Bought Gold and JPY vs USD (From 24-Oct to 31-Oct)

Long Gold was stopped out on 31-Oct

Short USD/JPY was stopped out on 30-Oct


Real-Time AmpGFX – Bought gold and JPY vs USD to re-establish (Mon 10/29/2018 1:01 PM MT)

Bought half unit of Gold/USD at 1227.94

Sold half unit USD/JPY  at 112.35

 

Comment

We are seeing the risk turning against the USD, particularly vs safe havens on the view that the Fed may pause, and the US economy is peaking.

The USD may also be challenged by the mid-term elections, the risk that the Republicans will lose control of the House of Reps, resulting in more discourse in government and less capacity to pass new legislation.

The concern over twin deficits may also return as an issue.  If Trump starts to push on with plans to cut income taxes, it may be viewed as a step too far.

The challenge for the Fed may get tougher as Trump politicises their policy decisions, while at the same time creating a more difficult environment expanding the fiscal deficit and pursuing tougher trade policies.

Global growth appears to be losing momentum with weaker outlooks in Europe and China.  This is contributing to a weaker outlook for the US and causing global equity markets to remain under pressure.

US Trade policy towards China may keep negative pressure on the outlook for Asia exporters, even as China eases fiscal and monetary policy.  US trade policy may also be dampening business investment in the US.

If the Fed does push on with plans to hike, perhaps on signs that wages are accelerating, it may do more to undermine equities than push up yields.

 

Positions

Long half unit of Gold/USD at 1227.94; s/l 1218.43; t/p 1283.83 (Capital at risk 0.40%)

Short  half unit USD/JPY  at 112.35; s/l 113.23; t/p 109.58  (Capital at risk 0.41%)


Real-Time AmpGFX – sold Gold and JPY to square longs (Fri 10/26/2018 11:19 AM

Sold half unit  Gold/USD at 1.233.23

Bought half unit USD/JPY at 112.03

 

Comment

Broadly speaking FX is whippy and lacking direction

Gold and JPY are trading very closely with the equity market in the US on Friday.  While not overly surprising it is indicative of a lack of genuine underlying interest and the influence of short-term trading that threatens to generate undue swings making it harder to hold positions.

The rapid retracement in both gold and JPY in today’s trading is making it hard to remain confident in my view that the USD is starting to react to negative feedback from a global downturn and downshift US rate expectations.

Overall the US economy remains more robust than abroad, and this may counter my argument for a weaker USD.  Basically, the fundamental outlook remains mixed at this time, and I am trading cautiously preserving capital.

Equity markets globally have had a large fall, and it would not surprise to see a bounce even if relatively short term.

I have no positions


Real-Time AmpGFX – bought Gold and JPY vs USD (Wed 10/24/2018 1:54 PM MT)

Bought half unit Gold/USD at 1232.07

Sold half unit USD/JPY  at 112.24

 

Comment

Equity markets appear to be in a significant bear market that reflects deteriorating global fundamentals that may not quickly bounce back.  PMI data in Europe was significantly weaker than expected, fears around financial conditions in China are high, and US trade policy towards China is not expected to be eased, and is still on track to be hardened.  Exports growth in several Asian countries has slowed, and China export growth may fall abruptly in coming months.

For the moment, the US data and Fed comments suggest that they will push on with rate hikes, but the risk is that this expectation will tend to weigh on US equities until the market begins to consider the Fed will pause, and this may then weigh on the USD.

The USD is also facing risks from mid-term elections and Trump attacks on the Fed.

This may undermine the USD against alternative safe havens.

Gold and JPY have strengthened, but modestly so far relative to equities.  Both are not burdened by large long positions.

GFTC positions have only in the last week moved to a long gold position.  Positions in JPY are significantly short.

 

Positions

Long half unit Gold/USD at 1232.07; s/l 1219.63; t/p 1283.83 (Capital at risk 0.53%)

Short half unit USD/JPY  at 112.24; s/l 113.23; t/p 109.58  (Capital at risk 0.45%)

 

 



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Greg Gibbs,
Founder, Analyst and PM
Amplifying Global FX Capital Pty Ltd