- 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 continuing selling GBP versus NZD. Fundamentally there were any new datas, however, sentimentally GBP suffered another new negative information as PM May is expected to give a speech in regards to Brexit plan next week and most traders fear that the talk is going to be about the Hard Brexit.
- Without new information, GBP will continue to suffer from uncertainty, however, the talk next week might actually be positive and also we might thane the high court ruling anytime soon, all these are the risk of shorting GBP. Meanwhile, NZD does not have tier one data and will continue to take lead over GBP and benefited from weak USD. If USD regains strength, we will see NZD losing ground but might still be well supported versus GBP. We need to watch out for next week’s GDT data. Ideally we will like to be at BE before next week’s UK PM speech and NZD GDT data.
- I’m still in this trade because the current information has given me a short view in GBP and a strong bullish view in NZD.
- I will still get ion this trade of shorting GBP versus NZD if i’m flat now because my view is supported fundamentally and sentimentally.
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 TO BE @ 1.7240
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