Yikes, the dollar was an absolute nightmare to long due to the pathetic 1.2% GDP growth vs 2.6%. The market did not appreciate the data at all and sold the dollar aggressively. Low GDP decreases the chances of a Fed hike which means we are back in limbo. Will the RBA and BoE cut during August? Is this the perfect rally to short the GBP/USD and AUD/USD, or will the dollar continue to be punished. Macro wise, the market is currently in a big mess due to the divergence in the global economy. Things are definitely weird and interesting.
This week was such a tough week for me, in fact, haven’t had such a loss in a while. So I had a terrible loss on the AUD/USD a couple days ago due to pending orders. Last night, I was looking at the NZD/USD and accidentally shorted the pair with the incorrect size. I was 10x more leverage than my usual trade. I panicked because it was a good trade and if I left it open, I could’ve potentially recovered my AUD/USD losses and earn some more. Unfortunately the BoJ shook the markets too hard and I exited the trade with a small loss. Interestingly enough, if I held, I would’ve scored big profits since the NZD/USD fell shortly after.
After the tough loss, I decided to trade London to recover for my terrible week. I think my mentality wasn’t at the right place since I was seeking for revenge. I was shorting EUR/USD with 3x the normal amount I usually trade and when price continued to move against me, I ignored my technical analysis. If I wasn’t so stubborn, I would’ve bailed the short EUR/USD and reversed it. I wasn’t in the right mindset and then when the GDP released, EUR/USD bears got crushed. I’m finally glad it’s the weekend. Time to rest up and get my psychology back together. Man, what a week.
Dollar had a decent bounce today after taking a nose dive from the FOMC statement. Although the Feds showed optimism, the markets did not believe the Feds were going to raise rates anytime soon. Currently the Feds are at a tough situation where things are so unstable globally, yet the Feds can’t change their language or they will lose their credibility. The dollar dipping after an optimistic FOMC statement shows how little confidence the markets have toward the Feds. At least today’s bounce kinda showed there’s still a little conviction left. Besides the Feds, the markets will be looking at the BoJ today and tomorrow. As of now, PIMCO said they expect 30% chance of no action and 50% of disappointment. The USD/JPY should start to look very choppy during Asia session. Be careful when trading said pair.
Two days ago I was experimenting with pending orders and got burned pretty bad during the AUD CPI data release. Fortunately, freak accidents aren’t too major anymore due to better money management from the past, but it still hurts. I’ll take this as a learning experience and continue with pending orders to improve my trading. For now I’m on a gradual road to recovery and I’m certain I’ll use this event as a growing experience.
I didn’t bother trading during NY since things were slow and sporadic. I faced a huge loss last night and I didn’t feel like taking any chances. However, after the FOMC, the Feds do look like they’re feeling a bit better on easing in the future. The possibility of a rate hike increased after their statement today. Although rates stayed unchanged, they stated that “near-term risks to the economic outlook have diminished”. I think this should be great for the dollar since other central banks are looking to cut.
Although the AUD/USD shorts have burned me yesterday, I decided to short it again as well with the GBP/USD. Interestingly enough, the dollar dipped down a bit despite the optimistic FOMC statement. I’m going to take this opportunity to buy the dollar at a better price and hold on.
There was some funky movements in the AUD/USD due to it’s CPI data release at night. It was on a heavy bear trend for days in the expectation of a rate cut by the RBA. CPI came out just as expected of 0.4% which gave the Aussie dollar a momentary boost. Other than that, the market was pretty quite in due for a FOMC statement tomorrow.
I got heavily played out today by the whipsaw action in the AUD/USD. My pending shorts got hit multiple times when the AUD/USD started to dip. Before the news release, I had 3 short orders opened with a pretty safe stop loss. When the CPI data came out, the volatility kicked the Aussie up, hitting my SL, and then dropping back down hard. I should’ve shorted it again when it was on top, but the price action was too wild. The loss does hurt but I’ll have to get it back..
The Yen had a strong move to the upside today which may be because of the BoJ meeting on the 28th. Investors probably do not want to be long Yen in the case the BoJ adds more stimulus making the currency weaker. Although Governor Kuroda did sound less aggressive last week, anything can happen.
I tried longing the USD/JPY and continued to lose pips. I eventually gave up the trade and went for a short GBP/JPY once it broke it’s support. USD/JPY should be back on it’s rally if the BoJ continues their passive outlook. There’s a good chance the yen can range until the 28th or continue to gain strength as traders close their positions before the announcement.
The pound’s rally from yesterday proved to be a fake out when the GBP/USD dropped sharply during London session. Oil was another main attraction when it reached a new monthly low of 43.72. Sure enough, it sent the USD/CAD flying despite the Canadian CPI as expected and retail sales above estimates.
Today’s NY session was very weird compared to London’s. I should really be trading more London because things start to slow down drastically during NY. I woke up early to find that pound was dropping hard and tried to make up for lost moves by aggressively adding positions. Unfortunately, all the major movements happened during London, and during NY, things started to retrace and then consolidated. However, the two big moves I could’ve caught during NY was short EUR/USD and long USD/CAD. I was too focused on shorting the GBP/USD and GBP/JPY which made me miss out on both wonderful trades… I have to stay alert.
Draghi kept the rates unchanged and told the world that the ECB is on standby. The bank doesn’t seem too worried to intervene now but if things get astray, they are ready to add more stimulus. The EUR/USD initially took off since there was no cut, but soon fell back sharply when Draghi’s demeanor was still cautious and dovish. EUR/USD was able to break below 1.1000 levels but didn’t have enough volume to stay down. I’m still dovish on the Euro until data shows fast recovery.
One pair that was tricky to trade was GBP/USD. It’s struggle to stay up right now, but there are not enough bears to take control. I really do see pound come tumbling down during August and I want to short every rally. I just have to be patient and wait for a clear signal to re short this pair.
It’s definitely an interesting day for the pound since it’s rally from London’s session. There haven’t been a real reason for it’s strength, however, it might have been a BOE Forbes comment that more evidence is needed to cut rates. It’s definitely possible that the markets overreacted after Brexit and the markets are balancing itself out.
My GBP/JPY trades didn’t go so well but I was able to manage my losses. I was not expecting pound’s strength to be so rapid, however, I still stand to short every rally it makes. I’ll wait till pound settles down and re short the GBP/USD or GBP/JPY once I see some signals.
The dollar finally had some power overnight which pushed the euro and pound below. If there are more conviction of a Fed rate hike this year, I can definitely see the dollar pairs moving in the favor of the dollar. Hopefully this dollar momentum continues and we can see newer lows.
I was able to bank about 50 pips from my EUR/USD short overnight which felt great. NY session wasn’t the best in volume so that was my biggest trade. I’m currently focused on the pound since it looks like it wants to cliff jump. Since I missed out on the GBP/USD’s big move, I decided to short GBP/JPY and hold it. Here’s what I see below.
Some may argue it’s a heads and shoulders but regardless, it can have huge potential if pound goes south.