Geopolitics dominating currency direction


Today’s focus is on the JPY safe-haven trade

We all know geopolitical issues are not ideal trading conditions but unfortunately, sometimes that’s all you have to work with. Right now we’re caught up in cyclone Trump as he picks trade fights with China and joins the international chorus against Russia’s involvement in Syrian chemical attacks.

The U.S.-China trade dispute outweighed a U.S. payrolls report that showed fewer job gains than expected, as well as generally upbeat remarks on the economy from Federal Reserve Chairman Jerome Powell. Although you could argue the USD’s mild reaction to weaker employment data was countered by Powell’s comments.

The fact is traders are watching the ‘safe haven’ trade (equities) for trading opportunities, and that’s just downright ‘not the norm’.

There’s not a lot of high impacting data this week with US CPI data Wednesday the major focus for traders.

Outside of that, we have to negotiate the random comments from various political entities: China, Russia & of course the US (Trump administration).

To make cash in these markets make sure you’re trading with the overall trend & also ensure you have tight trailing stops as the markets can literally flip at any time.

Understand the madness – Trump will generally only make comments during the North American session. That’s when he is in control and get’s most domestic airtime, so make sure you keep a close eye on US equity indices movements.

And make sure you concentrate on your trendlines. Now is not the time to start scalping mid-range. Be patient and wait for the trade setups!

Check our Next Best Trades Watchlist for full details as to which specific pairs we are focusing on.

Asian Session

The Nikkei is due to open -230 & that’s the best tangible instrument we can monitor to see how the market reacts to the weekend Syrian chemical attacks.

We also have the Japanese Current account data due & that may add some spice to the Nikkei should there be some variance.

If you’re not sure what I’m talking about, now is a good time to go through the Advanced Pro Trader Course – Trading the Asian session – Nikkei 225 & Yen.

European Session

We don’t have a lot of ‘market moving’ economic data scheduled so the European currencies should be drifting sideways as they have done the past few weeks.

Beware comments from UK PM May regarding Russia as well as don’t forget about Brexit. All up there isn’t a lot to get excited about and I wouldn’t be surprised to see the majors trade sideways.

North American Session

The market will be waiting for Trump to follow up weekend comments regarding both China & Russia.

Once again that’s not an ideal situation to be staring at your screens waiting for comments that can be (and probably will be) ambiguous.

The Bank of Canada’s ‘Business Outlook Survey’ is the best ‘lead in’ data release but it will more than likely be overshadowed by the various geopolitical events in the market.

Technical Set-Up – What’s Happening with the Majors on the Daily Charts

It’s always good to keep a perspective of the long-term trends in play but even more so when geopolitical events start dominating currency pair direction.

You can very easily get caught up in the short term price action around the geopolitical events and that can lead to overtrading, so make sure you take the time to know which way the currencies are going, or if in fact, they are just washing around in big sideways ranges.

Check our Daily Analysis for detailed analysis of the Major currency pairs.

Today’s Fundamental Drivers

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance into your daily preparation.

Your Daily Analysis needs to become habitual – For full guidance on our daily routine click here.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your sucess: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behaviour will take over).

Tune up your charts & get ready to trade…..see you in the 247 Trade Zone!


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