The Weekly FX-Basket Update #25
From Tariff Man, to TACO Man to PAC Man
Operation “Midnight Hammer” wow wonder who gave birth to that title, maybe it was PAC man himself - or Precision Arial Crusher Man - I guess we never will know. So, I’m back, somewhat, after going down last week surrender to sour throat and heavy coughing.
Not really there yet, as my last coughing fit played out more or less during the highlight of Operation Midnight Hammer - what a coincident! The week is likely to open with a gap, maybe a huge one or not, it’s hard to judge but remember that these War event spike are usually quite short lived and is usually better to buy that trying to sell into - unless you are very early or positioned yourself already last FRriday.
CHF
Due to last nights events a gap in favor of risk-off currencies are probably a done deal at the open, which ought to lift the Swissy above the high from 2 weeks ago. If it will go all the way to make a new high all together is hard to tell, but not unlikely.
However, almost without exceptions, risk off spikes due to war events are typically short lived and tend to turn the other way rather soon. So that’s what I expect here as well.
EUR
The Euro is not a typical risk-off currency but still tend to benefit from these types of events - against certain currencies like NZD, AUS, SEK etc. - which logically should propel it to a new high as the new week takes off.
From a EW perspective, both directions are actually possible here without breaking the legitimacy of the count. Thus I haven’t given any direction preference (solid vs dashed line).
CAD
A risk-off event shouldn’t normally benefit the Loonie, but in this case it may do as we could see oil taking off higher, maybe much higher and this is also in line with the count I have been following for quite a while.
We may not see this development from the start though but I really don’t know what will happen, bt I’m fine with that as no one else does either.
JPY
The Yen will probably take advantage of the situation and gain from it, for a while but it may not last even to the Europe session takes off. Important for the Yen is that it now is struggling around the 2007 low level and that may be more important than anything happen in the Middle East.
GBP
The Pound made a high a few weeks ago but has then been struggling to keep going and that’s the way last week started as well, but in the end we saw a remarkable recovery. I’m not sure that will continue due to the latest events, but at the same time it’s a bit hard to even out the count right now for a move lower. At least of an extended nature.
I think we may have a leading diagonal in the making, but the way it’s positioned is a bit tricky and I could be wrong here as well. In anyway, if it comes now or later, I think there is a path higher still.
NZD
The count seems to support it and so does the geopolitical events and I don’t think we can expect anything else than that the Kiwi will be on the offers desk this week.
AUD
The same destiny is probably waiting for the Aussie and not much more to say there. However, if we were to get some positive development that brought a real solutions, or when that happens, then I think we can expect quite some upside here.
USD
Last week, while I was gravely ill, turning my lungs inside out by coughing, the USD took a grand stand against the low of the previous week, which I wasn’t able to cover due to said illness. It’s quite likely that the last B-2 event will keep the next candle going in the same direction.
What’s not clear to me though is if we have 5 subwaves down in wave (3) or if it’s still Hammering out wave 4 and I don’t think we will know which until far beyond Midnight. In either case, I don’t think the lower bottom is in here yet, but before a continuation lower we may see price come as high as to test the May high from earlier this year.
OK, I haven’t recover 100% yet so may take it a bit slow as the week takes off, trying to focus on how things evolve, but hope to be back in a fuller capacity soon.