Good morning. On the weekend.
I’m gonna give a summary of the market.
What happened this week?
Well, for Friday. Boy, it was ALL safe haven buying.
But for the week in total.
- NZD was the biggest mover. And it was a sell -11.65%.
- USD was the most bought +9.33%.
- Safe havens all the way on top of the risk-on currencies.
But, what does this mean in the context of this month?
Those are the running %'s since June 1st. We can plainly see that this week was the flip of last week. Complete opposite. The Comms were on top dominating the safe havens, which were on the bottom of the pack, when the month first got rolling out. But something happened just after NFP (which was the last major economic indicator event).
But something was consistent throughout the month so far. Guess what (who) that is?
Sure, the big boys had a great day yesterday, but you also need to know that the EUR have been the most bought currency this month, so far. But, look at the %'s. They are all telling. Someone could have in their mind that the USD and the JPY are on a tear, after what happened yesterday. But where are they sitting after just 2 weeks? About dead even on the month. Right? So basically, nothing to sneeze at. They just retraced what was lost to them during the previous week.
We don’t know what’s going to happen next week. Honestly. But we should at least know what’s been happening. So therefore, let’s go back a little, on the weekly time frames, to around March.
I’ll help you here. What’s been the trend, leading up to this past week? It’s been safe haven buying, mostly lead by the JPY (purple). The USD (white) and the JPY, for the most part, follow each other. And the Swiss (pink) has been climbing along with them also.
Now the Comms (AUD, NZD, CAD) have been on the decline. Since Mar for the NZD, and April for the AUD. Now the CAD runs their own game. Their not always tied to the other 2. And same goes with the Pound.
Look at just the NZD and the AUD. You can see that last week was a very good buying week for the NZD. But…was it for the Aussie? Nope. They were not in sinc. So that tells me that the risk-on wasn’t in full bloom. Although CAD did catch a bid. But, in my mind, a full risk-on buying sentiment consists of all 3 of them going one way. And the same for risk-off buying. All 3 safe havens should be moving in the same direction. Although the Yen is always the most dominant, with that. Therefore, just watch the purple if you want to know whether there’s risk-off buying. And it’ll be that much stronger when the Swiss joins in.
Look. You simply can’t sum up the market in either risk-off or risk-on. It’s not always black and white. Cause you have to remember each currency can be traded with the mindset of how it’s doing all by itself. Like because of the condition of it’s economy, etc… But also, these currencies can be traded with the mindset of how they are relating to each other, meaning not all by itself. Like the differences between their interest rates, whether safe haven protection, etc. So basically, there can be so many different reasons. That’s why there will be divergences of some magnitude. But usually there will always be some sense of whether there’s more of a risk-on or more risk-off reason. If there is anything that can be certain in the market (and that’s a bold statement), it would have to be whether there is more risk-on or more risk-off. That is a reason for money to go somewhere. Think about that.
That’s all good and nice. I know.
But what do we have?
- Well, we are in a risk-off buying landscape going into the summer months.
- We are heading into the last month of the quarter. Vacation time is coming.
- This quarter has all been mostly risk-off buying. Will this continue to the end of it?
- Will we see any kind of change for the summer season?
Well, I think these are some questions and points we need to keep in mind. See, knowing these things give you some kind of edge in the market. I, myself, can’t imagine not knowing these things. If you’re a trader, you need to know the environment you are playing in. You can be a little more smarter than those who just are looking at lines on a chart trying to guess which way it’s gonna go next. Believe it or not, there are reasons why it moves the way it moves. And I don’t think it’s all that much of a secret.
Ok. I’m done with that nonsense.
Make it a good weekend.
MY DAILYS.xlsx (1.6 MB)