Trading Plan – Mon 4 Nov: Friday’s risk-on sentiment rolls over into this week

Mark Nugent Nov 2019, Trading Plan

Trading Plan – Mon 4 Nov: Friday’s risk-on sentiment rolls over into this week

Using the sentiment tool across the entirety of week 44 shows that risk sentiment was indecisive.

Equities were moderately up yet the US 10 year bond yield was moderately down and we expect these asset classes to move in the same direction. GOLD was moderately up which we would associated with risk-off sentiment yet the JPY was flat. The USD was moderately down which we would associate with risk-on sentiment. So, like I said, indecisive.

The Fed cut the Funds Rate by 25bp as expected on Wednesday and was seen as dovish as they set a very high bar for future rate hikes (significant rise in inflation). The US finished the week with misses on PCE, Personal Spending, Average Hourly Earnings and ISM Manufacturing PMI. NFP was the only positive news.

The Bank of Japan alluded to the chance of future rate cuts as did the Bank of Canada, causing a significant weakening in the CAD which, as of Monday morning, has yet to fully recover.

Talk on the US/China trade deal was generally positive with MOFCOM being more bullish than ever before. The AUD and NZD rose over the week.

The week ended with Friday being strongly risk-on, providing only the day traders with a chance to trade.

This week sees Super Thursday at the Bank of England and EU Economic Forecasts in the Euro zone, administered by Christine Lagarde as she takes over from Draghi at the ECB. In the video I cover what trading areas will be my focus.

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