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

Saturday Links: 30 January - 3 February 2017

Germany in the Age of Trump -- Project Syndicate -- Commentary by former German foreign minister and vice chancellor Joschka Fischer on the United States' turn inward, towards nationalism and perhaps even isolationism. Focusing on Germany, Fischer outlines how the resulting change in the world order would affect other countries that have relied on America's military might for protection. Germany has been among the chief beneficiaries, enabling it to concentrate on becoming an economic powerhouse rather than a military force that can defend itself in case of a conflict.

Forget Dow 20,000 — the Boom Times Are Over. Is Democracy Next? -- Foreign Policy -- Slightly polemic argument that democracy and liberalism may be in for tough times. Raising interesting questions: Is capitalism paired with democratic values the best model to generate prosperity and security, as has been believed throughout the 20th century, or could China's model of capitalism without democracy prove more successful? Has the past century's economic growth in Western countries really been the result of a good political system or has it merely been a byproduct of population growth? Must the Western world expect declining economic growth and dwindling prosperity now that the growth of its population is slowing down?

What defines a nation’s identity -- The Economist -- From the magazine's "Daily Chart" blog comes this illustration of how much weight the citizens of different countries give to certain factors that determine whether a person is accepted as somebody sharing the same nationality. For instance, being able to speak the national language seems to be the most important aspect for all countries that were part of the poll. Germans and Swedes don't seem to care much about another person's religion. For Greeks sharing national customs and being Christian is apparently a big deal.

Is Steve Bannon the Second Most Powerful Man in the World? -- Time -- Portrait of the man who, in his new role as Chief White House Strategist, has not only helped Donald Trump get elected by shaping the president's narrative of a movement towards a new political order in America, but who might also become one of the most powerful people behind the scenes in Washington. Whether Trump likes Bannon getting this much attention remains to be seen. If Trump really is a puppet, like many of his critics and now Time magazine opine, the question to ask would be: Whose hand is up Trump's ass? Bannon's? Putin's? (Excuse the groaner. That one was irresistable.) Personally, I believe the president is perfectly capable of forming his own ideas though... for better or worse.

Money trumps everything: Foreign investments in the U.S.

Isn't it interesting how pithy comments by Donald Trump set so many wheels in motion so quickly? Apparently, this is even true for countries that are potential targets for criticism by the U.S. administration for being alleged currency manipulators or unfair trading partners. Unbalanced trade is a major issue for Team Trump. China is the prime foe, but countries such as Canada, Mexico, Germany and South Korea, who feature trade surpluses with the United States and some of whose currencies are undervalued relative to the USD as measured by PPP, are in Trump's crosshairs, too.

Perhaps the jawboning is a tactic by Donald Trump, the dealmaker, his opening move in lengthy negotiations that will ultimately lead to more jobs in the U.S. and an increase in exports by American companies. The president's tough stance on trade has borne fruit already: Several American corporations have committed to building factories in the United States instead of Mexico. Now even foreign entities seem to be succumbing freely to Trump's demands: Japan's Government Pension Investment Fund (GPIF), which controls more than $1.1 trillion in assets, is reportedly planning to make substantial U.S. infrastructure investments, and technology giant Samsung Electronics may build a new U.S. factory for home appliances. Trump is selling these headlines as early success stories on his way to fulfilling his "Make America Great Again" campaign pledges. Looking at it more objectively, one must ascertain that these "successes" have been achieved without any resistance whatsoever. Let's see how his tactics hold up once he actually has to negotiate with another country. Trump hasn't really been tested so far, but we already know how badly he reacts under pressure.

DXY Dollar Index 03/02/2017Finally, a quick afterthought relating to Peter Navarro's criticism of Germany: While it is true that German exporters benefit from a weak euro, it has been the ECB that weakened the common currency (indirectly, mind you, because it's not really within its mandate to do so). German politicians as well as Jens Weidmann, president of the Bundesbank, have openly opposed the ECB's lax monetary policy. Hence Navarro's statement that Germany manipulated "its currency" to gain an unfair competitive advantage is hardly justified - you might even go as far as saying it's utter nonsense. My original commentary here.

Open positions as of 03/02/2017 12:38pm CET:
EURTRY short from 4.0524, unrealized return: +1.27%
EURUSD short from 1.0795, unrealized return: +0.55%

Realized YTD return: +0.7% from 2 trades
Total YTD return: +2.52% from 4 trades