A review of the Forex trading week 15 February 2019
Another rather disjointed week of ranges and moves. Just when you think you might get a break out, something strolls along and tucks it back in the box.
Same old same old waffle and rhetoric but the market made a mountain out of a molehill over what should have been a can-kick by Parliament. May basically lost a thumbs up or thumbs down vote to her progress since the end-Jan votes and rebels saw it as a chance to remind her that their backing will only stretch so far. GBP was offered pretty much all through the week and rallies were hit when the price got too juicy for sellers to resist. We also had some fun and games with a big futures order going through which domino-rallied through into spot prices. That 90 pip spike in GBPUSD became just another sweet spot for shorts and so we went on to make fresh lows thereafter.
UK data confirmed the dour mood from the BOE, and most other countries, as GDP and industrial production missed. CPI held up perhaps more than some expected and retail sales today gave a welcome upside surprise, not that you would have know from the quid’s reaction. As I type, we’ve hit 1.2886 having spent most of the last two days wallowing around 1.28 or under. Perhaps some short covering or weekend risk reduction but Brent breaking higher could be helping also.
Eurozone data also conformed to expectations of being softer, although Germany scrapped past dropping into a technical recession by the skin of its teeth. EURUSD seems intent on testing the lower end of the 1.12-1.15 range but is finding it hard work around 1.1250. Another attempt today looked like it might bear fruit but then US industrial production dumped and that gave buyers the ammo to lift it back up towards 1.1300. The short-term chart doesn’t look too convincing for bulls though as we’ve not come close to challenging the week’s highs around 1.1340 in bounces. 1.1200? Watch this space.
USDJPY had a spirited run this week, rising from 110 and taking out 111. However, as has been par for the course this week, the break turned fake and a bleed lower to 110.26 ensued. We’ve had another week of flip-flop moves in JPY in general and that’s not helped with ranges either.
There’s been a lot of eyes on the US/China trade talks and we’ve had tons of headlines but zero substance. If Trump and the Trumpets are to be believed, everything is going wonderfully but no one has actually said what exactly is wonderful. We’ve had some fluff about China upping chip buying and weak headlines about MOU’s but the market is still bereft of something it can get its teeth into. Perhaps the problems and issues are deeper rooted than we’re led to believe, or perhaps Trump is working some magic that he wants to announce all in one go. Like him or loathe him, you can’t fault the sense of drama. So, overall we seem to be edging out the week with trade deal expectations intact, though perhaps dialled down a notch. There’s no new shutdown coming, though Trump signed the deal and then slapped the emergency procedure card down to get his wall money. That’s likely to mean a trip or 200 to the US courts so that should see us kept busy until the next natural global extinction event.
Elsewhere, there’s not been too much excitement. AUDUSD has managed a rough 80 pip range for the week. The kiwi had some RBNZ fun but in another case where things didn’t sound as dovish as perhaps expected. We’re sitting pretty above 0.6850 as I type and this could become a base for a run to 0.6900. If it fails, we’re back looking down.
The Loonie has ping-ponged between 1.32 & 1.33 with brief but small extensions at both ends. Surprisingly, it’s not joining in the late Friday fun day in oil, though WTI is holding below it’s recent highs around 55.75. If WTI makes a similar break to Brent then we might see a bitter reaction.
And there we have it, in the main. Trading conditions have been tough again. We’re not getting big breaks and we’re not getting big trends. For me, it’s been a slow week with only a few trades done. I reduced my trading size again because I’m just trying to scalp the intraday levels and those aren’t holding any real strength, so I’m not keen to go too heavy. I then up the size if there’s any bigger looking levels in play but even then, still well down on what I would normally. Still, trading is about staying alive not trying to dig up trades for the sake of trading. I can ride out many lean months if need be, though that won’t help the old psychology much. I hope that’s not something eating away at many of you less experienced traders because as I spoke about last week, frustration can be an account killer. The levels are there but we just have to wait for them.
As is always the case, a big thanks to our trading room guys, colleagues, readers, tweeters, news hounds and the squawkers, who make sure there’s never a dull moment in trading.
Have a great weekend all and thank you for coming to ForexFLow.