Well, what started out as a very quiet week soon turned into another blockbuster thanks to comments and actions by the various Central Banks. USD bullishness has again been the standout element of the week against much weaker EUR & JPY and with US Unemp rate and NFPs next week Dollar volatility is unlikely to subside.
- USD was very quiet going into the FOMC but has since rocketed back up to new multi year highs. The Fed announced the end of their bond purchasing program citing improved labour market conditions and whilst they pledged to keep borrowing rates low for a considerable time they did signal willingness to act sooner should conditions improve, with many market participants focusing on the possibility of an earlier movement in rates.
- GBP has weakened over the week mainly against the stronger USD, with little in the way of domestic data. Still soft from a dovish BoE minutes release the pair ends the week close to NFP lows
- JPY has fallen off a cliff this week, initially on improved risk sentiment and subsiding risk aversion flows but most notably in the wake of the BoJ unexpectedly increasing it’s monetary stimulus package after many market participants had begun to play down the possibility of further easing this month. The BoJ has increased it’s annual fiscal expansion target to 80 trillion yen from a former 60-70 trillion yen target.
- EUR ends the week lower, having made a promising start (though mostly on position squaring ahead of the FOMC) the pair suffered on the back of the FOMC release and saw bearishness further compounded today by the CPI miss and positive US data. ( Chicago Purchasing Manager and Univ Of Michigan Confidence both came in strong) The bullish sentiment surrounding a more Hawkish FOMC release is starkly contrasted with the dovish ECB and further downside is expected next week.
- AUD has had rather a quiet week in light of the moves seen in other USD pairs. Trading mostly higher over the week on improved risk sentiment price did drop on the FOMC release and now ends the week marginally discounted from the open.
- CAD saw a stronger start to the week on rebounding oil prices but quickly gave up the ghost on the back of the FOMC release and comments from Gov Poloz that further stimulus is justified given the excess capacity in the Canadian economy due to weak export growth.
- USDCAD: Neutral – Revised ( longs from last week were exited for a small loss on Tuesday’s bearish close)
- EURUSD: Neutral – Revised ( Shorts from last week were exited at breakeven stops.)
- GBPUSD: Bearish – No Change – Still holding short positions with stops moved to entry now giving a risk free trade.
- USDJPY: Bullish – No Change – Still holding long positions which were added to on break of last Monday’s high
- AUDUSD: Neutral– Revised ( shorts stopped out) – Short positions held from last week were stopped out for a small loss
Make Sure you tune in on Sunday evening for our Weekly Forex Outlook & COT analysis.
Get your hands on all the trading plans, indicators and strategies required to gain a comprehensive understanding of the Order Flow trading techniques successfully used by the traders here at Littlefish FX. Find out more here.