Prepare to Ride a Trend In the Making

More often market trends can only be identified 'after the fact' when prices have moved in a particular direction. This is certainly true for every financial instrument either in stocks, foreign currency or commodity markets trading. And when it finally does, every trader or investor would say how they wish they could have stayed and held-on to these stocks or currency pair. Only a few exceptional investors and traders would have been able to anticipate such market potential in-the-making. While other traders might have simply walked into a fortunate event out of mere luck can likewise be well accepted.

Being able to ride a probable market potential can be defined even before it actually happen. This is the very essence of how strategists with exceptional trading abilities stays ahead from the rest of the pack. Developing these strategies can best be applied by following proper guidelines that can cover all possible angles of a draw down. Although, one of the most common distractions, so to speak is the relative price swings that can stop-out a position even before establishing its true market direction. The frustration of which is that the trade was either not appropriately executed within a specific time-frame that have resulted in a loss prior to getting back to the original side of the trade set-up.

Prepare to Ride a Trend In the Making

MT101 Preference on CCY Pairs

Analysis & Outlook:GBPJPY, USDJPY, AUDJPY

While U.S. Non-farm payrolls data are expected to show the country adding a healthy number of jobs; the US Dollar has indeed regained its strength since its turning point @79.75 and have rallied towards to where it is now @82.76 higher levels. Jobs growth has been on of several driving forces that elevated the USD contrary to certain threats that may derail its advances in the coming weeks.

With inflation in the EU Zone currently @0.3%, the ECB will have to work on to bring newer policy measures within the week. And the BoE meets on Thursday's rate decision that again would be hyped as to the timing of its rate hike moving forward, contrary to the continued pressure on the Euro is weighing heavy of the market.

On the technical angle, the US Dollar Index recent corrective move was seen as a short-lived response towards the end of the months trading with a cluster island signifying a temporary decline and reversed back higher after filling in the price gap created in the early opening day in Asia. The USDCHF which is more aligned with the DXY movements have likewise moved similar to the price directive of the DXY and currently @0.9202 after the correction.

The EURUSD is currently @1.3117; as of this writing and would still hold to these levels as supported by ECB Mario Draghi's previous comments on top of the recent EU / UK-Manufacturing PMI data that was slightly off the mark has kept this pressure for the Euro to even get a technical bounce-off the low levels.While the GBPUSD has held its marks on a daily tight range between the recent low @1.6538 to its recent price swing towards 1.6643. These price swings will continue on both majors on the sideline. Meanwhile, the USDJPY's continued decline in value has provided a support for the USD and its relative Yen related Cross rates a favorable lift.

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Variable Ratio Analysis: Cable & UK Gilts vs. US Treasuries

Fundamental breakdown
Changes in Foreign Exchange rates can influence market sentiment and affects US Treasury risk as compared with the UK Gilts in this case; which has seen wider spreads in this current market conditions.

In understanding the risk characteristics of an investor in the GBPUSD currency related market, we need to know the risk factors in relation to the variation in the economic conditions of the financial markets.  Identified here is the variable difference where the European sector has been adapting a favorable stance versus the recent decline in the US Dollar market. Thus the US treasury is at risk from a declining US value contrary to its European counter part.

Cable & UK Gilts vs. US Treasuries