ForexSpirit

I know that I’m only perpetuating the problem, but I don’t think I’ve yet to see a metaphor as overused as ‘green shoots’ in recent times. It even seems as if the news articles that track how often the phrase ‘green shoots’ is being used are multiplying like weeds in a garden. Enough with the gardening analogies!

The phrase has become so widespread that I think the markets are about ripe to administer a healthy dose of pain to those who jump back into the markets thinking that the road to recovery is upon us.

Thus, even though EUR/USD has been looking to break the March highs around 1.37 this week I’ve remained sceptical of the strength left in the euro bulls and have been looking for reasons to keep short.

I kept my powder dry until Wednesday this week, when we had the release of the US retail sales data. The data for April was expected to be essentially flat, but came in worse than expected (0.1% core and 0.0% overall consensus versus -0.5% core and -0.4% overall actual), along with further downward revisions to March’s poor showing.

I started adding shorts through Wednesday and Thursday (which saw an unforeseen uptick in weekly unemployment data).

I closed out all those positions earlier today after the release of CPI showed modest inflation and there were improvements in the TIC long-term purchases, capacity utilisation rate and preliminary University of Michigan consumer sentiment. I had originally been looking to exit from my positions at 1.3500 but the positive economic data posed too much chance of price returning into the weekly range of 1.3550 to 1.3700.

It looks like the buying of Swiss francs by the Bank of International Settlement (BIS) at 11:00 EST put paid to that happening, as the dollar strengthened across the board and ended up breaking below 1.3500 to end the week at 1.3495.

In hindsight I could have definitely played the ranging nature of the market this week better, but at the same time I’m happy with my 1.4% equity gain.