Fed on track to hike: USD long

Expectedly, Yellen didn't provide anything enlightening yesterday. The market realized the Fed is still on track to hike rates this year, with March being a "live" meeting (although the hike probability is not high by any means for that meeting). Perhaps traders are still remembering 2016 when the Fed didn't hike as often as had been expected. Traders should forget all about 2016! The Fed entered its rate hike cycle, and it will hike again. Traders should also pay less attention to Trump statements. Let's wait for actual implementations of his promises instead. Regarding his USD rhetoric, it's meaningless. If his administration will deliver on his stimulus promises, which I think it will, that will be inflationary and ultimately positive for the US economy, i.e. it will give Yellen & Co. even more reason to continue hiking rates. It will also be important for the Fed to prove it is an independent institution; the US president has no business pressuring his nation's central bank. Everything is playing into the USD long story at the moment. Don't let Trump noise fool you into thinking anything else.

EURUSD Short 15/02/2017

Quick look at NZDJPY: After I chickened out of putting on a NZDJPY long trade post-RBNZ, the pair is looking constructive again. Trendline support still valid. On hold but definitely interesting.

NZDJPY Daily 15/02/2017Open positions as of 15/02/2017 10:19am CET:
EURUSD short from 1.0795, unrealized return: +2.37%

Realized YTD return: +4.34% from 3 trades
Total YTD return: +6.71% 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

European elections: Anxiety now!

Only a few days ago nobody was looking at Europe, despite the many challenges faced by the euro area this year. All eyes were on Trump, the US dollar fell after negligible comments made by the president and his staff of economic advisers. What a difference a weekend makes! It's Tuesday, the EUR is weakening for a second day in a row and miraculously the whole narrative by market watchers has changed. Analysts are highlighting the risk from European election outcomes that might endanger the euro zone, possibly even the European Union. It is as if market commentators woke up and, in unison, had the same thought: Anxiety now! The switch has been flicked, USD risk-off has been turned into EUR risk-off. It's a new week, so let's have a new story to tell. To be frank, I'm fed up with researchers and self-proclaimed journalists (who are doing a lot of things these days, but definitely not serious journalism) wanting to explain to me why an asset has moved in a certain direction after the fact. Instead, they should be separating the important news from all the noise (mostly coming from Trump these days), study the evidence revealed by their research and then make appropriate deductions about the state of the market as well as implications this might have for the future. Too often analysts change their opinion even after minuscule changes in asset prices, instead of showing any sign of confidence in their own research. How can this type of market analysis be taken seriously? Don't even get me started on journalism... The Economist aside, there's little I can read nowadays without having a total freak-out. Anyway, let's not digress: I'm standing firmly by my EUR short / USD long call.

EURUSD Daily 07/02/2017Open positions as of 07/02/2017 08:56am CET:
EURTRY short from 4.0524, unrealized return: +2.75%
EURUSD short from 1.0795, unrealized return: +1.05%

Realized YTD return: +0.7% from 2 trades
Total YTD return: +4.5% from 4 trades

BoJ holds stimulus, JPY little changed

The Bank of Japan kept its stimulus package unchanged and only marginally adjusted its inflation forecast. BoJ governor Haruhiko Kuroda (still enjoying himself in Davos) said it was "too early to discuss an exit strategy". Although inflation is still well below the central bank's 2% target, the recent bout of JPY weakness has taken pressure off Kuroda & Co. to do more. Uncertainty of the effects from Trump's policies may also have played a role in the BoJ's decision to take it slowly. The JPY is little changed. I expect more JPY weakness going forward, NZDJPY long being my favoured trade idea. Looking for breakout above 83.75.

NZDJPY Daily 31/01/2017Open positions as of 31/01/2017 8:52am CET:
EURTRY short from 4.0524, unrealized return: +0.36%

Realized YTD return: +0.7% from 2 trades
Total YTD return: +1.06% from 3 trades