The Importance of Anonymity

The modern era of social media has had a profound impact on the way in which we all lead

our lives. The pros and cons of this more interconnected world are yet to be fully

understood by many, but the integrity of one’s identity and data should never be taken for

granted- just ask anyone who’s had that stolen from them!

The same issues apply to markets in general too, and for the purposes of this article, more

especially in the Forex space. Having too many people know which way you are exposed in

the currency market is more often a source of disappointment than it is a reward. I have

written here previously, and not that long ago, that quite often leading protagonists like to

publish the details of their trading ideas. This invariably includes the levels at which they

would place a loss limit on any risk they take- or to be more exact; where exactly they

advise others to.

Only yesterday we saw a number of stop losses driven out on some trades previously

advertised only a few days back. I shall not go into detail here on what those were, but I

would again remind the reader about the importance of balancing the desire for media

exposure against the value of retaining a degree of anonymity, be that personal or

otherwise. Point made I will move on.

On Wednesday evening the US Fed, it would seem, has put a hold on further monetary

tightening for the time being. The immediate impact sent US yields and the dollar lower,

further underpinning January’s equity market rebound, making it the best month for US

equities in seven years. The combination of lower interest rates and a lower dollar also

helped gold to lift further, through $1320 an ounce.

However, since then month end demand for the US currency yesterday has seen it rebound

over the past 24hours as the EURUSD fails again to lift convincingly past 1.15 and the

GBPUSD has continued to shy away from breaking above resistance, now at 1.3225, falling

back below 1.3100 in Asian trading overnight.

When it comes to the EUR I have already mentioned the importance of not forgetting the

potential negative impacts of Brexit on the currency- something that often seems to get

overlooked, but more importantly perhaps; the data releases this week from the Eurozone

have not been at all positive either.

Italy is technically in recession having posted another quarter of negative growth which is

perhaps not that much of a surprise as it was widely expected. However, another set of

alarmingly weak German data yesterday is also portending a wider slow down on the

continent. German December retail sales fell by a whopping 4.3% - a number that makes the

UK data for the same period look good!

Eurozone inflation doesn’t seem to be a problem either. A fact that may be endorsed this

morning with the release of the most recent Pan-European CPI data due out at 10am,

details of which will most likely be revealed before you read this article. However, and as

far as further fed policy action is concerned, the latest US unemployment report may

provide more direction for the markets ahead of the weekend when at 1.30pm we will see

their numbers for January.

One element of this report which could be more important than the headline jobs numbers;

is the level of wage inflation, currently running at an annualised rate of 3.2%. This is

expected to be unchanged in January, but anything markedly higher or lower will either add

or detract from the Fed’s policy shift earlier this week. Consequently, US equity and bond

markets and the dollar could take their lead into the weekend from this too, but as usual

the devil may also be hidden in revisions to any of the detail.

Talking of ‘hidden detail’-a parting anecdotal thought for today- If you do not want your

name on the list then, “Don’t tell him Pike!”

Important Economic releases due today

10am- Eurozone January CPI inflation report

1.30pm- US January non farm payrolls and monthly job report

(non farm payroll estimate vary between + 150k-210k- median 170k)

3pm- US January ISM manufacturing index