Daily thread to exchange ideas and to share your thoughts
Good day, everyone! Hope you’re all doing well as we get things going on the session. It’s mostly a case of souring risk sentiment that is dominating trading to start the day and that’s very much reflected in the strongest and weakest performing currencies in the major bloc.
The yen and dollar stay bid with equities holding weaker at the start of the European cash equity market open. Meanwhile, the kiwi is facing strong pressure to the downside as softer sentiment weighs on the currency.
The loonie is dragged lower as oil prices are slipping too while the pound is also trading near the lows for the day at the moment, not helped by the Brexit quagmire as we may have to wait until Monday for fresh developments.
The euro is proving to be somewhat resilient as it goes toe-to-toe with the dollar so far today. EUR/USD sits in a narrow 30 pips range so far, with buyers continuing to try and hug the 1.1400 handle.
The softer risk sentiment is the key theme in markets now but be wary of that ahead of US trading later. As we get more earnings releases, there could be potential for stocks to turn around and Wall St may very well be the catalyst for that to happen.
I’m out of any trades now after my remaining AUD/USD long position from two weeks back was stopped out yesterday. The change in risk sentiment this week certainly warrants a consideration for a turnaround in risk trades but I’ll be looking towards the yen for that if anything (and if I wasn’t going off for a short break).
I reckon the trading landscape now rewards those who adapt to changes in the risk narrative more than anything else, unless you favour trading the EUR/USD range and sterling volatility from Brexit. Otherwise, it’s very much a case of waiting for breaks on the technical chart and going with the risk narrative before switching it up on the next shift in focus in the market.
Then again, who am I to say? We’re only three weeks into the new year. 😀
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