To avoid regurgitating already known information, today’s NY series of speeches will most likely be boring. Chances of Yellen repeating what we already know is high and as a result, market movements might be limited. On the other hand, Mario’s Jackson Hole speech will be the first in three years. Back in 2014, he only hinted on QE at the back of the then deflation and general economic crisis in Europe. Today, things look positive and being pragmatic enough-and even if he steers clear off the monetary policy talk and strictly stick to the symposium’s topic, reduction of QE is imminent. Europe in particular has been recording impressive data over the past year. Factory orders from improved manufacturing is stellar, labor condition is good, inflation is picking up slow but steadily and then most importantly, investors in general are upbeat about future prospects. This will mean only two things, euro appreciation and pick up of bond yields which will attract even more capital from the US and other areas. Being a Friday with next week being NFP, I remain neutral on EURUSD until after next week when trend direction is clear. However, I’m Euro skewed in the sense that chances of a Euro rally is high.
Before then, I will look to trade the Gold. Gold today will most likely appreciate because of the uncertainty Yellen and Mario brings to the table. We all know what happens when there is risk. Capital flows to gold and Yen. These two then provide good scalping opportunities only if you buy which I will.
Gold has been trending higher in the monthly chart with a buy signal formed recently after momentum slowed. I will trade as follows:
Stop Loss: 1280
Take Profit: 1300
Have a good trading day and a nice weekend.