before getting my teeth intro this blog, as a refresher, I pulled from the archives the titles of my last two communications prior to my break just to see what frame of mind I was in: –


July 9th 2016 – Fyi, I still stand by this belief. Nothing I have heard or read has convinced me that another vote will not miraculously appear on the agenda after the UK winter. This is just my own thought on the matter. The initial doomsday scenario touted by “the remain” camp at the BREXIT vote was pure scare mongering. Lets wait and see… as my wife will vouch to, I am not often right!!


July 16th 2016 – I got this prediction total ass ways… it was as boring as watching CNN for 2 hours non-stop, same old stuff from a week ago just regurgitated over and over. In fact the world is a great place at the moment, as the only news worthy topic as far as CNN is concerned is the U.S. Presidential election. News channel my arse, it has been sold out and as for the 6/8 member panel discussions, it is just a replica of Washington, divided by political affinity, total polarization, so no wonder the electorate want a damn change away from old style news and politics which is totally boring and not at all informative.

Moving on, once again…

What has happened over the past 6 weeks or so?

I want to say that a lot has happened, however, in reality there has not been too much mind shattering FX news. From my perspective, three news items did jump out, they were: –


Jesus, Mary and Joseph that old chestnut I can hear you muttering under your breath. Yes, frankly if I could get away from writing about this I would but I cannot and what makes it worse is, I do believe that central banks will be front and centre through to the end of this year with their actions and of course their non actions. Utterly boring, but it is what it is.

Later this month are we either going to see Janet Yellen signal a rate hike of 0.25% at the September FOMC meeting or are we on wait until the last chance saloon in December like last year? Given the September jobs number, which wasn’t a blow out number, expectations have been reeled in. Don’t you just wish that she would get it over and done with and move on? Maybe they will, but I seriously doubt it, as this FED appears to require permission from the markets to do anything. The tail definitely wags the dog now in my opinion. So we will be on hold, in daily debate as the FED speak from voting and non-voting members consumes the air space.

For those of you who have seen the U2 360 DVD when Bono introduces the band and he gets to bass player Adam Clayton and says of Clayton “frankly he could not give a damn”. Well I am at that stage with the FED, I am sick of hearing about will she wont she? I wish that Copernicus were around to get hold of dithering Yellen and tell that she is not at the centre of the universe!! The problem is that unfortunately she damn well is at the centre of my universe! So bugger that for a game of soldiers!

If the FED raises rates, is the central bank divergent policy trade back in play. 12 months ago I would have said a definite YES… now I am not that certain anymore.

However, keeping it real. If Yellen raised rates this month on the back of the September jobs number and the what can only be described as crappy ISM Manufacturing PMi numbers, I guess even CNN would break from Presidential election coverage to announce that hell had actually frozen over! The Fed is looking for reasons NOT to raise rather then reasons to back raising rates. Yellen is a dove and that is it.


BREXIT means BREXIT… no it doesn’t … BREXIT means… “we need to think about it much more deeply and debate it to understand what it actually means”.

Even though it appears that with her cabinet she has started to place “RED LINES” in place over the key areas, in my mind, there has not been anything new from Theresa May and her cabinet in the past 6 weeks. For me however, BREXIT still means UNCERTAINTY.

With starting to place stakes in the ground vis-à-vis minimum goals/objectives/targets to achieve in the Article 20 exit discussions with her counterparts in the EUROZONE, it does mean that movement has taken place but frankly it is at a snails pace and this process could take years. I read over the summer break that it took Greenland two full years to separate and without been rude to Greenland in any way, there simply is NOT the same complexity involved. Two years to exit may be what can be called a dream sequence.

If you have ever seen the movie by Martin Scorsese “The Last Temptation of Christ”, soundtrack by Peter Gabriel, excellent music by the way, great stuff by the master, this music can stand on its own alone… love it.

Back on track… my point is at the end of the movie there are scenes with Mary Magdalene, which were called “The Dream Sequences/scenes”.

Theresa May is having a dream sequence with her shopping list of RED LINES in my opinion. Look at this from the German perspective, they will not want the UK to have anything that looks like a compromise because this will only fuel other countries to think that the grass will be greener on the other side of the fence. The Germans cannot risk a EUROZONE break up.

However, should Germany provide big concessions to the UK, my conspiracy theory is that the Germans want the EUROZONE to implode.

Watch this space!!



Governor of the chaps club aka the RBNZ. Talk about whatever way the wind blows management. I am 100% totally confused with RBNZ monetary policy.

Wheeler must have that rare disease concerning his hand coordination as his left hand has no idea what his right hand is doing and vice versa. His actions say one thing and his words say something else.

