I am happy to be back after a two-week break over the Easter holiday.
If ever there was a loaded question that was it.
Before looking at the economic story, you will notice some subtle changes to the blog, as always, I enjoy the feedback, so feel free to share your views, good or bad, I can take it!
As I see it we have the following to consider this weekend and moving forward in the short and medium-terms: -
- The Covid-19 pandemic in many countries / states / provinces is at a really crucial point of “The Curve”.
- Have the case and death rates hit their peak? This is the most dangerous time according to the Scientists and Medical Experts.
- Politicians are starting to feel the heat (literally as temperatures rise in the Northern Hemisphere), there is pressure from Opposition Political Parties, Pressure Groups and the younger population in particular to get back to party time and relax social distancing and self-isolation guidelines / rules.
- Moving too soon on movement restrictions will bring a second wave which will require a greater isolation period than wave one.
- We are in a worldwide recession, without doubt in the G7.
- With the USA having over 26 million out of work claiming unemployment benefit, and I expect this to top 35 million when all is said and done, the likelihood of a V-SHAPED or U-SHAPED RECOVERY is frankly nothing but fantasy. Take 30 million out of the population spending money on discretionary items, and there is no magical fix.
- The Daily rants at the alleged “Virus Update” press conferences directed to the press; contain so much BULLYING, it is embarrassing. They are not virus updates. TRUMP measures their success via ratings... he believes he’s in campaign mode, they are self-congratulatory events. Total and utter bullsh*t.
FICTION (FAKE NEWS):
- The S&P 500 is NOT and does NOT represent the state of the U.S. economy.
- HYDROXYCHLOROQUINE or CHLOROQUINE both touted by TRUMP as a possible aid to stem the Covid-19 pandemic have been cautioned against use by the FDA stating they are both not safe or effective.
- DISINFECTANT INJECTIONS also referred to by TRUMP as a cure for Covid-19 are lethal and cause death. Bleach manufactures were quick out of the starting blocks to point that out.
My God; what a sad world.
I could write a whole blog on TRUMP; the lies, the misleading of the American population never mind the markets. This continual deliberate confusion and mixed messages he creates on policy, his inability to prepare and deliver a speech in a language we understand, his constant and continual walk back of his statements and the lies and more lies....
LEADERSHIP IS OWNERSHIP...
How in name of sanity can Americans re-elect this man?
Last time around, many people especially voted for TRUMP but denied they did because it was embarrassing to say that you voted for such a person.
America is viewed around the world as a joke; a laughingstock, run by a liar and an idiot.
The following “Bingo Card” I pulled off Social Media
I see an L-shaped recovery as we bounce along the bottom for some time; why?
- The world revolves around the USA, sad but true. The sneeze and the flu scenario are still as true today as they were 30-40 years ago.
America is the ultimate consumer society; it lives on credit. If 26 million spenders do not have jobs, they will NOT be spending money.
- The face of the economy has changed.
There is no doubt at all that we are in a worldwide recession, as usual there are still winners and losers: -
Logistics – Up
Consumer Staples – Up
Consumer Discretionary – Down
Travel, Leisure and Hospitality – Down
Oil – Down
- We all hope that they will return to full employment around the globe, but the workplace via technology has been forced to change and many jobs will be lost and never re-advertised again. In fact, I still think there will be millions more jobs set to be shed.
Consumer confidence to spend in these areas may NOT return until late 2021. It could be even longer if the “second wave of Covid-19” comes to pass.
The graphic below is interesting.
We all hope for a better outcome than the one I have just outlined, but given my thoughts are derived from looking at the issues I just cannot see a V SHAPED RECOVERY.
From a currency trading perspective, I remain in the short to medium term in the camp of USD strength.
Despite all the fringe commentaries one reads, all the moves of late in precious metals, the dovishness support from the other G7 Central Banks, it all comes back to the FED.
The FED has stepped in without waiting and with colossal financial support to keep markets moving and liquid. As we all know, the dysfunctional partisan existence in Washington D.C. with lawmakers is tantamount to a group of numpties waiting at the airport for their ship to dock. Even in such dire times U.S. lawmakers still throw mud at each other, there are at best inept.
We have what I think is best described as a loop and the Jeffries chart is perfect.
Around the world the unwinding continues. Emerging markets need dollars to offer stability and the ultimate flight to safety will always be the USD. The printing presses around the world are running 24 x 7 at the moment to keep markets liquid. The money supply numbers, when we get sight of these will no doubt cause many sharp intakes of breath.
I fully expect to see the DXY up near 120.00 again if USD demand really shows its teeth. In a “second wave” scenario, I think we have a TINA (There is NO alternative) situation.
So, regarding currency pairs to trade we have plenty of options with my short to medium term scenario in mind and should we have a “second wave” in the fall this will only fan the flames of a strong USD as we look with a longer-term time horizon.
To find out what pairs I am looking at, trading and why, you need to subscribe to THE WEEKLY FX PREMIUM.
Another positive week on pips, +385 gathered over last week as you can see from the table below. The monthly total so far is +2,078 pips.
Moving on again...
To coincide with people self-isolating at home, and the fact that from April 1st, I am adding back MOMENTUM and FUNDAMENTAL trade styles (which should be interesting), I have launched a SPRING PROMOTION based on what I am calling “TURN 3 into 6”.
