USD and CAD Selling Wave Arrives! Key Points and Future Outlook
Results from September 16 to September 20: +5,631 USD
This week, I achieved a total profit of +5,631 USD.
Key Point 1: U.S. FOMC and Dollar Trends
The highlight of the week was the U.S. Federal Open Market Committee (FOMC) results. Before the FOMC, the market was expected to remain in a range, and I executed range trading. However, the response after the rate cut announcement was unexpected. The 0.5% cut led to a targeted selling of the dollar, but "buy the fact" dynamics increased, resulting in some positions being stopped out.
Currently, the dollar is rebounding, but I anticipate that medium- to long-term selling pressure will return. I plan to look for opportunities to sell USD while taking positions to sell USD/JPY and buy AUD/USD, GOLD, Bitcoin, and U.S. stocks.
Key Point 2: Waller’s Comments and Inflation Outlook
Fed Governor Christopher Waller cited slowing inflation as a reason to support the 0.5-point rate cut. This raises the likelihood of an additional 0.25-point cut in November and December FOMC meetings. However, if labor market conditions worsen or inflation data weakens further, more aggressive policies may be adopted.
If inflation were to accelerate again, there’s a chance that further rate cuts could be postponed, making continued monitoring essential.
Key Point 3: Potential for Significant Rate Cuts by the Bank of Canada (BoC)
The Canadian dollar (CAD) is also in focus. The market is pricing in a 0.5% rate cut by the BoC, which is weighing on the CAD. The August CPI data came in lower than expected, creating a conducive environment for the BoC to pursue monetary easing. Additionally, the U.S. rate cut has led to similar expectations for Canada.
I plan to adopt a bearish trading strategy for the Canadian dollar.
Currency Outlook and Future Strategy
-
Japanese Yen (JPY): Buy Bias Strong expectations for additional rate hikes from the BoJ are likely to increase buying pressure, particularly from overseas investors. I intend to continue buying yen.
-
Euro (EUR): Neutral The ECB's interest rate outlook remains uncertain, with potential for a rate cut alongside a cautious stance. The euro's direction will also depend on the dollar's movements, so I will maintain a neutral stance.
-
Australian Dollar (AUD): Neutral The RBA is not in a hurry to cut rates, and there are strong concerns about inflation. Given the potential narrowing of the interest rate differential with the USD, I will also keep a neutral outlook for the AUD.
-
South African Rand (ZAR): Buy Bias The SARB's mild monetary easing stance is raising expectations for economic improvement. The ZAR is expected to show strong movements, so I will adopt a buying strategy.
-
British Pound (GBP): Neutral The BoE is expected to make gradual rate cuts, but inflation risks remain high, leading to cautious movements. As the downside appears limited, I will maintain a neutral position.
Weekly Summary
A selling wave for the USD and CAD has arrived. I will continue to look for opportunities to sell the dollar while keeping an eye on other major currencies as I develop my trading strategy.
Afterword
Thank you for reading this week's FX Trading Report. I would like to discuss the importance of "sleep" for trading performance. To lead a healthy life, it is crucial to have a balanced diet and exercise, but adequate sleep is equally important.
Key Benefits of Sleep:
- Weight Management: Less than 7 hours of sleep is linked to weight gain and obesity risk.
- Improved Concentration and Productivity: Sleep deprivation can impair focus and judgment, negatively impacting trading.
- Enhanced Physical Performance: Sleep aids muscle recovery and overall stamina.
- Heart Health: Lack of sleep increases the risk of hypertension and heart disease.
- Blood Sugar Control: Sleep deprivation raises the risk of type 2 diabetes.
- Mental Health Improvement: Sleep issues are closely related to stress, depression, and anxiety.
- Boosted Immune System: Sleep supports immune function and enhances resistance to illness.
Conclusion
To maintain a healthy trading lifestyle, it's important to ensure 7-9 hours of quality sleep each night. Prioritizing sleep can enhance physical and mental stamina, positively impacting trading outcomes. I look forward to seeing you in the next FX Trading Report!