My FX Journal - 80% Fundamental 20% Technical

FXX

Experienced member
1,138 187
Very helpful post!
It's prompted a few thoughts, cheers

It's great to hear you thoroughly enjoy it. That's certainly one of the keys to longevity! :) Good luck with the journey!


I have been trying to understand the cycles of economies and once I have that understanding, I can then identify the stage of that cycle that they are in. I have already compiled a list of the interest rates of each of the currencies I trade and what they were previously. This should be giving me an indication as to the direction or intent. I have also identified the highest and lowest rates in history for this currencies but I've not yet began to look into why some were exceptionally high and why some have a strong history of keeping theirs negative. Once i've done this i'll move on and do the same with other key aspects, such as GDP, inflation, etc..

I've definitely dug in for the long haul
Don't bother with historical interest rates as an indication of future intent. Focus your attention on the central banks for direction. They will not only provide subtle clues as to their intentions to raise, drop , or be neutral. They will also state exactly what they are looking at to determine their next course of action. Read their statements and follow speeches.
 
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Nowler

Established member
786 58
Don't bother with historical interest rates as an indication of future intent.
Of course.
I just want to know why rates would have been so. Curiosity :)

Focus your attention on the central banks for direction. They will not only provide subtle clues as to their intentions to raise, drop , or be neutral. They will also state exactly what they are looking at to determine their next course of action. Read their statements and follow speeches.
Will do (y)
 

Brumby

Established member
593 135
Don't bother with historical interest rates as an indication of future intent. Focus your attention on the central banks for direction. They will not only provide subtle clues as to their intentions to raise, drop , or be neutral. They will also state exactly what they are looking at to determine their next course of action. Read their statements and follow speeches.
The BOE rate decision on Thursday will be an interesting proposition. Currently the probability of a hike is almost a given at 89 % (source :Bloomberg).

Several trade scenarios I can think of :
1)Buy into the event and then sell on the fact

2)A price pop and reverse (buy the rumor sell the fact). An opportunity to fade.

3)if forward guidance is dovish - clearly a sell

4)If BOE retains rate - Just sell and don't even wait for a pullback.

What is your current thinking in approaching the rate decision?
 

FXX

Experienced member
1,138 187
The BOE rate decision on Thursday will be an interesting proposition. Currently the probability of a hike is almost a given at 89 % (source :Bloomberg).

Several trade scenarios I can think of :
1)Buy into the event and then sell on the fact

2)A price pop and reverse (buy the rumor sell the fact). An opportunity to fade.

3)if forward guidance is dovish - clearly a sell

4)If BOE retains rate - Just sell and don't even wait for a pullback.

What is your current thinking in approaching the rate decision?

I am thinking of selling into the fact. Everything about sterling is dovish even this upcoming rate hike. Over the weekend there were some stories out about businesses begging the chancellor to not hike rates.

"Businesses have issued last-ditch appeals for the Bank of England not to raise interest rates this week, claiming a combination of weak growth and higher borrowing costs would tip struggling retailers into insolvency.

Mark Carney this weekend faced pressure from business lobbies to keep rates at historically low levels to support consumer spending and company investment. The Bank is widely expected to raise rates for the first time in a decade on Thursday.

The British Chambers of Commerce warned that a rate rise could be the “tipping point” that crashes business confidence and investment."


“It is pretty extraordinary, given that economic conditions are slowing, that we are talking about interest rate rises,” said Suren Thiru, a BCC economist.
 

FXX

Experienced member
1,138 187
notes on voters for BOE
 

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FXX

Experienced member
1,138 187
“I’d prefer to go into the meeting” with a short position on sterling, said Steven Barrow, head of currency strategy in London at Standard Bank. “There is a reasonable enough chance they don’t raise rates, we’ll have to see what comes out from the statement the bank puts out.”
 

FXX

Experienced member
1,138 187
fyi for those interested.

FireFox (haven't tested other browsers) has an alerts feature that prompts when you access a site that offers this. I did this with the tradingeconomics website and have notices the data releases are near instant (faster than forex factory at least)
 

Brumby

Established member
593 135
Long EURGBP @ 0.88187
A report that came out in Bloomberg that got me thinking.

[/IMG]

There is currently a 100 basis spread between 2 year UK and German yields. A rate hike by BOE will further cause a repricing in cable in order to ensure that this spread doesn't drift too far apart. This is in my view a current disconnect to the market's 89 % probability pricing in of cable's rate hike. I think somewhere in the current valuation is a risk premium on cable due to Brexit which is muddling valuation.
 

FXX

Experienced member
1,138 187
A report that came out in Bloomberg that got me thinking.

[/IMG]

There is currently a 100 basis spread between 2 year UK and German yields. A rate hike by BOE will further cause a repricing in cable in order to ensure that this spread doesn't drift too far apart. This is in my view a current disconnect to the market's 89 % probability pricing in of cable's rate hike. I think somewhere in the current valuation is a risk premium on cable due to Brexit which is muddling valuation.
tradingview.com allows you to overlay and it makes for an interesting view and also overlays economic releases (the round icons at the bottom). I am a bit concerned about EU CPI reading shortly given that yesterdays Germany reading was a bit soft. I might cut the trade if the EU data breaks expectations to the downside.
 

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FXX

Experienced member
1,138 187
fyi for those interested.

FireFox (haven't tested other browsers) has an alerts feature that prompts when you access a site that offers this. I did this with the tradingeconomics website and have notices the data releases are near instant (faster than forex factory at least)
The releases popped up about 2 seconds before Ransquawk even started speaking!!!
 

Brumby

Established member
593 135
The releases popped up about 2 seconds before Ransquawk even started speaking!!!
The data will naturally precede the squawk because it is read from the data. I use a free squawk service which from observation is about 30 secs behind the Reuters number.
 

Brumby

Established member
593 135
was it this

"BoC Governor Poloz says expects rate hike to hit harder than in the past and that the central bank is most concerned how rate hikes will impact highly-indebted consumers, also says if economy continues to evolve, less stimulus is needed in future"
Maybe a long USDCAD trade opportunity here. In a 27/10 radio interview Poloz was basically dovish in tone. It is unlikely in the BOC statement in a few hours that tone would have changed over a few days.
 

FXX

Experienced member
1,138 187
Maybe a long USDCAD trade opportunity here. In a 27/10 radio interview Poloz was basically dovish in tone. It is unlikely in the BOC statement in a few hours that tone would have changed over a few days.
post data, looking to get in on a retrace. are you in?