Whilst I place great importance on ‘technicals’, all of my trades are placed with an understanding of the fundamental cause behind a currencies movement.
This requires knowledge of underlying economical data and each currencies correlation with the ‘risk environment’.
I will be posting regular thoughts on the current narrative and the best (in my view) potential trade opportunities.
Please feel free to add your own thoughts or questions…
Best wishes, John
Thursday 30 January.
There has been a lot of information to take in this week. And currently, I find myself in a little bit of limbo in terms of having confidence in the direction of the currencies.
Risk sentiment stabilised following the Deepseek led tech selloff, but the ‘risk currencies’ didn’t follow suit.
The BOC delivered a 0.25bp rate cut, which was largely priced in and the CAD ended the day where it began, despite ‘still relatively dovish’ rhetoric.
The FED held rates as expected but did sound hawkish, keeping the higher for longer US rates narrative in tact. Perhaps to the dislike of Mr Trump, who last week was suggesting faster rate cuts. The USD didn’t strengthen as you would ‘think’ it would following a hawkish tone. US GDP data came in soft (bad news is good news) but jobless claims reported lower (backs up higher for longer).
The ECB cut rates and Similar to Canada, sounded fairly dovish. But the EUR hasn’t weakened.
Company earnings continue to remain robust, although cautious forward guidance from Microsoft has hit the MSFT price.
All in all, whilst on the whole, market sentiment remains tentatively positive, tariff threats, deciphering the FED rate cut path, uncertainty surrounding the BOJ and any other ‘potential Trump volatility’ appear to be muddying the water.
Which is a shame given by the end of last week I was hopeful of a calmer, more straightforward environment. But we can only follow our instincts, which for now, means sitting and waiting for clarity.
Perhaps Fridays PCE data will nudge everything into place.
Post PCE thoughts.
In line with expectations’ PCE data shouldn’t rock the boat and keep the risk environment fairly positive. Combined with more ‘soft data’ from Canada (GDP). Plus. Continued tariff threats aimed at Canada. I’ve entered AUD CAD long for a Friday afternoon 1.2:1
It’s essentially a CAD short trade based on continued negativity coming out of Canada.
I’ve chosen the AUD to long due to the ‘mildy positive’ risk environment.
It’s a 16 pip stop loss with 20 pip profit target, 1.2:1 Friday trade.
The risk to the trade is the usual ‘strange Friday price action’. Tariff talk or general negative sentiment.
Commenting to follow! Thanks for posting this type of content!
Weekly Review.
I began the week starting Monday 27 January optimistic we might get a ‘risk on’ environment. But that optimism was immediately blown out of the water as news of an emerging AI company ‘deepseek’ caused concern for S&P 500 tech companies, NVIDIA in particular was hit hard. The negativity filtered though to the overall environment with the VIX rising above 20. Although I didn’t envision the negativity would last too long, it did mean hitting pause on any trade ideas.
The long term effect Deepseek could have on the major US tech companies remains to be seen. But by Tuesday things had calmed down and it was over to thoughts of Wednesday’s FED rate decision.
The decision (as expected) was an interest rate hold. And the accompanying ‘hawkish narrative’ shouldn’t come as too much of a surprise. Interestingly, the USD didn’t particularly strengthen following the hawkish narrative. It’s now up to the market to desipher when and how many cuts the FED will implement this year. Currently, it looks like June and two cuts. Which is good for the ‘soft landing narrative’ but it does make the USD tricky to trade. Should we lean on ‘higher for longer’ and long the dollar? Or trade it short as part of a ‘risk on’ trade? I suspect both scenarios will be present over the coming weeks and months.
There were two other interest rate decisions during the week, the ECB and BOC passed by rather uneventfully. Both central banks cut rates and came across fairly dovish. But both currencies didn’t weaken as you might expect. Although sentiment remains subdued for the CAD in particular, as the dovish BOC, slowing growth and tariff threats ‘should’ keep the CAD suppressed moving forward.
The threat of tariffs has been an underlying narrative for the last couple of weeks and it appears it could be coming to a head during he upcoming week. Notice of imminent tariffs has been given this weekend and we could see a volatile start to the new week. Currently it appears the USD will start the week on the front foot. But the back and forth of threats and retaliation will be something to keep a keen eye on.
On a personal note, it was a week of two trades. An AUD CHF long post ‘tech sell off’. whereby I felt the market had stabilised enough to ‘anticipate’ a ‘risk on’ trade. And although the general mood did improve, it took a while for the currencies to react accordingly and the trade stopped out. On Friday, I felt the ‘soft’ CAD GDP data warranted a short CAD trade and the overall environment was positive enough for me to get over my concerns of ‘strange Friday price action’ so I entered an AUD CAD long.
Feel free to ask any questions 
Curious how you see this affect USD/CAD? I just read an article saying if the tariffs does end up happening on Tuesday, it could push Canada and Mexico into a recession. 
