As the summer nears an end, activity in the markets is expected to rise. Not only are traders returning from vacations, but the busy calendar suggests even more action than usual.
What can traders do to get ready for this change? Here are three things.
The debt crisis in Europe returns, with big hopes but also fears. Details about the ECB’s big bond buying program are highly anticipated as well as the ruling of the German constitutional court regarding the legality of the ESM bailout mechanism. All this relates to the situation in Spain. In addition, the troika delegation is returning to Greece to see if Greece made progress. Add high expectations towards the Fed decision and many other events, and you have an explosive mix.
So, here is what you can do:
What can traders do to get ready for this change? Here are three things.
The debt crisis in Europe returns, with big hopes but also fears. Details about the ECB’s big bond buying program are highly anticipated as well as the ruling of the German constitutional court regarding the legality of the ESM bailout mechanism. All this relates to the situation in Spain. In addition, the troika delegation is returning to Greece to see if Greece made progress. Add high expectations towards the Fed decision and many other events, and you have an explosive mix.
So, here is what you can do:
- Stay up to date: The aforementioned events are the biggest ones. There are many more events scheduled and news breaks out unexpectedly. Stay tuned with what’s going on – the news could be dramatic to trigger big moves, and it’s important to know why and if the moves are expected to be sustained.
- Consider trading crosses: Often, the risk events cause excessive volatility that makes trading quite choppy. If you want to skip the action caused by some US indicators and focus on longer term moves on other currencies, try trading your specific currency against currencies other than the greenback.
- Lower your leverage: The mix of high volatility and high leverage can be lethal to your trading account. Big moves in the right direction are excellent, but even if you got the big move correctly, a sudden swing to the wrong direction may be quite painful, as it may swing away a big chunk of your account. Higher volatility provides more opportunities but more risk. So, lower your leverage and consider smaller positions.
Editors’ Picks
EUR/USD climbs to daily highs near 1.1820
EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.
GBP/USD trims losses, retests 1.3460
After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.
Japanese Yen gives back half of early gains against USD ahead of US PPI data
The Japanese Yen (JPY) surrenders half of its early gains against the US Dollar (USD) during the European trading session on Friday. The USD/JPY pair rebounds to near 155.90 as the JPY falls back, but is still 0.15% down.
Editors’ Picks
EUR/USD: Fed calm, ECB steady, but the Dollar still leads Premium
EUR/USD is still struggling to find real traction. The pair has tried to stabilise, but momentum keeps fading, leaving the door open to further weakness.
Gold: Falling US yields, geopolitics help XAU/USD hold ground Premium
Gold (XAU/USD) gained traction and climbed above $5,200, ending the fourth consecutive week in positive territory. The next round of US-Iran talks and crucial macroeconomic data releases from the US will be watched closely by market participants in the short term.
GBP/USD: Will Pound Sterling defend key 1.3450 support ahead of US jobs data? Premium
The Pound Sterling (GBP) entered a bearish consolidation phase against the US Dollar (USD), after having tested critical support near the 1.3450 level on several occasions.
Bitcoin: Another month of losses, and it’s been five
Bitcoin (BTC) price is stabilizing around $68,000 at the time of writing on Friday, but the Crypto King is poised to close February on a fragile footing, marking its fifth consecutive month of losses since October and a rare start to the year with back-to-back monthly corrections.
US Dollar: At a crossroads; Fed steady, tariffs in flux Premium
The US Dollar’s (USD) upward momentum from the previous week seems to have encountered a tough nut to crack in the 98.00 region, as measured by the US Dollar Index (DXY).
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