It is very difficult to treat his comments seriously. One minute there is a special meeting and policy is tightened, and with the next breath, its, we are not doing anything. Then he acts surprised that the NZD is appreciating in value.

I read sometime ago that 0.6500 was the target fair value for the NZD/USD. RBNZ policy actions have had this pair in range between 0.7200 and 0.7400 recently. When the pair reached c.0.6400 back in January this year, instead of keeping the pressure on, Wheeler took his eye off the ball and its been a bull run ever since.

Most traders and commentators believe the fair value for the NZD/USD is below 0.6500 but frankly I just do not see it reaching these levels again unless we have the FED tightening, commodity prices falling, China slowdown issues raising their profile and Milk prices falling.

The RBNZ annoys me, as it is the weakest central bank of the majors. Every time I see NZD news on the docket it rattles my cage.




I was away on Prince Edward Island last week taking in some shellfish whilst the roof was being re-shingled on the house. Therefore my thoughts on last week’s news are not really valid for a full commentary as I was merely taking in headlines. I did no background reading or follow-ups. I took on no fresh trades I just managed existing live positions.

This area will return next week with a bang given what is on the horizon over the next week!!



I have looked back over 2016 blog titles and it comes as little surprise to me that my favourite topics this year have been the EUROZONE and CENTRAL BANK MONETARY POLICY.

It is very doubtful that the FED will raise rates on the 21st September (later this month) and it now looks like a December rate hike is the next opportunity to do so. I am not even so sure that this date will be a “LIVE” rate meeting as we would have just concluded the 2016 Presidential election, and depending upon the victor and the market reaction December could prove to be a difficult time for the FED.

No matter what happens from now until the year end central bank monetary policy will dominate FX moves and the markets will probably remain skittish as a result.

It is however, not all down to the FED… thank God.

Other central banks have big decisions on their agenda moving forward. The ECB, BOJ, BOE, RBA, BOC, SNB and even the chaps at the RBNZ all have major issues in their pending trays that sooner or later they need to tackle head on.

This year so far, the likes of the BOC, RBA and the chaps at the RBNZ have held back a lot of commentary on over-valuations of their currencies probably more in hope than belief that the FED would hike, strengthening the USD and in so doing weakening their currencies. This plan if it were in play has failed miserably and the fact that the smaller central banks simply deliver nothing but mixed messages most of the time the exchange rate against the USD has remained much stronger in their favour than they would have liked. RBA target rate is more like to be sub 0.7000 not 0.7500 and RBNZ believed target rate is 0.6500 not 0.7300. The BOC is difficult to understand as most of the time the BOC Governor Poloz has his head buried in a bucket of sand, and his voice is therefore very muffled!!

Before looking at what I consider to be the challenges ahead and what are the critical success factors for each central bank through the end of this year below I have added an excel spreadsheet detailing by central bank the key dates moving forward.



The first thing I noticed as it stood out for me were the dates of the staff Christmas parties. Tempted, as I am to go there and talk about the various Christmas parties I will not, other than to say that the chaps at the RBNZ being so switched on, probably don’t know its Christmas in December and haven’t scheduled a meeting!! Either that or they are total piss heads and will start rocking on November 29th at the rather aptly named around boozing the “Stability Report Meeting”.

Lets me just clarify, I firmly believe that you could lock the whole lot of these numpties into the Guinness factory in Dublin on Friday night around 8PM come back on Monday morning at 8AM and they would all be stone cold sober.

Getting back…


Whilst all eyes will be on the FED in September to see if there is a surprise rate increase, should they not surprise the market’s attention then shifts to December 14th. I think that November is written off being so close to the election.

As I mentioned earlier it is not all about the FED, Copernicus, as I mentioned earlier has been in touch and has confirmed that the whole world does NOT revolve around Janet Yellen.

Reputations are at stake no matter which way you slice this up. The FED like it or not still is able to move markets and has some element of respect left but its power has been waning of late. Yellen is a ditherer and so dovish the markets are exploiting this to their benefit at every opportunity. I do think that if the FED does NOT hike in 2016 this will affect their “punch” moving forward.

Without any doubt if the FED does NOT raise, later this month it ensures that Central bank monetary policy will remain front and centre until the end of the year.

As I stated earlier I think that should the Fed raise this month, hell would have probably frozen over. Check your house insurance policies.


Mark Carney (Governor BOE) has nailed his colours to the mast so to speak. There is more to come; the effects of a weaker cable have already been reflected in the recent released manufacturing PMi’s. Right now the UK is benefiting from a weak currency and membership of the EUROPEAN COMMUNITY. It won’t last and as soon as Article 50 of the Lisbon treaty is triggered, I would imagine that cable would come under pressure, as the uncertainty moving forward becomes a greater focus.

