Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me.
- Wait DXY. – MT is sideways normal. The withdrawal of the HK extradition Bill, the UK vote to delay Brexit, the formation of a new Italian Government and the confirmation that US/China Trade talks will resume in October all contributed to a positive mood towards risk assets this past week. Data out of the US was mixed with ISM Manufacturing PMI showing the sector is in a recession while the Non-Manufacturing part of the economy continues to expand. Also, jobs growth was below expectations, but wages were stronger and unemployment steady at near record low levels. The Dollar Index fell in four out of the past five session, reversing from the 99 level it had flirted with the previous week to close right on 98. Fed speakers are in blackout until the FOMC meeting on the 18th where a 25bps cut is widely expected while on the data front CPI and Retail Sales are the main releases this coming week.
- Wait GBP/USD. – MT is bull normal. After reversing from 1.23 resistance the Pound found strong support at 1.20 as the prospects of a no-deal Brexit subsided following the passage of a Bill to force PM Johnson to ask the EU for yet another extension to the Brexit deadline, this time to January 31st. How this drama will play out is anyone’s guess and political risk remains extremely high for the Pound. PMI’s released during the week all slipped below expectations, but the pair still closed the week higher on the back of positive sentiment. In the short term we could see more upside towards the 1.25/1.27 area or we could drift back again toward 1.20.
- Wait USD/JPY. –MT has turned bull normal. Weak Japanese economic data and more importantly the easing of geopolitical fears spurring risk-on sentiment have seen the pair move higher closing the week right on 107 resistance. An inside bar has formed here. Trading above 107 would confirm the shift to a more bullish sentiment. However, the current JPY weakness is best traded in the crosses rather than in USD/JPY.
- Buy AUD/USD. – MT is bull normal. The fundamentals remain mostly negative for Australia with the only bright spot being the domestic real estate market for established dwellings. The RBA as expected left rates on hold last week and other economic data was far from rosy. But that didn’t matter as the favourable turn in risk sentiment greatly benefitted the AUD making it one of the best performing currencies. Earlier in the week the Aussie re-tested support at 0.67 for a third time rejecting it strongly once again. In the short-term further upside is likely with potential resistance at 0.69.
- Sell EUR/USD.– MT is bear normal. Data out of Germany continues to disappoint and expectations are high for the ECB to take action at the next meeting on September 12 but whether that will include a relaunch of quantitative easing has been put into doubt following statements by Council Members from the Netherlands, Germany and Austria who don’t see the need for a resumption of bond purchases.
- Wait NZD/USD. – MT is sideways normal. Early in the week the chart printed a strong reversal pattern with a false break of an inside bar which had formed at 0.63. The turn in risk sentiment then pushed the Kiwi sharply higher. The economic outlook for New Zealand remains weak and we are looking for an opportunity to sell at potential resistance around 0.65.
- Sell USD/CHF. – MT is bull normal. With risk-on sentiment weighing on both USD and CHF the pair remains range bound. If the Swissie closes below Friday’s low there is a good chance of a retest of 0.97, conversely a strong close above this week’s high has the potential to lead to higher prices toward the 1.01/1.02 zone.
- Sell USD/CAD. – MT is bear normal. A hawkish Bank of Canada Rate Statement followed by stronger employment numbers and Ivey PMI provided the catalysts we had been waiting for to take the Loonie out of the trading range it had been in over the past month. A move back down toward 1.300 is now the most likely scenario.
- Sell EUR/GBP. – MT is bear normal. After reversing from long term resistance at 0.93 four weeks ago, the pair has continued to move lower on a weekly basis. The outlook for the Euro remains bearish, however Brexit headlines will be an influence for the short-term movements in the pair.
- Wait EUR/CHF. – MT is bear normal.
- Buy AUD/JPY. – MT is bull normal.
- Wait NZD/JPY. – MT is sideways normal.
- Wait GBP/JPY. – MT is bull normal.
- Wait EUR/JPY. – MT is sideways normal.
- Buy CAD/JPY. – MT is bull normal.
- Wait CHF/JPY. – MT is sideways normal.
- Wait GBP/NZD. – MT is bull normal.
- Sell EUR/NZD. – MT is bull normal.
- Wait AUD/NZD. – MT is bull normal.
- Sell EUR/AUD. – MT is bear normal.
- Wait GBP/AUD. – MT is sideways normal.
- Wait AUD/CAD. – MT is sideways quiet.
- Wait GBP/CAD. – MT is sideways normal.
- Sell EUR/CAD. – MT is bear normal.
- Sell NZD/CAD. – MT is bear normal.
- Wait GBP/CHF. – MT is bull normal.
- Buy CAD/CHF. – MT is bull normal.
- Wait NZD/CHF. – MT is bull normal.
- Buy AUD/CHF. – MT is sideways normal.
- Wait Gold. – MT is bull normal.
- Wait Oil. – MT is sideways normal.
- Buy S&P 500. – MT is bull normal.
- Buy DAX. – MT is bull normal.
- Buy Nikkei. – MT is bull normal.
- Wait T-Notes. – MT is sideways normal.
(MT = Market Type: Click for more information on market types.)