Buy a 3-month FX PREMIUM subscription for CAD$450.00 and receive an additional 3 months FREE. (details below)
Moving on once more...
Some new ideas moving forward: -
- I am very shortly going to begin a weekly market review; podcast or equivalent, which will be open to all, no more than 10-15 minutes.
- For WEEKLY FX PREMIUM subscribers, they will receive separate podcasts and my thought at the moment is that they may be daily 5 minute or so reviews.
FX - FORWARDS, BACKWARDS & SIDEWAYS:
1: - USD INDEX (DXY) TRADE CHART and MY THOUGHTS:
(The Daily DXY chart is below and my thoughts, ideas and comments regarding the DXY are contained on the chart)
MY SHORT-TERM BIAS: Bullish
MY LONGER-TERM BIAS: Neutral
2: - USD MAJORS - TRADING CHARTS and MY THOUGHTS:
3: - THE WEEKLY FX PREMIUM:
3.1: FX PREMIUM MONTHLY PERFORMANCE:
3.2: A BRIEF OVERVIEW ON LAST WEEKS TRADING:
Last week was a strange week for trading. I traded heavier than previous weeks and it resulted in more shorter-term trades like MOMENTUM and SWING trades, which to be honest had many of the pips gained handed back just as easily.
As I have mentioned the EUR, I found hard to read and for the life of me I am still beating myself up for trading it. I had earlier written to WEEKLY FX PREMIUM subscribers letting them know that I would be looking elsewhere for set ups, which I did BUT I still went after both the EUR/USD and EUR/JPY.
I made some returns long USD/MXN and long USD/CAD, my EUR trades balanced out (I could hear my brokers shouting yippee), I hate giving hard earned pips and $$$ to my brokers.
We are still in a news driven trading environment and all the focus appears to be on exiting lock-down protocols. Politicians are “Vote Orientated” so the longer an economy remains in lockdown the worst the economies of the world are going to be when self-isolating etc. ends. As mentioned earlier a wave two of the Covid-19 will be devastating BUT it appears to be a risk worth taking by the world’s lawmakers.
With this backdrop in mind, the demand for the USD will be overwhelming in my mind and emerging market currencies could be very attractive trades.
3.3: WEEKLY FX PREMIUM SUBSCRIPTION INFORMATION:
The WEEKLY FX PREMIUM is my subscriber based FX support option, which offers, subscribers’ full access to my suggested trade set-ups and my market commentaries.
If you go to my website https://www.weeklyfxdrivethru.com you will see more information about the WEEKLY FX PREMIUM.
Lots of information about the way I do things, plus, previous reports about my trades, my trade styles and my trade projections for the year are located on my home page by selecting the appropriate tab located at the top of my home page.
In addition, details about how to subscribe to the WEEKLY FX PREMIUM is also located at the top of my welcome page under the “SUBSCRIBE” tab.
3.4: SPRING SUBSCRIBER PROMOTION:
“TURN 3 into 6” – details below.
(This section is only available to WEEKLY FX PREMIUM subscribers distributed via a separate blog)
5: - THE FINAL SHOT:
5.1: LOOKING AHEAD – THIS WEEK’S ECONOMIC DATA & MY THOUGHTS:
It is a fun packed week that lies ahead of us. We should have some real knicker-gripping price action.
- JPY: BOJ Outlook Report and Monetary Policy Statement.
Just not sure other than limitless stimulus what else the BOJ can offer. As always, I will say, we have heard it all before, for me it’s all a question of will the JPY react, and, if it does how?
- USD: Consumer Confidence, GDP, FOMC Statement and Press Conference and the eagerly awaited Weekly Unemployment Claims.
I think the FED could be out gunned by the Unemployment Claims this week. Nevertheless, Jerome Powell’s statement and commentary will be dissected up / down / left and right as always. I am not sure what else the FED can do vis-à-vis stimulus addition apart from buy stocks, which I am surprised TRUMP has not yet suggested. That would ensure the S&P rallies.
- AUD: CPi
I am not so sure this will be a market mover like it usually is given the Covid-19 overriding the economic data. The CHINA data may be more of a market mover for the AUD. We shall see.
- CNY: Manufacturing PMi
Last months numbers were much better than expected. This will be more of a performance indicator.
- CAD: GDP
I am not so sure this will be a market mover like it usually is given the Covid-19 overriding the economic data. Remember this is February’s data.
- EUR: Monetary Policy Statement and Press Conference
It should be an interesting morning for me. The EU council meeting from last week could not agree a way forward on how to act vis-à-vis the Covid-19 pandemic.
Europe is in a mess. Business confidence is at a historic low. Whilst, the single currency shrugged off the bad news into last weeks close, the path of least resistance, in my opinion is lower with the EUR.
The ECB reaction will be interesting, as the politicians seem incapable of agreeing a pathway forward. I have no doubt questions over certain countries debating whether to maintain EUROPEAN UNION membership or not will once again rise to the top.
5.2: CLOSING THOUGHTS:
Finally, as usual…
Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.
Finally, Be GRATEFUL for your wins and COUNT THEM. Be positive, keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
Self-isolate and stay safe...
The Pip Accumulator
BLOG VERSION: #364 FREE NEWSLETTER
DATE: 26th April 2020