This week’s FX trades from February 12th to February 16th, resulting in a total loss of -2166 USD.
Despite moments of the U.S. dollar being bought due to unexpected rises in the U.S. CPI and PPI, the momentum did not last due to factors such as an unexpected decrease in U.S. retail sales, leading to significant volatility. This fluctuation tore through positions, ending in a net loss. It was a week of missing the wave.
However, it seems that a trend of selling the U.S. dollar continues, possibly in anticipation of future U.S. interest rate cuts. From now on, I plan to enter positions by selling the U.S. dollar only.
Key points to watch moving forward include:
January U.S. retail sales saw a significant decrease for the first time in about a year, indicating a cooling in consumer spending. Retail sales in January broadly decreased, marking a significant drop for the first time in about a year. While consumption during the end-of-year holiday season had been robust, there appears to be a pause in personal consumption.
Severe winter weather may have influenced these numbers, but a continual decrease in sales could indicate a potential risk of worsening household consumption. Consumers have been supporting strong economic growth, contributing to the avoidance of a recession.
Core sales, excluding restaurants, car dealers, building materials stores, and gas stations, decreased by 0.4%, marking the first decrease since March of the previous year.
(Source: Bloomberg)
This downturn temporarily exerted significant selling pressure on the U.S. dollar. If the previously positive U.S. economic indicators continue to decline, it could further strengthen dollar selling. The focus is on the U.S. Manufacturing PMI on the 22nd. If it leans towards selling the U.S. dollar, that would be a trend worth following.
Canadian Consumer Price Index (CPI) The Bank of Canada (BOC) was the earliest among major countries to end its rate hike cycle in July last year. Therefore, the market strongly speculates that Canada might be the first to cut rates, with rate cut expectations being factored in for the April meeting. While the widening interest rate differential between the U.S. and Canada puts pressure on the Canadian dollar, if the CPI follows January’s strong employment statistics with positive results, speculation regarding the timing of rate cuts could be pushed back to mid-year or the third quarter.
(Source: Trader’s Web)
Depending on the results on the 20th, there might be significant selling pressure on the Canadian dollar. If the Canadian CPI decreases, I plan to follow by selling.
P.S.
Bitcoin has reached the significant milestone of 50,000 dollars, garnering global attention.
The Bitcoin halving is expected in mid-April this year, and if past patterns apply, volatility is expected to increase around the halving period, with new highs anticipated 7-8 months after the halving.
If the same pattern repeats, Bitcoin could set new highs by November 2024.
Of course, this is merely a prediction and may not necessarily come to pass.
Especially since, in January this year, a Bitcoin spot ETF was approved in the United States, attracting a staggering 33 billion USD in just the first month. Inflows from the spot ETF are expected to continue, likely supporting the Bitcoin market for the next few months.
However, it might be difficult to follow the exact same pattern as before. There seem to be more reasons to buy, with few factors driving the price down.
Of course, moments of temporary selling may occur, but these could provide opportunities for short-term trading, potentially resulting in profits this year.
It’s worth keeping an eye on.
Have a great weekend 🙂
