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🌐 Morning Note & Top Trade Ideas - July 26

πŸ”΄ What's moving markets?

Good morning traders. Markets opened with caution as US-China relations are again in the focus. China described the relations in a "stalemate", and the UK is also looking for ways to remove China's nuclear energy company from all future projects.
This adds to the risk aversion already existing in the markets due to the rapid spread of the delta virus variant. However, it looks like countries are mostly insisting on accelerating vaccination efforts rather than introducing new restrictions, which could prove beneficial for global growth.

It's worthwhile to mention that new daily cases in the UK dropped below the 7-day average, and hospitalizations remain low, which could become a positive template for other countries to drop restrictions and focus on vaccinations (90% of UK population has covid antibodies, and almost 60% have received two vaccination shots).

Markets aren't as convinced. After strong earnings reports from the UK in the last week, Asian markets still closed lower today (Japan is higher, but this is more than offset with a huge drop in Chinese indices), and European markets opened lower.
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/725W4x4f/

πŸ”΄ US Dollar Index

The DXY is trading lower this morning but a daily trendline is providing support at the moment. US Treasury yields are lower as well, but should remain supported ahead of the FOMC meeting where markets will be focused on any tapering hints. This, combined with the FOMC "risk-event", should provide support to the USD. Resistance at 93.20 and support at 92.70 and 92.10.
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/yHWG2mI2/

🌐 Morning Note & Top Trade Ideas - July 27

πŸ”΄ What's moving markets?

Good morning traders. It's the second day of the trading week, and the massacre in Chinese equities doesn't show signs of slowing down. Hang Seng is down more than 4%, and Shanghai Comp 2.5%. This more than offsets the rise in Japanese and Australian equities as China's tech crackdown continues. European markets also opened lower, with the DAX down 0.85% and FTSE 0.78% so far.
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/XHSSg4ly/

πŸ”΄ Currency Strength

Risk-off is also evident in the currency strength indices. JPY, USD and CHF are the strongest, while NZD, AUD, and CAD are the weakest currencies so far. Both the Australian and New Zealand economies are heavily dependent on exports to China, so markets will also be focused on today's IMF World Economic Outlook update and the growth forecasts that the fund gives to China.
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/vZe43VUe/

πŸ”΄ US Dollar Index

The DXY rose despite a fall in UST yields, which is a classical phenomenon of risk aversion. Flight to quality (bonds) pushes yields lower, but the sell-off in risk assets (such as equities) makes holding cash and the USD an attractive option for investors until the dust in the markets settles. Tomorrow's FOMC meeting (risk event + expectations of a slightly hawkish tilt) is likely to provide further support for the US dollar today and tomorrow, especially against high-yielders.
πŸ”΄ Top Trade Ideas - July 27

⭐️ Long USD on pullbacks - Risk-off and FOMC to provide support for the currency

⭐️ Short risk currencies - AUD, NZD and CAD are all possible candidates, although the RBA (AUD) is likely the most dovish.

⭐️ Short EUR - The extremely dovish ECB meeting combined with risk-off and the FOMC could push EUR/USD towards the 1.17 region, as mentioned in one of our previous posts.

⭐️ Premium Club traders get detailed signals (TP & SL), charts, position sizing, and trade management updates for our trade plans.
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🌐 MORNING NOTE - July 28

πŸ”΄ What's moving markets?

Good morning traders. We are halfway through the trading week, which started with a strong risk-off tone after China's crackdown on domestic tech companies. The Hang Seng lost all of its 2021 gains, but managed to recover some ground this morning as risk sentiment stabilizes. Overnight, Nikkei closed -1.4% lower, and Shanghai and Australia were softer as well.

European markets opened in the green. The French CAC is leading with 0.60%, EuroStoxx are up 0.59%, and the FTSE and DAX around 0.20% so far.

Despite risk aversion and the FOMC meeting this evening, the pound outperformed other majors on the back of seemingly lower infection rates. New cases fell to 23k yesterday, well below the 7-day average of 32k. Markets are hoping that the UK's model of easing restrictions could prove to be a template for other countries that have high vaccination rates.