At the moment it looks like the CAD will weaken, particularly Vs USD.
I’ve read the BOC may implement a further 5 rate cuts.
We could get volatility if Canada hits back with tariffs. But for now, I’m looking for long USD CAD opportunities. Especially after a pullback creating ‘nice 1hr support’
USD will strengthen across the board if all remains as is.
US inflation near term at least will rise thus eliminating the talk of fed cuts.
Stocks will decline, especially if the trade war lengthens/widens.
Keep in mind guys…
Next 24h will decide.
USDCAD is beyond 1.47. Tariffs really impacted CAD value.
I cannot understand why retail traders would want to do this kind of analysis.
Why not let the big banks do it for you? They have to do it anyway. They pay professional economic analysts huge salaries for this.
We will never know as much as they did.
We will never have as much experience as them.
Our judgment will never be as good as theirs.
If we look at our financial charts, we can see the fundamentals there, in our technical parameters and metrics.
This is one aspect of retail where we cannot compete with the big banks.
But we can still use their information. We can see what they are doing and we can do it ourselves?
We’ll never be able to overtake them and do it earlier, right? Not consistently, anyway.
Why would retail forex traders use our time for this purpose when there are so many other ways to spend our time on more productive, relevant and more important things?
As always, you ask very good, perceptive questions. 
I agree with everything you say above. So do my colleagues.
I think almost all long-term successful traders would, too. A very few might not (but most of those will actually turn out to be “marketing,” directly or indirectly!).
Technical analysis really tells us what fundamental analysis means. You can use TA without FA, but you can’t really use FA without TA.
Without evidence of buying pressure (shown by TA), you surely wouldn’t decide to enter a long position based on FA only? But even without any fundamentals, it could easily be logical and sensible to do so from TA alone. This really tells you what you need to know? 
These few posts below will at least help you to understand that your thinking’s definitely on the right path! 
See I had thought that Trump wanted the dollar to weaken and for the stock market to soar… Unless he sees this as a “temporary” fix?
Why not? I mean I don’t see why you question what other people want to do lol. If it’s something you prefer not to do yourself, we’re certainly not questioning you.
As someone who’s spent a lot of time here in the past, can I just say that there are some “new” accounts here acting just a little sus…
Right now that’s what the market is supposing - Kevin Hassett gave an interview that stressed this is not a trade war, it’s drug war.
Further the it’s been confirmed that the Canadian PM and Pres Trump have talked vis phone today & will talk some more later - around 8.00 pm gmt
So hints of a deal on the drug war?
Edit - the Hasset interview was today
Interview here
NEC Director Kevin Hassett on Pres. Trump’s tariffs: This is not a trade war, this is a drug war
Yeah wouldn’t be surprised.
VERY curious what will happen tomorrow.
This is wise. I know very little!
I try to learn, here. Naturally I am confused when some members say the opposite things to others. Sometimes I ask questions. This is normal, in forums?
I think for reasons which @Franca_Bridge (thank you!) explained right before your post.
Sus = suspect? I did not notice much. It’s hard for me to tell, mostly because my English is bad.
But like @MartialChartsFX and @MattyMoney and other helpful members I follow here have often said before, many are perhaps AI text, not human writing?
I see also, as anyone can see, that some people use the forum for marketing. I think their income comes directly from traders who buy things, probably not really from trading forex? I am “sus” anyway, just as you are! 
Sometimes it’s difficult for a beginner with almost no experience, and who does not speak much English, to work out who to trust here. I hope anyway that my questions don’t annoy you, although it looks like maybe they do? Sorry! 
“Girl” you need to go find another thread to convince you’re someone else. I’m not falling for your new persona. BYE.
Stop derailing this thread.
To tariff or not to tariff?
Weekend news of imminent hard hitting US tariff’s on Canada, Mexico and china gave a ‘risk off’ start to the week. The USD ‘gapped higher’ at market open.
Those gaps are staring to be filled as it’s been announced tariff’s on Mexico will be delayed. Will it be the same for Canada and China?
Unfortunately, this continued ‘back and forth’ makes it very difficult to form a trade conviction at the moment. It seems the ‘US administration’ is as confused as everyone else about what the actual plan is.
If the tariff’s announced over the weekend are implemented over the next 24 hours, we could see a sustained period of ‘risk off’.
Suggestions Canada will need another 5 rate cuts to avert a recession will likely see the CAD in particular struggle for a while.
But if there is a substantial walk-back, the market ‘should’ stabilise and will likely see a return of the ‘risk on’ trades we had a glimpse of a couple of weeks ago.
Of course, you could trade the headlines. But for me, that is too bold, so I’ll be sitting on the sidelines for now, until there is more clarity.
Not to tariff Mexico right now - paused for a week for negotiations.
Scott Bessent (treasury) & Howard Lutnick (commerce) part of the team - clearly more than just about drugs.
No mention re Canada - report 10% on EU