Carney has to deliver stability in the markets into the year-end. There are 4 BOE meeting / Rate decisions and of course its always worthwhile to note that announcements / initiatives can be made at any time. Stability and managing the uncertainty is paramount to cables success or failure into the year-end. I have no doubt that the calls for 1.1000 – 1.2000 GBP/USD will be realized, it is down to Carney to make the drop to these levels steady and not giant steps lower.

You just have to remember Carney is a slippery customer, he was an absolute disaster at forward guidance when he first came to the BOE. The markets were constantly misled by his commentaries. I think that Carney’s learning curve with his move from the BOC to the BOE was huge and like him or not, he replaced the previous BOE Governor, “steady Eddie” Merv “the swerve” King who was careful with his vocabulary and was never flustered, painfully slow at times at explaining but you knew what he meant and where he was going. This is not there for me with Carney, not yet anyhow.

Carney has a huge task ahead of him as the BREXIT ramifications hit both the UK and EUROZONE financial sectors in particular. The BOE will not be far behind the FED for making headline news moving forward.


If there is a central bank at the last chance saloon, it is the BOJ. Recent meetings whether they have tried to move the needle with initiatives or not have all been met by the markets raising up the middle finger to all the attempts made by the BOJ to weaken the JPY.

Kuroda (BOJ Governor), I think is now on borrowed time. I do not think that Abe (Japan Prime Minister) will be happy until the USD/JPY is above 115.00-120.00 and the EUR/JPY in the 125.00-130.00 range again. It’s a tall order and despite the largest QE and QQE programmes plus negative interest rates in place they are still struggling.

Japan has lots of unique problems facing it, an ageing population, high savings rates and basically an external energy dependence plus DEFLATION. There isn’t a central bank on the planet in the history of central banks that knows how to tackle DEFLATION.

This is a big final push to the year-end for the BOJ, I cannot stress how important this period is. For a country heavily dependent on exports it needs the JPY weak. Competition from China and its territories is huge and pressure is intense for Abe’s government policy and the BOJ to succeed.


Last week, Mario Draghi (ECB President) completed a press conference that he probably did not want to do (he probably does not want to do any!!). He had nothing new to bring to the party.

The ECB is quickly running out of Assets to purchase. All he did was really re-iterate that he will keep QE moving at the current rate and extend if required. I think my thoughts and comments about the EUROZONE are well documented over the past few years.

I have long said that 19 counties using effectively one chequebook is a recipe for disaster.

  • 19 different views on the world never mind Europe
  • 19 completely different sets of cultures
  • 19 different independent central banks
  • 19 sets of different tax rules
  • 19 sets of different political problems
  • need I go on any more….

Now we have a BREXIT issue that will affect the EUROZONE hugely and need I say the usual shite of how not to handle big issues will be demonstrated the EUROZONE leaders.

Add to the BREXIT, GREECE. GREECE has STILL NOT been sorted. Debt relief is the only way forward. What we have here are politicians on four/five year election cycles not prepared to make the tough decisions. They prefer to kick the can down the road and leave it for the next in charge.

Big elections in ITALY, SPAIN, FRANCE and GERMANY are all happening inside the next 12 months or so. There will be posturing between now and then and this final period of 2016 will be busy with EUROZONE uncertainty.

For his area, Draghi has basically stated that country-by-country financial reforms are required now as there is only so much; so far he can go with monetary policy. Need I say it… 19 different countries coordinating financial reforms… yeah right bring that one on!!

The ECB will always be high on news as the fair value price of the EUR/USD is probably nearer to parity and given the reforms required the hit and miss of economic performances across the EUROZONE, a weaker EUR is required to help really kick start matters. It just does not seem capable of making this happen.


Stephen Poloz (Governor BOC) sees risks to the Canadian economy moving forward, however, it’s really all about OIL prices. I had thought that by now the BOC interest rate would be closer to 0%, but it still sits at 0.50%. There is no doubt that there are huge house price issues ahead and a housing bubble especially in Vancouver and Toronto is on the cards. I strongly suspect that this is the main reason behind the no cut policy above all else.

Canada is not a progressive country and the BOC is very conservative therefore we should only expect them to react after events and move behind the curve.

We may see a cut before the year end, but do not expect anything brave from Poloz and co.


Glenn Stevens passes along his calculator in the next week or so. He has completed his final rate announcement and left saying that the AUD/USD is now at fair value. Holy crap…. that’s a new one. I suppose he had to say that to say that he left with all things rosy!!

I need to read up more on this but this seems to be at headline level that contradicts most things that I have read in the past from the RBA vis-à-vis pricing levels.

My thoughts are he’s not going to leave stating that the AUD/USD at six months highs around 0.7750 is poorly valued, as it would show a failure.

Possibly one further cut before the end of the year but frankly I would not be betting on this at all.


