Weekly Review and Outlook 1st February 2016

Mark Nugent2016 H1, February 2016, Trading Plan


Weekly Review and Outlook

(Video below)

Monday – Draghi – bullish on EZ economy, QE making a difference.
Wednesday – US Fed hold rate unchanged. US job market good. Inflation view unchanged. NZ – rate unchanged. “Some policy easing may be required.”
Thursday – UK GDP on target. US unemployment good.
Friday – Japan reduced one of three rates to -0.1%. Will do so again if required they say. US GDP misses at 0.7% vs expectation of 0.8%.

The week was characterised with a reasonable return to risk-on with no extreme Chinese stock market activity. There were multiple news stories on Brexit being a disaster for the Euro zone.

Trading Report

USDJPY (long on weak JPY) – in profit. Move up on rate reduction. Tight static stop 100 pips below Friday’s high.
USDCAD (long on oil price) – cautious stop below clear recent support zone. Currently in loss.
EURUSD – triggered on Friday. Trading a channel within a channel. Risky trade so stop at breakeven.

Outlook for Week Commencing 1st February 2016

Tuesday – Australian RBA rate statement; Global Dairy in New Zealand.
Wednesday – Japan’s Governor Kuroda speaks.
Thursday – UK BoE rate and quarterly inflation report (could cause significant GBP weakness).
Friday – US NFP and Average Earnings (chance for US to consolidate positive sentiment). Australian quarterly monetary policy statement.

Themes and Trading Opportunities

  1. Oil – buy USDCAD (already in)
  2. Risk-on causing flow out of JPY and hence weakness – buy USDJPY (already in)
  3. USD strength (news dependent) gives two opportunities: a) sell EURUSD (4th theme is Euro weakness – already in) and b. buy USDSGD (on Emerging Markets weakness caused by strong USD).
  4. Euro weakness (the trade is mentioned above – 3a).
  5. GBP weakness (news dependent – will re-assess after Thursday’s MPC statement, Carney’s talk and Quarterly Inflation Report.

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You can download the presentation slides HERE