This week saw plenty of turbulence in currency markets as forex traders adjusted positions heavily after several key developments. We started rather quiet on Monday as well as Tuesday without any major market moving surprises and more of a continuation trade of the previous week. Forex markets as well as equity markets hit turbulence on Wednesday.
Ben Bernanke’s speech did not add as much volatility as usual, but the release of the FOMC minutes from the prior meeting took financial markets by surprise as voting members considered to take the food of the gas paddle and stop their unlimited supply of monetary stimulus. The sole reason for the much stronger than anticipated rally in global equity markets was the pledge by central banks to supply the markets with unlimited stimuli. Equity markets tanked after the release and currency markets became more volatile.
Thursday saw the Nikkei 225 drop 7.32% after China reported that its manufacturing sector contracted for the first time in seven months. Yen related currency pairs saw a major reversal trade on Thursday and collapsed further on Friday after the Bank of Japan stated that they have supplied enough stimuli for the economy. We expect the weakness to continue next week, both in global equity markets as well as Yen crosses. We also expect a stronger Australian Dollar amid a short covering rally.
Overview of profits for the week which ended May 24th
- USDJPY: 275 pips
Total: 275 pips
Monday, May 20th
AUDNZD Long Recommendation
We recommended a long position at 1.1990 with a take profit target of 1.2150 (AUDNZD Support Zone Breakout). This was an add-on trade to a previous long position we took on April 18th at 1.2190. This currency trade currently carries a floating trading loss of 319 pips. This represents an increase of 181 pips compared to last week. We will maintain our take profit target of 1.2150.
Tuesday, May 21st
AUDCHF Long Recommendation
We recommended a long position at 0.9475 with a take profit target of 0.9675 (AUDCHF Grinds out Support). This currency pair continued its downward movement and we adjusted our second entry level to 0.9275 which was triggered on May 24th. This currency trade currently carries a floating trading loss of 239 pips. We recommend a stop sell order at 0.9200 and adjusted our take profit target to 0.9425.
Wednesday, May 22nd
GBPUSD Long Recommendation
We recommended a long position at 1.5075 with a take profit target of 1.5275 (GBPUSD Last Call). This was an add-on trade to our existing two long positions we took on January 2nd as well as January 21st at 1.6320 and 1.5875 respectively. This currency trade currently carries a floating trading loss of 2,646 pips. This represents an increase of 78 pips compared to last week. We have adjusted our take profit target to 1.5725.
Thursday, May 23rd
USDCAD Short Recommendation
We recommended a short position at 1.0350 with a take profit target of 1.0200 (USDCAD Due for Correction). This currency pair has moved lower and currently carries a floating trading profit of 29 pips. We will maintain our take profit target of 1.0200.
Exit from trades of previous weeks
USDJPY Short Positions
We closed both our open USDJPY short positions on May 24th for a profit of 275 pips as our take profit target of 100.75 was triggered.
We had a total of four trading recommendations this week; two were new trades and currently carry a floating trading loss of 200 pips while two were add-on trades which currently carry a total floating trading loss of 2,965 pips. We closed both our open USDJPY short positions for a total profit of 275 pips which also totals our weekly profits.
In addition to the two new trades as well as two add-on trades we also carry seven positions from previous weeks. We have one open NZDUSD long position which currently carries a floating trading loss of 93 pips. This represents a decrease of 29 pips compared to last week. We seek to add-on to this trade below 0.8085 this week and adjust our take profit target to 0.8235.
We have two open GBPCHF short positions which currently carry a floating trading loss of 784 pips. This represents a decrease of 632 pips compared to last week. We have adjusted our take profit target to 1.4285.
We have one open EURUSD long position which currently carries a floating trading profit of 82 pips. This represents an increase of 96 pips compared to last week. We have adjusted out take profit target to 1.3000.
We have four open EURGBP positions, three short positions and one long hedge, which currently carry a floating trading loss of 1,422 pips. This represents an increase of 265 pips compared to last week. We will maintain our take profit target of 0.8275.
We have two open EURAUD short positions which currently carry a floating trading loss of 754 pips. This represents an increase of 428 pips compared to last week. We have adjusted our take profit target to 1.3000.
We have one open AUDUSD long position which currently carries a floating trading loss of 280 pips. This represents an increase of 78 pips compared to last week. We seek to add-on to this trade below 0.9630 this week and adjust our take profit target to 0.9830.
We have one open AUDCAD long positions which currently carries a floating trading loss of 90 pips. This represents an increase of 50 pips compared to last week. We seek to add-on to this trade below 0.9940 this week and adjust our take profit target to 0.9990.
Our total floating trading loss for the week stood at 6,506 pips. This represents an increase of 48 pips or 0.74% compared to last week. We expect a strong finish to the month of May which should see our floating trading losses decrease by at least 500 pips. GBP related trades account for 4,852 pips or 74.58 % of all floating trading losses and are down 289 pips or 5.62% compared to last week. AUD related losses account for 1,682 pips or 25.85% of all floating trading losses.
We hope you enjoy your weekend and that we will see you back on Monday.