Weekly Review and Outlook 31st July 2017

Mark NugentJuly 2017, Trading Plan

Weekly Forex Review – Week Commencing 24th July 2017

Economic Calendar

Over the weekend:

Nothing.

Monday

ECB’s Mersch stated monetary accommodation is still needed and ongoing expansion in the euro area offers confidence. Mersch also stated that risks to the euro area growth may be to the upside and that headline inflation is dampened by weak energy prices, but added that underlying inflation is to rise gradually. (Newswires)

BoJ minutes from June 15th – 16th meeting stated that members agreed policy needs to be keep easy as price target is still distant. The minutes also reiterated that financial conditions were highly accommodative and that Japan’s economy has been turning towards a moderate expansion. (Newswires)

Tuesday

Nothing.

Wednesday

AUD CPI misses (0.2% vs 0.4%).

UK Prelim GDP was on target at 0.3%.

FOMC DECISION

– FOMC held rates between 1.00-1.25%, as expected and said balance sheet normalisation is to take place ‘relatively soon’.
– On inflation, the Fed said it is monitoring inflation developments closely and that inflation will remain somewhat below 2% in the near term, but stabilise around 2% in medium-term.
– Although there was no major immediate reaction, the USD softened in the following minutes, with all of the major FX pairs moving to best levels on the day against the USD, with focus on the inflation comments.

Thursday

BoJ Summary of Opinions from July 19th-20th stated year on year change in CPI is likely to increase gradually towards 2% with the inflation target likely to be reached by around fiscal 2019. Furthermore, there was an opinion that the range of the target level of 10yr JGB yields should not be interpreted too strictly, while there was an opinion that it is appropriate to set the new target of JGB purchases at a yearly pace of roughly JPY 45tln and then reduce the pace of purchases in an orderly and incremental manner. (Newswires)

Friday

JPY Tokyo Core CPI beat expectations at 0.2% vs 0.1%.

Canadian GDP surged to 0.6% vs expectation of 0.2%.

US Advanced GDP beat expectation (2.6% vs 2.5%).

Market Reaction

The USD continued downwards on the “Trump discount”. US equities were mixed with the Dow30 being the best performer. The FTSE100 was down on the week and the FTSE250 flat but volatile. The DAX30 continued down after the auto-makers’ cartel allegations. Oil and gold rose. The US 10 Year yield was volatile but moved up across the week. The EUR index hit highs not seen since January 2015. The JPY moved out of its consolidation zone by strengthening. The GBP rose for five consecutive days. The CAD rose across the week on the oil price. The AUD and NZD both rose within current ranges.

Trading Plan

Three trades closed during the week. Trade 47 (EURUSD long) closed for a gain of +1.49%. Trade 48 (DAX30 long) closed for a small gain of +0.05%. Trade 49 (FTSE250 long) closed at breakeven. Month-to-date performance +2.25% and year-to-date performance is +11.9%.

Weekly Forex Outlook – Week Commencing 31st July 2017

Economic Calendar

Over the weekend:

North Korea fires yet another missile into the ocean off Japan on Friday.

Russia expels 755 US diplomats after the US House of Representatives voted for sanctions against Russia after concluding they meddled in the US election. The bill needs to be approved by the Senate and then Trump himself.

In the news:

USD weighed by month end flows and political tensions

Mon – EUR Headline and Core CPI Flash Estimate

Tues – AUD Cash Rate and Statement; GBP Manufacturing PMI; EUR Prelim Flash GDP; USD Core PCE Price Index

Wed – GBP Construction PMI

Thurs – GBP Services PMI; GBP BOE Super Thursday

Fri – AUD Monetary Policy Statement; USD Average Hourly Earnings and Non-Farm Employment Change

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Here is your Weekly Review and Outlook video.

I discuss last week’s trades at 9:45 and this week’s trading plan at 16:20.

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