FX Trading Ideas for the Week | Oct 07 - Oct 11, 2019

By Aiza Belle | 08 October 2019 | | Share:

It's funny how the main drivers of all these crazy world events mirror the ouroboros.

Almost forgot that it's Inktober season once more as well.

Not much risky economic news event this week-- just oil, US CPI and last month's Fed minutes, and UK's manufacturing. So the main focus of the market is still the US-China trade "talks", with Trump following up on his plan last week to limit capital outflow to China by blacklisting 28 Chinese tech companies, and making that now look like a punishment for China's human rights violations against Muslim minorities.

There's also a "rumor" that instead of one more Fed rate cut this year, there will be 2: 1 this month and the other 1 by December -- given that the additional tariffs on China will be imposed by December, textbook-wise, more rate cut is due.

Unfortunately, instead of US depreciating as expected (and as what Trump wanted), it's even moving higher -- DXY might breakout past 100 instead of my initial expectation of it bouncing down from that psychological level.

Why?

Because as these trade "talks" and recession fears worsen, the whales treat cash (like gold and even cryptos) as safe haven, and that includes the US Dollar.

Aside from US-China trade play, the markets are also currently focused on Brexit. Here's the latest news as of this writing, and a summary of what's happening just in case you're also confused about this Brexit drama like me.




From what I understand so far, the UK (particularly the MPs) wants a "soft" Brexit -- leaving the EU but demand some special treatment instead of being treated like the rest of EU outsiders with customs checks. Doing so will also soften the blow to the British economy.

PM Boris and Northern Ireland on the otherhand, are like F it. We're out? We're out. No one foot back at the EU door.

Before you proceed, make sure to read and understand this Disclaimer here and TRADE AT YOUR OWN RISK.

I. FX Trading Ideas for the Week

AUD - Wait

Despite still being bullish technical-wise in the short-term for AUD, it's better to wait in the sidelines for now given the risks of getting whipsawed from all these US-China trade spats (unless you're using the Volfefe index very well-- cheers!🍷 lol). 

AUDCAD - Continue short-term buying up to 0.91, else wait for trend confirmation
AUDCHF - Wait for bullish confirmation past 0.67450 before buying
AUDJPY - Wait near 72
AUDNZD - Wait for bullish continuation near 1.07 before buying
AUDUSD - Wait near 0.675
EURAUD - Wait to consolidate back to 1.60 or lower before buying 
GBPAUD - Wait for better entry near 1.81 then buy

CAD - Buy Soon

Aside from oil being oversold, expecting its price to rise again as demand increases during colder autumn and winter months soon. Forecasted US oil inventory is also lower than previous period. Need to be careful though for any whipsaws brought by US-China trade spats and any unexpected news from OPEC and upcoming US oil inventory figures release.

CADCHF - Wait near 0.745
CADJPY - Wait for confirmed reversal near 0.80 or lower before ounter-trend buying
EURCAD - Wait near 1.46
GBPCAD - Wait for confirmed reversal near 1.62-1.63 then buy
NZDCAD - Wait near 0.84
USDCAD - Wait near 1.33
AUDCAD - Continue short-term buying up to 0.91, else wait for trend confirmation

CHF - Wait

Still the same as last week-- currently bearish overall on CHF in the short-run but need to be weary of any increased trade tensions and recession fear as CHF is also a safe haven currency and therefore fundamentally bullish.

CHFJPY - Wait near 107.8
EURCHF - Wait neat 1.088
GBPCHF - Wait for better entry at 1.2 or lower then buy
NZDCHF - Wait near 0.625
USDCHF - Wait near 0.99
AUDCHF - Wait for bullish confirmation past 0.67450 before buying
CADCHF - Wait near 0.745

EUR - Wait

Despite the previous "rumored" recession in the Eurozone (more like recession fears only instead of the actual thing), and possibility of EUR to have bullish bias IF a no-deal Brexit will happen, it's best to go wait and see mode for now especially with all these US-China trade "talk" news and EUR price action showing mixed biases too.

EURGBP - Wait for confirmed reversal around 0.90-0.905 then sell
EURJPY - Wait near 117
EURNZD - Wait near 1.738
EURUSD - Wait near 1.09
EURAUD - Wait to consolidate back to 1.60 or lower before buying 
EURCAD - Wait near 1.46
EURCHF - Wait neat 1.088

GBP - Buy

GBP recently experienced some drop after Boris no-deal Brexit plans and Northern Ireland vetoed Boris opposition and claiming his plan doesn't violate the Good Friday Agreement. The MPs now have come up with a new law, the Benn Law, which forces Boris to extend Brexit until January 2020.

The only way to end this Brexit drama is for the MPs themselves to negotiate a deal with the EU instead of repeatedly burning their acting PMs and requesting for further delays until they can have an election and pick another scapegoat they can use as a "front" so they don't embarrass themselves not just from the EU but also the world.

I'm not sure if Boris has enough power to implement no-deal Brexit despite being repeatedly choked by the MPs. But if the MPs have the stronger hand overall , then expecting Brexit to be delayed again which is bullish overall for the GBP.

Of course the EU, particularly Merkel can just say "No" to another Brexit delay. But from what I heard so far, the EU itself doesn't like the complicated Northern Ireland border issue, so definitely a Brexit delay is in the works.

GBPJPY - Wait for better entry near 130 or lower before counter-trend buying
GBPNZD - Wait near 1.935
GBPUSD - Wait for  better entry near 1.20 before buying 
EURGBP - Wait for confirmed reversal around 0.90-0.905 then sell
GBPAUD - Wait for better entry near 1.81 then buy
GBPCAD - Wait for confirmed reversal near 1.62-1.63 then buy
GBPCHF - Wait for better entry at 1.2 or lower then buy

NZD - Buy

Still the same as last week, still bullish on NZD overall given how underrated its economy is as mentioned in last week's post.

NZDJPY - Wait for confirmed bullish reversal near 67 then buy
NZDUSD - Wait near 0.63
AUDNZD - Wait for bullish continuation near 1.07 before buying
EURNZD - Wait near 1.738
GBPNZD - Wait near 1.935
NZDCAD - Wait near 0.84
NZDCHF - Wait near 0.625

JPY - Sell (short-term)

Still the same as last week, expecting a short-term reversal soon. However, if trade talk and recession fears escalate, continue being bullish overall in the Yen and just quickly trade and get out of any short-term bearish yen opportunities.

USDJPY - Wait near 107.8
AUDJPY - Wait near 72
CADJPY - Wait for confirmed reversal near 0.80 or lower before ounter-trend buying
CHFJPY - Wait near 107.8
EURJPY - Wait near 117
GBPJPY - Wait for better entry near 130 or lower before counter-trend buying
NZDJPY - Wait for confirmed bullish reversal near 67 then buy

USD - Buy Soon

Given the escalating trade talks and recession fears, and rumored rate cuts, expecting DXY to finally reach 100 at least and for USD pairs to rise in the medium-term. However in the short-run, it's best to wait in the sidelines instead.

AUDUSD - Wait near 0.675
EURUSD - Wait near 1.09
GBPUSD - Wait for  better entry near 1.20 before buying 
NZDUSD - Wait near 0.63
USDCAD - Wait near 1.33
USDCHF - Wait near 0.99
USDJPY - Wait near 107.8
XAUUSD - Wait near 1500
XAGUSD - Wait near 17.7
XTIUSD - Wait for confirmed reversal at 51.5 then counter-trend buy
USDZAR - Wait for confirmed reversal near 15.5 then counter-trend sell
USDMXN - Wait near 19.5

Ouroboros by AndreeSalazar