Head chap at the RBNZ Graeme Wheeler is without doubt the hardest central bank governor to fathom. His meetings are plain boring and so laid back that most of those attending seem completely disinterested in actually asking questions. What is the point? He says one thing and does another.

Sadly from my perspective the NZD is badly valued against most currencies from the AUD through to the USD and I cannot work out why the NZD/USD is closer to 0.7500 rather than 0.5500. It is defying gravity from a currency perspective. I am in trades looking for the NZD to weaken substantially as most economists keep singing the same tune relating to a NZD over-valuation. I keep saying to my subscribers patience is a virtue in trading and we all must show a lot of patience. My NZD positions are a reflection of patience.

Two or three months ago, I would have said that this currency with Milk pricing pressures, China and Commodities all against it, would see it needing to be re-valued considerably lower. It has not had the cuts I had expected and I will be surprised if there are any more in the offing this year. But frankly who knows, decisions in New Zealand are reactive rather than proactive, so one cannot be certain.


Thomas Jordan (Governor SNB) has been quiet of late but that does not mean that the SNB has not been playing in the markets.

It looks to me that there is a general support around 1.0800 for the EUR/CHF and I have no doubt that the desire for flat 1.1000 or above exchange rate is a minimum requirement for the SNB. Despite several attempts it has failed to stay above this level. I would imagine that this is a goal for 2017, maybe even 1.1500.

Expect the 0.75% negative rate to remain in place for the foreseeable future. Will they be tempted to raise it to meet their CHF valuation expectations? That is the $64k question.



Whichever you slice this up. I am a firm believer that central bank monetary policy is the biggest, or potentially biggest influence on currency pricing.

We have lost our way a little over recent times as the “currency wars” intensified. The markets have had the last laugh at times by refusing the jawboning and the rhetoric.

Nevertheless, whether you treat them as equivalent to “rock stars” or not, a central bank governor or president has the power to move markets, and bear in mind they have more money than you and can print the damn stuff if they want to.

We have a lot of high value risk events running through into the year-end, some we know about like BREXIT and the U.S. Presidential Election. Bubbling under are ITALIAN constitutional reforms referendum and the GREECE debt problem. The EUROZONE then leads into elections in SPAIN, FRANCE and GERMANY. Plus we also have geopolitical news like NORTH KOREA, ISIS and Middle East tensions related to OIL to keep us focused. CHINA continuing reforms should also not be ignored.

With the above in play it stands to reason that central bankers will always be hanging around ready to jump in with a comment or two and maybe in their defense for once, I will acknowledge it is a thankless job trying to create and maintain market stability and a good financial policy based on a three to five year plan.

I end on my soapbox though. When Mario Draghi last week spent time wasting our time by moving 12 and 24 month GDP projections by 0.1% I screamed – “give me a break” – just end the meeting if you have nothing meaningful to say. I am sick to the back teeth of listening to every central banker extending the period to which they will achieve their 2% inflation goal and the constant winding back of GDP data. 




(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).



TUESDAY: EUR – Draghi Speaks and German ZEW Economic Statement.

WEDNESDAY: BOE – Employment Data.
WEDNESDAY: AUD – Employment Data.

THURSDAY: GBP – Retail Sales and BOE Interest Rate and MPC voting.
THURSDAY: USD – Retail Sales.

FRIDAY: USD – CPi and Core CPi.

(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: 1.1229


GBP/USD – Weekly Closing Price: 1.3264


AUD/USD – Weekly Closing Price: 0.7536


NZD/USD – Weekly Closing Price: 0.7324


USD/CAD – Weekly Closing Price: 1.3047


USD/CHF – Weekly Closing Price: 0.9751


USD/JPY – Weekly Closing Price: 102.69




We are now about 10 days away from the next FOMC meeting with a press conference. However, we have a “Carney Alert” of sorts this week with a BOE interest rate announcement, which follows the jobs, retail sales and CPi data.

Personally I am light on trades at the moment so I will be looking to add value trades as this week progresses. That means to me that setting up GBP related trades prior to the Thursday BOE announcement represents poor value unless they are quick in and out FLASH TRADES.

I will be looking more to commodity currency trades after the AUD jobs data and the NZD after the Dairy auction results both due on Wednesday.

The SNB meets this week and whilst I am not expecting anything, never under-estimate the SNB, it’s all in the language with them and the level of the EUR/CHF exchange rate. The PREMIUM SERVICE is currently +65 pips in a long EUR/CHF trade, which I will probably leave on the table through the SNB meeting; at least those are my thoughts at the moment.

As Genesis sang we live in the “Land of Confusion”, well I call it maybe more a world of uncertainty; so with that in mind

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,

Scott Pickering
The Pip Accumulator

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