July is coming to a close and there is a ton of economic data on tap. An entry long on USDJPY was triggered last night at resistance. I've since closed it out in the money since I don't want to have positions open through the FOMC volatility storm going on today. Pending outcome of todays economic events I may open long USDJPY or short AUDUSD. Short GBPUSD is another position i've been waiting to enter into.
I'll post monthly results later on today or tomorrow. That being said I've got a few general words on current markets: With algos running rampant everywhere, bond/dividend yield stretched thin, and stocks floating on QE, the fundamental environment for FX trading right now is in a rare place. The introductions of forward guidance from multiple central banks around the world and the trend of accommodating monetary policy has made the fundamental direction of currency pair price action quite predictable. The predictability of central banking decisions and simplicity of directional movement of international currencies contrasts starkly with the "broken", manipulated, and complex current nature of the stock market. This is not to say that currency markets are free of manipulation, but it is less relevant in these markets in my opinion. The
only thing that matters in the markets today is monetary policy. It is such a saturated source of money velocity (rate at which money changes hands) that the economy cannot function any longer without it. We are holding the worlds economy up on toothpick stilts. A "currency war", is raging, despite how much we many choose to deny this. Every mainstream currency is on a path of devaluation, and the only difference between them is the rate at which they are going down. With this in mind, the purest, most fundamentally sound and simple way to take advantage of this phenomenon is long term FX positions. We do not know if the S&P will crash, or if gold will break to new highs, or if HLF will beat earnings next quarter..... but we do know, for a fact, that if the BOJ prints at a significantly faster rate that the Fed, the Yen will devalue against the dollar, in theory to infinity if the rate of printing never changes. The math is pure and simple, and over the long term this phenomenon is not subject to shareholder/trader sentiment like other assets. This is why FX trading is both profitable and optimal in the current market environment.
