Good morning. Well its not really that good a morning as I see that the green trade i left yesterday is now in the red, but I had no intention of closing it yesterday as I felt there was more profit to be had (we will come to this point later.)
Anyway, as many of you no doubt know, against our expectations, the EURO rallied yesterday like a rocket after Mario Draghi and co left the QE amount unchanged. This caught the market by surprise given Mario’s speeches recently and his use of very direct language “we will do everything we must”. The market reaction clearly shows that many of us got the complete wrong idea from him. Those of you who claim you knew this would happen, 99.9% of you did not and got lucky with those month old positions, let us be honest here. You did not outwit all these respected economists with you talent, it was purely by mistake.
Anyway Mario’s actions bring up two questions:
1.) Did he fail to communicate effectively with the public?
2.) Did he mean what he said but then fail to win over the rest of the members?
Whichever of the two it is, one thing is clear. This is the first time Mario has failed to deliver on his words and in future I suspect the markets may not take his speeches for granted as they have in the past. In short, his words on monetary policy will not be seen as absolute anymore. Bear this in mind when listening to his future speeches.
Anyway onward to today and why we left the NZDUSD sell open. Quite frankly, I remain bullish on the US employment data (NFP’s) and intended to leave this trade open till this evening to capitalize on this. In addition while the trade is moderately red, it poses no danger to our account and is not in danger itself at this time.
Why I am i bullish on NFP’s, well there are a number of reasons.These include Comments by Yellen that 100K jobs would suffice the labour market at the moment. Bear in mind that today’s data is expected to show in the region of 200K and with productivity meeting expectations, it is not likely to be far off.
On the back of this I have opened a EURGBP sell. This is because I feel EURUSD pair will fall more given strong US data than the GBPUSD and I intend to benefit on the EURGBP cross falling as a result. In addition I have an order in to buy the USDJPY should it reach adequate levels before the NFP’s.
Presently, the account’s equity is up 2.8% this week, which is not bad considering our current red trades and the fact that everything this week went against our expectations. It is actually quite good that we are still in profit for the week at this point and I am proud that I can attribute that to sticking to my strategy and not giving in to a dozen or so odd people who copied yesterday and then left moaning after I refused to open more trades for the sake of opening trades. Its always amazing that certain people come late to party and then expect 1200 others to change their beat to suit them. I guess these guys must feel important in their own way 🙂
As always good luck to everyone today,