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The Aussie Stands Out In Low Vol FX

The Australian Dollar and the British Pound were both propelled into high grounds through the last London morning session. But as the New York session began, the currencies' strength gradually disinflated to end up the day still well above the rest of its peers yet quite far off the highs made earlier on the day. 

Let’s get started…

Scan of the Forex market

To see an expanded version, right-click and select ‘open link in new tab’. The indices show the performance of a currency vs a G8 Forex basket. Indicators are available to use these measures via Tradingview and MT4.

 

The Australian Dollar and the British Pound were both propelled into higher ground in the last London morning session. But as the New York session started, the currencies’ strength gradually deflated to end up the day still well above the rest of its peers (not the case of the Pound anymore…) yet quite far off the highs made earlier on the day.

I must admit market moves remains quite modest overall, a thematic that I’ve been stressing for most of December. The fact that we are dragging on unresolved impasses such as Brexit negotiations or COVID stimulus in the US, alongside little in the way of other news or data, has really caused idleness (read low volatility) to settle in.

And it’s not like the prospects to get an immediate resolution are just around the corner. The UK and EU negotiators remain a long way from reaching a deal, while in Capital Hill, the Dems and GOP continue their brinkmanship as the COVID-19 related cases and deaths in the US worsens by the day. Even an event that had been pencilled in as a propeller of higher vol turned out to be a dud. I am referring to the Bank of Canada, after it kept rates unchanged at 0.25% and rates would likely stay unchanged through 2023.

In the next 24h, the currency to watch most closely is the Euro as the ECB meets. With regards to today’s meeting, the question is how aggressive will the ECB be on additional stimulus measures. Consensus is for TLTROs and an extra EUR600bn (+/-) being added to the PEPP bond buying programme (QE) and to extend from June 21 to at least the end of next year.

In terms of market analysis, I am particularly interested in finding long-sided trap pattern opportunities in the Australian Dollar heading into this Thursday (the video below provides insights). Similarly, I will be stripping down the currency flows via the performances of indices to spot any opportunities to spot disparities in strength vs weakness.

Analysis of the Forex trends

In my video analysis below I use concepts such as momentum, market structures or order flow to come up with the daily outlook in the currency market. 

Economic indicators & events

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video. The indicator allows you to save time and avoid mistakes.

 

Source: Forexfactory

Important footnotes

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About the author

Ivan Delgado

Ivan Delgado is a decade-long Forex Trader. Feel free to follow Ivan on Youtube. Join thousands of traders who follow Ivan's insights to increase their profitability rate by learning the ins and outs of how to read and trade financial markets. Ivan has you covered with in-depth technical market analysis to help you turn the corner.