Regarding the FOMC this evening, there is a non-negligible risk that the central bank could provide a hawkish tone as inflation rates and economic growth rise above a longer-term trendline. Still, the meeting could also be a "non-event" if the bank decides to postpone any talks about taper to the August Jackson Hole meetings and reaffirms that inflation is only transitory (which is the base-case scenario as delta variant risks still lurk).
Forwarded from CommaFX Market Club
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πŸ”΄ US Dollar Index

The DXY is trading lower for the week and is almost unchanged for the day, which is an interesting development given the lower risk appetite in the first half of the week and the FOMC risk event (however, a similar pattern also emerged two weeks ago when the dollar decoupled from risk sentiment). This also shows how markets are difficult to trade these days.

Yields are slightly firmer, and I believe the USD could still find some support ahead of the FOMC. Yesterday's low of 92.30 acts as a support in this regard.
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/iYi1QpWs/

πŸ”΄ Intermarket

The USDCAD pair is still showing the largest divergence with cross-market indicators. 2-year yields remain unsupportive and higher oil prices also point at lower rates for USD/CAD. If today's FOMC disappoints USD bulls, there could be a significant reaction in USD/CAD (risks tilted to the downside).
πŸ”΄ Top Trade Ideas - July 28

⭐️ Short AUD - China tensions, risk sentiment, and RBA dovishness could prove to be too much for the AUD. But the FOMC could be the key catalyst for the currency.

⭐️ Long USD/JPY - The pair retraced off the 61.8% Fib yesterday, followed by a bullish intraday structure. 10y yields look supportive, so there might more upside potential during the day.

⭐️ Short USD/CAD - 2y yield differentials, oil, price-action suggest further weakness.

⭐️ Premium Club traders get detailed signals (TP & SL), charts, position sizing, and trade management updates for our trade plans.
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Forwarded from CommaFX Market Club
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🌐 Morning Note & Top Trade Ideas - July 29

πŸ”΄ What's moving markets

Good morning traders. Chinese equities are recovering from the recent sell-off after China arranged a virtual meeting with top investment banks in an attempt to ease market fears. China said that the policies were targeted, and that other industries won't be hurt. This, and yesterday's FOMC meeting, was enough to bring back risk appetite to the markets. Hang Seng closed +3.3% higher, Shanghai Comp rose 1.5%, and Japan and Australia were also firmer.

European equities opened higher with the French CAC taking the front seat, up +0.80% so far, followed by the FTSE (+0.73%).

Yesterday's FOMC meeting didn't deliver any major surprises. Rates are left unchanged, and Chief Powell said that the economy made progress (but not "substantial progress") towards the Fed's goals to start tapering. They will assess the economic situation at the future meetings (more than one meeting? This leaves us with the December FOMC to start tapering.)

Markets were expecting a slightly more hawkish tone from the FOMC. The US dollar rose initially, but then sold-off against other majors. Today's Advance GDP q/q (expected stronger) and Friday's PCE deflator (the Fed's favorite inflation measure, expected higher) now have additional weight for the markets.

The day after the FOMC meeting is usually light on events. Besides the US advance GDP report, traders will also look at unemployment claims (expected lower) and pending home sales (a leading indicator, expected lower as well).
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/9r9eZTzu/

πŸ”΄ Currency Strength Index

Let's take a look at the performance of currencies this morning. NZD, CAD, and AUD are the strongest, while USD, JPY and CHF are the weakest so far, signaling the return of investors to riskier and higher-yielding assets. NZD and CAD still have the most hawkish Central Banks, while AUD and EUR the most dovish ones. If I had to pick between EUR and AUD, the possibility that the RBA could in fact further ease monetary policy makes it more dovish than the "forever QE" stance of the ECB.
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/LXPAXOpM/

🌐 Morning Note & Top Trade Ideas - August 03

πŸ”΄ What's moving markets?

Good morning traders. Risk sentiment remains fragile in the markets as Asian equity markets closed lower overnight. Investors are worried over new crackdown measures from the Chinese government, this time targeted on online entertainment. The rapid spread of the delta virus variant is also deteriorating risk appetite with new daily cases staying above the 7-day average for the second day.

In the UK, however, daily infections fell for the fifth straight day and stay well below the 7-day average (21k vs 25k). This gives hope that the UK template of easing restrictions could be successfully applied to other countries with high vaccination rates. European equities are in the green but little changed from the open (DAX +0.14%, FTSE +0.34%).

