Expect nothing new from Yellen today

Fed chair Janet Yellen will deliver her semi-annual congressional testimony before the Senate Banking Panel today. I expect nothing new from her today. It's too soon since the latest Fed meeting on 1 February to change course, and the dollar is too strong to hint at a March rate hike, in my opinion. I maintain my EURUSD short position. By the way, US National Security Adviser Michael Flynn's resignation is a non-event for FX, ignore it.

DXY Index 14/02/2017Open positions as of 14/02/2017 08:45am CET:
EURUSD short from 1.0795, unrealized return: +1.77%

Realized YTD return: +4.34% from 3 trades
Total YTD return: +6.11% from 4 trades

Closing my EURTRY short trade

Since EURTRY failed to break through the 50% Fibonacci retracement at 3.9083 on Friday and RSI is back in neutral territory, I closed my EURTRY short trade at 3.9354 this morning. Having opened the position at 4.0524 on 23 January, this translates into a quick 3.64% spot+carry return. I still like the pair for shorts, but considering the sharp TRY recovery since January I'd rather watch from the sidelines until a new selling opportunity presents itself.

EURTRY Daily 13/02/2017Open positions as of 13/02/2017 08:44am CET:
EURUSD short from 1.0795, unrealized return: +1.51%

Realized YTD return: +4.34% from 3 trades
Total YTD return: +5.85% from 4 trades

Noise isn't news

While my open positions are going well, I have no ideas for any further trades. As usual, lots of noise coming from Trump, but nothing substantial and hence nothing tradable, in my opinion. Don't trade hot air, i.e. ignore what Trump is saying, focus on what his administration is actually implementing.

I'm looking for EURUSD to hit 1.06 today. Ideally, we'll see a re-test of 1.0524 soon.

EURUSD Daily 10/20/2017Open positions as of 10/02/2017 08:54am CET:
EURTRY short from 4.0524, unrealized return: +3.83%
EURUSD short from 1.0795, unrealized return: +1.39%

Realized YTD return: +0.7% from 2 trades
Total YTD return: +5.92% from 4 trades

Kiwi heavy after RBNZ: NZDJPY idea on hold

The NZD fell after the Reserve Bank of New Zealand expectedly kept its benchmark rate unchanged. RBNZ governor Graeme Wheeler highlighted the NZD's strength. The reserve bank regards the NZD as overvalued (i.e. a drag on exports), and as such, the NZD may be the main factor in the decision on when to begin hiking rates. My NZDJPY long idea is clearly looking less attractive as of today. The pair is still on my watchlist, but an imminent trade is unlikely due to downside risk to the NZD.

Regarding the JPY, Shinzo Abe reportedly told Donald Trump he should discuss currency matters at international forums, such as the G20 summit in Hamburg in July, instead of using Twitter. Possible Hamburg accord?

NZDJPY Daily 09/02/2017Open positions as of 09/02/2017 08:31am CET:
EURTRY short from 4.0524, unrealized return: +2.71%
EURUSD short from 1.0795, unrealized return: +1.21%

Realized YTD return: +0.7% from 2 trades
Total YTD return: +4.62% from 4 trades

Watch NZDJPY ahead of Abe-Trump, RBNZ

I'm still keeping an eye on NZDJPY. The pair failed to break through its December 2016 high at 83.741. Currently supported by its 50-day moving average (weak support). I still favour NZD long / JPY short, but Abe-Trump today and RBNZ tomorrow keep me on the sidelines for the time being. The JPY has shown some unexpected strength in January so far.

NZDJPY Daily 08/02/2017The NZD is slowly approaching its 2014 high at 82.01, as measured by the trade-weighted NZD index. After a jump in inflation expectations, the RBNZ may be inclined to comment on the kiwi's strength to avoid an extended move higher. While the Reserve Bank might well fight kiwi strength, I don't expect any attempt to weaken the currency. Benchmark rates likely to remain unchanged tomorrow.

NZD Trade Weighted 08/02/2017Open positions as of 08/02/2017 08:51am CET:
EURTRY short from 4.0524, unrealized return: +1.75%
EURUSD short from 1.0795, unrealized return: +1.3%

Realized YTD return: +0.7% from 2 trades
Total YTD return: +3.75% from 4 trades