Big Picture November 5

Last week, I saw the best possible trades for the coming week as long USD/CHF, short EUR/USD, and long of the S&P 500 Index in U.S. Dollars. The overall result was positive, as the USD/CHF rose by 0.28%, the EUR/USD rose by 0.02%, and the S&P 500 Index rose by 0.17%, producing a small average win of 0.14%.

The Forex market over the past week has continued a little in favor of the U.S. Dollar again, and seems now have invalidated the long-term bearish trend in the greenback. Although there was major news concerning the USD, the dominant even in the Forex market was the “dovish rate hike” by the Bank of England, which saw the British Pound fall by more than 1% against a basket of currencies.

The news agenda this week is almost certainly going to be dominated by monthly guidance and interest rate decisions due from the Australian and New Zealand central banks respectively. The New Zealand Dollar has been in focus with high volatility and active trading with large directional movements. As the price is near a long-term low, this situation is likely to persist and should be boosted by any surprise move by the RBNZ.

The American stock market is still making new all-time highs which is always a bullish sign, despite the relatively low volatility.

Following the current picture, I see the highest probability trades this week as long of the U.S. Dollar against the Japanese Yen, and long of the S&P 500 in U.S. Dollar terms. Apart from the stock market, there are very few clear strong trends in the market now.

Fundamental Analysis & Market Sentiment

Sentiment is currently a little less bullish on the U.S. Dollar and stocks following disappointing Non-Farm Payrolls data which was released at the end of last week, although the Unemployment Rate showed a tightening which is likely to help the greenback to stay strong. Geopolitical factors may move to the fore, as President Trump begins a visit to Japan and other Asian countries in the wake of increased Korean tensions, and the world digests the implications of an Iranian attack by proxy upon the capital of Saudi Arabia by ballistic missile which occurred yesterday.

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