Staying USD long

Donald Trump's first address to Congress turned out to be uneventful. His "America first" motto shone through, but he managed not to say anything negative or too dopey. Everybody is still waiting for him to present details on how he is planning to implement the promised tax cuts or provide stimulus to the US economy. I stick with my credo that listening to Trump is a bad strategy; I prefer to watch out for actual implementations of what he promised. I've said this before: Ignore Trump noise. As such I also maintain my EURUSD short position as the overriding narrative of Fed rate hikes combined with economic stimulus and European election risk is still active. Support levels 1.0524, 1.0454 and 1.0341.

EURUSD Monthly 01/03/2017USDCAD looks constructive for a long trade targeting 1.3575. Technical analysis, continued USD strength & Canada NAFTA risk supportive. On my watch list.

USDCADOpen positions as of 01/03/2017 8:50am CET:
EURUSD short from 1.0795, unrealized return: +2.56%

Realized YTD return: +4.34% from 3 trades
Total YTD return: +6.9% 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

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.