So, last night’s BOJ decision was a complete mess.
Missed badly on expectations – the BOJ practically didn’t do anything to weaken the Yen.
Yet, dollar yen only really started to feel the heat after the dismal US GDP report today – which saw the dollar under pressure for the rest of the day.
Hmmm, FX is so hard to trade right now…
But it’s fun 🙂
Top Ideas for August
1. Short GBPUSD to 1.28
This is a fun one to trade. BoE should cut interest rates and ease, whilst the dollar remains relatively strong compared to Sterling. Above 1.35 and this trade is invalid.
2. Short EURUSD to 1.09
A brilliant time to get in on this trade, as the end of July saw some nice dollar selling due to a soft GDP and end of month flows into EURGBP. The fundamental MP divergence should send this pair right back where it belongs – under 1.10.
3. Short NZDUSD to 0.69
A fantastic time to short this at 0.71-0.72. RBNZ are expected to cut rates in August.
4. Short AUDUSD to 0.72
RBA are expected to cut rates. This is bearish for the Aussie dollar.
5. Short SPX500
This index has gone way too high, too quickly. There are multiple divergences on a 4H chart. It needs a correction. BOJ didn’t ease as expected – this is bearish for SPX. Any hints of a rate hike will also cause the SPX to drop.
6. Long USDCAD
Oil is still facing a huge oversupply. Some end of month profit taking has somewhat strengthened the Loonie, but as oil drops below $40, this pair should rocket.