Daily thread to exchange ideas and to share your thoughts
Happy Friday, everyone! Hope you’re all doing well as we look to wrap up the final day of the trading week and get ready for the weekend! It’s a quiet one in terms of headlines to start the day but there has been decent movement already in the currencies space.
The aussie and kiwi are holding at their highs as we begin the European morning, buoyed by China’s commentary that they will continue to bolster its economy this year. Meanwhile, the dollar is slightly weaker as Asian equities and the Chinese yuan are faring better on the day.
The pound is the laggard though, moving lower in the past twenty minutes as European traders start to weigh in with their views on the currency. We’re now headed for a third meaningful vote next week, so expect that to be the focus for sterling over the next few days. In the meantime, chop chop chop.
Large expiries in EUR/USD between 1.1300-25 may well keep the pair contained until US trading so there isn’t much to really focus on there. I’m tempted to engage in a small short in AUD/USD as price closes in on 0.7100 but the risk-reward at this point seems rather silly for a downside move. That said, with yields still being a key factor in driving the long-term direction of the pair, it’s hard for me to argue for an extended upside aside from further short covering at this point in time.
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