Daily Alert – Wednesday 20th January 2021: The strange start to 2021 continues

Mark NugentDaily Alert, Jan 2021

Daily Alert – Wednesday 20th January 2021: The strange start to 2021 continues

Risk sentiment has been very changeable so far this week. Monday was moderately risk-off. Tuesday saw a reversal to moderately risk- on. So far today Wednesday we are indecisive as of 1500 GMT.

On Monday, I went short AUDJPY based on the risk sentiment (risk-off). However, rather than entering at market, I placed a pending order because in the last 12 or so hours of Monday’s Daily candle the price had been moving sideways. I was also aware the Americans were on holiday on the Monday and quite often sentiment can reverse when these traders come back on a Tuesday and indeed that is what happened. My trade was not triggered and as we went risk-on I cancelled the pending order.

Today we have the Presidential inauguration in the US. Also, the ECB has been reported to be adopting yield curve control to try and equalise the spread of bond yields across the strongest and weakest EU economies. This is going to be an expensive and almost certainly unpopular policy. It has not yet been confirmed by the ECB but as the rate-setting meeting is tomorrow, I do suspect that this news has been leaked and will be shown to be true. We will find out more tomorrow.

It has been an interesting start to the year. In week 1, we had riots in the US. In week 2 we had Trump’s second impeachment. This week we have the US Presidential inauguration. For these reasons and because these risk events are unusual, I have been cautious hence my use of pending orders. Hopefully, things will settle down next week and we can get some proper trading under our belts.

Thank you for your time I will be back on Friday with your review of the week.

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