Heavy Event Risk Doesn’t Gaurantee Volatility but it Can Help Setup Trades

We were presented with another day of heavy event risk. Under normal market conditions (something that I would say is years behind us at this point), the presence and release of a major round of scheduled data would catalyze significant volatility and perhaps develop underlying capital flow trends (risk appetite). However, as we have seen time and again in recent weeks, an overloaded day of fundamental event risk actually works to temper larger fundamental trends. This means we are presented with short-term volatility; but still lacking for those larger trends. Such was the situation today. A significant round of event risk that included a highly anticipated Fed meeting minutes would rouse concern but fail to produce a singular move. There was however enough movement to shake up my positions.

Two of the most active currencies on the day were the British pound and Swiss franc. That is ironic because I had jumped into a reduced size GBPCHF long position yesterday. It was a gamble to begin with because the long-term range had established many tests of support at 1.5850; and the individual moves from these currencies offer more than enough drive to overcome this road block. Good thing I set my stop approximately 90 points away and kept my leverage low. At the same time, my GBPUSD would fall under the sterling's weight and help to offset the stopped out cross. For my other active trades, the day would offer little to work with as they are largerly dependent upon medium-term setups. EURUSD was little changed and AUDCAD is still struggling to jump forge direction. In fact, the latter reduced size position is in the red and running beyond my projected time frame. If it doesn't get stopped out or show significant headway by tomorrow; I will just cut out and move on.

A clear bearing on AUDCAD is a consideable probability over the coming 24 hours. Due for release in the upcoming Asian session is the Australian GDP reading. This has good volatility potential. For that reason, GBPAUD is an attractive potential trade as well. Whether this pair puts in for a breakout or range swing, there is opportunity. That being said, I am keeping my expectations reserved as a deviation from underlying risk appetite trends won't last long. At the same time, I could look for another EURAUD channel swing (which would have worked out well if I jumped back in on Monday); but I don't want to push it. Another short-term notable includes GBPNZD which is currently in the middle of its range and USDCAD as it marks out a short and long-term triple top. I'm on the lookout for more short-term opportunities and will try to update them on the Real Time News feed.