In Australia, the RBA kept rates unchanged overnight and didn't announce any changes to its tapering plan. The bank will continue to purchase bonds at a rate of A$5 a week until September, and then A$4 a week until mid November. However, the bank made some changes to its statement and said that the path of tapering would depend on the economic recovery in the coming months.

The Dollar index is slightly lower as falling UST yields weigh on the currency. Still, tapering rumors and risk appetite could provide support during the week.
Forwarded from CommaFX Market Club
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🌐 Morning Note & Top Trade Ideas - August 06

πŸ”΄ What's moving markets?

Happy Friday traders! It was a quiet August week as markets entered a period of lower liquidity. The main highlight so far was the Bank of England meeting from yesterday, where the bank joined the Fed and the Bank of Canada with tapering hints. Although there is no exact timeline of when policy normalization could begin, the pound traded slightly higher following the meeting but gave back most of the gains overnight (a slightly hawkish BoE was overall expected).

This morning, China imposed fresh travel restrictions amid fresh outbreaks of the delta variant. Asian equities closed mixed (Hong Kong -0.10% and Shanghai -0.24), while Nikkei and Australian XJO are slightly higher. European equities are mostly unchanged. VIX is lower at 17.20.

Markets are now focused on US NFP numbers, where expectations are set for 870K new jobs vs 850K forecasted. A surprise beat of new jobs should see the USD supported, especially against low-yielders (EUR and JPY), as the Fed could be one step closer to start tapering.
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🌐 Morning Note & Top Trade Ideas - August 31

πŸ”΄ Top Market Movers

Good morning traders and happy Monday! We're back after a short pause in August, a month that is usually marked by extremely low trading volume and unpredictable market movements as bankers in top banks enjoy their holidays. It could take a few more days for liquidity to return to the markets, so we need to be extra cautious when trading the markets these days.

So, what's moving the markets today? As expected, the delta virus variant is still taking the top headlines. The EU is considering travel restrictions for Americans (at least for those who are unvaccinated), the US ended their 20-year long mission in Afghanistan, and non-manufacturing PMI in China came in unexpectedly lower than forecasted.

Still, it looks like the markets opened with a risk-on tone. Major indices in Asia and Europe are higher, AUD and NZD are some of the top performing major currencies, and VIX and DXY opened lower.
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πŸ”΄ Economic Calendar

Looking at the economic calendar for today, the Canadian GDP is expected to rise by 0.7% month-over-month compared to the previous month's 0.3% decline. Combined with higher oil prices and a risk-on tone, the Canadian dollar could be a trading candidate this week.

In the US, markets are focused on the Chicago PMI (expected at 68.0) and the CB Consumer Confidence (expected 122.9), with both reports being very important in the light of the recent vague Fed comments in Jackson Hole about tapering.
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/h1QZ6BEI/

🌐 Morning Note & Top Trade Ideas - September 02

πŸ”΄ What's moving markets?

Hello traders, trading activity is slowly returning to the markets as traders prepare for the big day - tomorrow's NFP release. Yesterday, the US ADP employment disappointed with a reading of just 374K vs 640K expected, which reinforced of a more patient Fed. Markets are now lowering their bets of a possible tapering in September, but much will depend on tomorrow's NFP report (expected at 750K vs 943K for the previous month).

Another key event was the OPEC+ decision to stick to their plan to increase oil supply at a gradual pace. This means, October will see a 400k bpd increase in supply, despite worries that the delta variant may lead to a reduction in global oil demand. Oil reacted initially with a sharp sell-off of up to 2%, but regained some ground afterwards (currently up 0.67% for the day.)

In the equity markets, Asia closed slightly higher and Europe is somewhat firmer, VIX is trading at 16.00, and the US dollar index is hovering around its opening price (92.44).
Forwarded from CommaFX Market Club
https://www.tradingview.com/x/vnXdukjY/

πŸ”΄ Currency Strength Index

Looking at currency indices, the AUD, CAD, and NZD are the strongest currencies today. The JPY, USD, and CHF are the weakest. A clear confirmation that markets opened in a risk-on mood and that the US dollar index could see further weakness ahead of the NFP release.