Today we had the press conference for Donald Trump that the market took a reversal stance on and sold off US dollar. There weren’t really updates for the press conference, so most likely the selling came from the existing uncertainty around the new president as he’s about to take office soon. Meanwhile, the equity markets were still largely green with oil market surged regardless of the large built on crude inventories. The risk sentiment is certainly on and that has helped NZD tremendously. As mentioned, NZD is a more neutral currency as there is no new agenda from RBNZ in terms of easing and it’s also political stable in comparison with other countries. Today we had a breakout candlestick for NZD/CHF that cleared the 0.7150 area and looking to edge higher. The existing trend is also an uptrend, if the risk on sentiment continues then we can really expect AUD, NZD & CAD commodities currencies to keep going higher.
- The catalyst was the risk sentiment, the recent weakness of USD and the technical signals.
- We’re right in the middle from the last short-term downtrend.
- The risk is the sentiment shifts which will be the biggest one to benefit CHF and hurt NZD.
- I’ll manage it by following up the global news to see if there is any risky event to turn off the sentiment, otherwise i’ll trail with regular 3 bar exit for this trade and expect to hold it over the weekend.
- Yes but only if i get filled the next day or so.
SL @ 0.7030
because we had 3 singles in NZD/CHF, GBP/NZD & EUR/NZD and all GBP, EUR & CHF had all equal fundamental reasons to be shorted, so i decided to separate the risk % and place trades in all 3 trades instead to risk 1% in buying NZD.
GBP has fundamental uncertainty and sentimental weakness from Brexit, EUR also has sentimental weakness and suffered as risk on sentiment to pressure the safe heaven currency because EUR is one of them.
SL @ 0.7030
SL @ 1.5253
SL @ 1.7648
- The market reacted as expected by selling CHF and buying NZD. NZD still benefited from weak USD but CHF is also benefited from today’s risk off sentiment market. CHF acts in accordingly with safe heaven flows so we need stock market to pick up for CHF to continue lose strength. If USD regains strength, all other currencies will be hurt and we don’t really know whether NZD or CHF will be hurt more.
- As long as USD remain weak, we should continue to see strength of NZD and if the stock markets can pick up, then this trade will take off. If not, then we might head into a sideway movement.
- I’m still in this trade because my view is still the same and there is no tier one datas from both currencies for me to move my SL now.
- I will get into this trade but I’ll much prefer GBP as we have new negativity for GBP today from the scheduled speech for PM May for next week, which market has viewed it as a possible hard Brexit talk.
The PM May speech tomorrow will be a large risk event and the market has been in a negative for this event. We might see a reversal prior to the event or after event, or we might see continuation of selling into GBP.
The safe heaven currencies will of course be benefited if the risk sentiment continues to be off, but will be hurt if the sentiment changes to on.
Nevertheless, we’re tightening our SL to further reduce our exposure.
MOVE SL @ 0.7134
Updates Jan 17th
The PM May’s speech turned out to be a strong boost for GBP and market has viewed it as positive outcome, at least for now.
This of course pushed GBP further versus all pairs which stopped us out in our GBP/NZD trade at Breakeven.
On the other hand, because of the GBP strength, the USD & EUR have both been sold further.
The winner beside GBP is JPY & CHF both safe heaven currencies, but also AUD & NZD.
I’m tighten up my SL for both NZD trade and am more confident toward EUR/NZD trade as the GBP strength now really hurt EUR.
NZD/CHF on the other hand does have pressure of save haven currency effect and if the equity markets continue to be down, we should see further buying into CHF which will jeopardize our trade.
MOVE SL @ 0.7141
MOVE SL @ 1.5015
updated Jan 18th
The market has regained strength with both Asian and European equities closed up, USD also regains strength today.
Tomorrow we have the ECB event which will either be an event to pressure EURO or help EURO.
This reason alone let us decide to move SL to BE now.
Furthermore, the awaking of USD will further pressure NZD & AUD.
On the other hand, the risk on sentiment will also help AUD & NZD.
Either way, tomorrow’s event will be another fresh catalyst for us to trade.
Move SL to BE for EUR/NZD
As for NZD/CHF, because of the narrow range, we don’t want to move SL to BE just yet, also CHF and NZD do not have headline risk event for tomorrow.
We will mainly focus on the ECB meeting and how the market reacts to that in the risk sentiment to see.
If market reacts negatively for EUR, this will help USD but also help European equity markets as weak EUR will help trading further although strong countries like Germany will not be happy.
Nevertheless, if the equity markets turn around, this will help our NZD/CHF trade.
Alternative scenario for this, is that the strong USD might pressure AUD & NZD as they both surged so much from the absence of USD previously, and this might really pressure NZD to further hurt our trade.
However, if markets reacts positively for EUR, this will pressure USD and also pressure equity markets as cheap money might be finished sooner than expected. If markets turn down then this will help CHF and further pressure our NZD/CHF trade.
updates Jan 19th
- NZD continued to be the strongest currency to give us another solid green day against CHF. Even though we had a risk off sentiment day, but the sentiment is really into buying AUD & NZD due to high yield, stable political outlook and generally non events.
- If in the normal circumstances, i will relax and keep holding this trade further, and perhaps even enter too add on since we do have a solid Green big shadow, however, because of tomorrow’s inauguration which is going to be very volatile for the market and over the weekend, not only i’m not looking to do anything except moving SL to BE, I’m also very likely to exit all trades prior to the weekend. Unless NZD/CHF edges higher after the inauguration event or if we have a clear direction.
- I’m still in this trade because NZD is still very strong and CHF is still very weak. I’m setting SL to BE to prevent any upset for tomorrow’s big event.
- I will not get into this trade if I was flat now b/c it’s not ideal to get into any trades prior to major risk event when it’s so close.
Move SL @ 0.7170
as for EUR/NZD, we had a similar picture that i’m still hold my trade with SL to break-even.
NZD/CHF OUT @ BE