Holiday update – Thursday 19th August 2021

Mark NugentAugust 2021, Daily Alert

Holiday update – Thursday 19th August 2021

Wednesday

The FOMC minutes were seen as dovish. Participants generally judged that the standard of “substantial further progress” had not yet been met. Most judged that it could be appropriate to start reducing the pace of asset purchases this year.

Canadian CPI beat expectations, as did Australian Unemployment Rate and Employment Change.

RBNZ Governor Orr said the banks’ view is to raise the interest rate to a more neutral level over the next 18 months and it is highly likely they would have hiked rates if it weren’t for the Delta lockdown, while he added they have made it very clear the next move is likely an increase so can afford to wait.

Sentiment was very definitely risk-off as those countries pursuing a zero-Covid strategy move in and out of lockdown in a futile and endless loop.

Equities and the US 10-year yield fell significantly, and haven demand pushed the USD up to levels not seen since November. Commodity currencies fell like a stone and the JPY is rising on the sentiment, although it went a bit silly yesterday by falling despite the risk-off sentiment. WTI had its fifth consecutive bearish day.

My Japan225 long went the wrong way and, due to the solid risk-off sentiment, I exited at last night’s close for a loss of around 0.8 percent. My WTI long was not triggered.

I took AUDUSD short at the close in the normal way (stoploss of 0.5x ATR, 1 percent risk). I would normally have taken AUDJPY but, as I said, the JPY had a funny day on Wednesday.

Now

Sentiment this morning is not improved.

In terms of trading, I will patiently wait for an improvement in sentiment and go long on equities and WTI. I will manage the AUDUSD trade. I am not looking for any further trades at this point. If I can exit the week without loss, I’ll be happy. The AUDUSD is around 2x risk in the money, so the signs are good.

Later

There are no further Tier I announcements this week.

Have a great weekend when it comes. I will be back on Monday with your Trading Plan for Week 34.