For a PDF copy of this edition click here.
A difficult environment here for breakout/momentum traders in all asset classes as we have a very headline-buffeted environment in the wake of Trump’s renewal of tariff threats on China over the weekend. The deadline of noon on Friday sets up an important event risk for the ensuing action, which has already produced a number of direction changes since the ugly open on Monday.
FX traders may find it difficult for trades to sustain a direction, though a sustained “risk-off” period through Friday could finally see a more notably breakdown in JPY crosses and a weakening trend in commodity currencies and emerging markets (the latter possibly frustrated by China’s defense of the CNY level). Breakout signal tracker
The original signal upon which our USDCAD trade was based would be expiring today, but since the trade is still in good shape and survived a test of support, we will keep the signal on provided a new breakout to the upside unfolds ahead of the weekend. The USDRUB long signal has oddly been held back, which is a surprise given the backdrop. Also, the EURAUD long signal was held back by the Reserve Bank of Australia's failure to cut, but this could change if we continue to see risk-off on US-China trade concerns.