Hello again folks. Good afternoon from lovely Singapore. We hope you have had an excellent trading week and though last week didn’t quite happen according to plan, we saw some very clear trends which provided for easy trading.
We have had some surprise moves especially with the Sterling, but nevertheless, clear trends were visible and it was a very profitable ride, particularly on that currency. If you had paired it with the Usd, it might have yielded some pretty nice profits(486 profits). If you had paired it with the Yen, with its seasonal weakness as highlighted in last week’s post, the profits will have been handsome(586 profits).
With our star performer so far, the Cad/Jpy, we have now clocked about 570 pips. Cad/Jpy has now increased about 6.5% since we had opened this position. Based on a single unit, our R:R on this position has now reach about 320%. We have managed this position very carefully since we made a call on this on March 8th and we have added many positions since. Therefore, the ROI on this particular opportunity is now well beyond that level. I hope you did make some profits on this.
So, what happened last week;
Right, getting back to what has happened last week, we did have a fairly “happening” week for a week that hosted the NFP. I tend to believe that lots of profit taking for 1) protection against the NFP whipsaws and 2)closure of the months’ positions proved to set the trends, especially for the Eur and the Gbp.
Here is how the currencies all fared against the USD;
1) Eur = +0.22%
Upside limited to 1.3550, downside will continue once 1.3500 is broken.
2) Gbp = +ve 1.86%
(surprise rally move, clocking almost 500 pips)
Upside limited to 1.5320
3) Jpy = -ve 2.35%
(biggest loser of the week, the seasonal weakness of the Yen has played very well into this performance)
4) Chf = -ve 0.18%
5) Cad = +ve 1.42%
6) Aud = +ve 1.52%
Looking for a break above 0.9250 before considering any long trades.
7) Nzd = +ve 0.06% (movement of only 4 pips)
8 ) Gold = +ve 1.06%
Finally broken the 280 pip trend and strengthening against USD weakness.
What can we infer and what lies ahead?
We have seen a classic case of USD weakness across the board. Now, before you jump in and start longing all majors against the USD, be careful. As i had mentioned earlier, the weak hosting NFP and the month close could have played very nicely to cause these rallies.
We don’t have any fundamental backing on the strengths of these currencies or the weakness of the USD(except for NFP, but the news from everywhere else is far worse off). Therefore, be cautious on going long for we might get sucked back into the dollar strength rally as seen for many weeks prior and there isn’t any reason yet to believe that this trend has reversed.
What is the USDx showing us?
No Weakness as Yet
No surprises here. There seems to be weakness for the moment but nothing to indicate a major trend reversal as yet.
Bottomline
We should be back to trends prior to last week with $ strength continuing and pressure on Euro and Gbp continuing to push them downwards.
More interestingly, we have seen oil break the $82 level and now trading above the $85 level. It has just roared through that resistance level within the last week alone. With this important price breach, oil might see new highs. This will greatly help our Aud,Cad and Gold positions, especially pegged against the Yen for the moment, till at least about May-June window.
News on the Fundamental front;
Mon – Holiday almost everywhere, except the US (Best not to trade today)
Tue – Aud Cash Rate Statement (Must Trade, expected hike of 25 bps)
Wed - USD FOMC Meeting Minutes
CAD Building Permits
CAD Ivey PMI
Thurs – Gbp Bank Rate
Eur Bank Rate
Fri – Cad Unemployment Change/Rate
Keep your eyes peeled for some major trend setters this week folks. As always, happy trading!
