Not so long ago, in a galaxy really really close....Currency Wars... when a country is in dire need for growth, one way is to boost it's exports, a quick way of doing this is by making its exports relatively cheap; a quick way of doing this is by devaluing your currency and a quick way of doing that is QE. However, when everyone is doing QE no-one gets the benefit as one countries export is another countries import (a zero-sum game).
We now have that situation with the dollar and yen and in some parts the euro. The problem becomes when everyone has to devalue relative to a devaluing dollar in order to compete...messy and becomes a real problem for countries that rely on their exports for growth (name those BRICs). For trading this essentially then comes down to the size of QE and building in currency caps for consideration in our trading (example, will the USD/JPY actually be allowed to go below 77.5 by the BoJ?).
This week remained relatively flat across many pairs, not quite the resistance busting headlines of last week but nonetheless still an interesting week. We highlighted at the start of the week the risk of yentervention and the BoJ didn't disappoint expanding their programme alongside the US; we also highlighted some pound focus on the data front.
As always a review of this weeks trades (not so great this week, but given the previous weeks September is still looking good):
- AUD/USD short to start the week which we closed on a reversal pin for 95 pips profit at T1
- EUR/USD short from Monday - we closed at T2 but you could still be in this one, if you are looking good for further downside, a pin close tonight and...well read our Sunday post to find out - booked 178 pips
- AUD/USD long which we got stopped out on but has continued to show signs of a bounce; -58 pips
- GBP/AUD short which we closed today for flat - 0 pips (we actually took a small profit of 20 pips but we like to be conservative)
- USD/CHF long - hit T1 which we closed for 68 pips, another close of a pin tonight gives us an opportunity for another entry...(again check out our Sunday post)
- GBP/USD long, - hit T1 (we actually aimed for the 1.63 handle) but a conservative T1 would have got you 75 pips
Trades we are still in:
- AUD/CHF long - still in this (actually we didn't quite catch it as my order failed...do'h) if you are in it though it is currently up.
- Long USD/JPY, bit of a high risk wait and see trade, wouldn't suggest this to others.
- GBP/JPY long (or one of the yen shorts)
Beyond the signal trades we also caught nice USD/JPY and USD/CAD longs mid week on our dollar strength predictions.
So out of the analysis a total of 358 pips, that said if you didn't close or weren't online with us a conservative 200 pips could have been achieved with a few trades.
EUR/USD
Spiked higher then pushed lower today leaving a small inside bar and pin. Check out the Sunday post on how we intend to pay this but we are still expecting a push lower before a return to the uptrend.
GBP/USD
Pound has remained relatively flat this week, primarily consolidating. 
AUD/USD
Similar to the euro and the pound, a bearish pin formed today, we are expecting a push lower, although so far every try this week has resulted in a bounce back on strong support, if this finally breaks we could move lower in a stronger fashion.
USD/JPY
Slightly lower move on Friday although relatively flat. Support comes in around the 78.00 handle.