Last couple of days were busy in the world of Forex trading. Plenty of new and important fundamental news were released. The Reserve Bank of New Zealand joint the ranks of Bank of Canada and the RBA  and increased its benchmark rate. The hike was largely symbolic, only 0.25%, but unlike the BoC, the RBNZ seemed to be more optimistic about prospects for future increases. Later, unemployment numbers for May were released in Australia. The rate dropped from 5.4% to 5.2%, which proved positive for the Aussie. We also had the ECB rate decision (unchanged), comments from the new Japanese finance minister to “watch exchange rates carefully” and labor news form the USA. The American data was interpreted as an “improvement”, but we had heard it before, without any meaningful changes to follow.

Most of the news turned out to be negative for the USD and JPY, even if no explosive price swings took place. Most of the currency pairs started to correct/reverse early in the week and the latest news extended these moves some more. For the week, though, currencies like the AUD and the NZD made solid gains, while the Yen slipped few hundred pips. Even the Euro recovered to some degree. This brings me to planned trade in NZD-JPY from the last post.

I was placing a sell order at 59.82, which didn’t happen and looking at the 61.60-65 area for a possible buy. Price spiked there and pulled back, creating a buy situation at 61.90. That’s where the order was located. The RBNZ rate decision pushed the Kiwi, forming a gap, and few hours later the buy order was filled. Objective was fairly small, 60 pips, but trade worked out nicely. For now, the sell order at 59.82 remains valid, but I don’t expect it to be filled very soon.

There was also a trade in GBP-AUD from last week. It was filled in early Monday trading at 1.7800. A little later market sold off and the price created what looked like a solid reversal pattern, so another position was established at 1.7458. Expectation was for a fast recovery. Unfortunately for me, that did not happen.

This pair bounced some, but soon settled into a sideways pattern. All of AUD pairs were slowly building momentum, or setting up breakout bases and time was approaching for the unemployment data from Australia. Decision was made to dump this trade and I closed both positions at 1.7531. This means a loss on the first trade of about 270 pips and a gain in the second one of 50 pips, for a total of -220 pips or so. Moving on.
With only one trading day left, I’ll focus on short term trades like 15M and/or 5M charts, with the instrument of choice EUR-JPY. It moves a lot, spread is tight. Currently the trend is up, but I’ll be looking for trades both ways before and during European session. The US session will likely become quiet after first 2-3 hours. Many traders worldwide will probably be cutting work short tomorrow, due to start of the World Cup. Me too.

Mike K.