Early Days

TIME HORIZONS - When you take positions that you'd expect to play out over a longer time horizon, it's important that you remember this was the expectation at all times. It's so important when you trade that you make sure you know going into a position what your expectations are with respect to how long you think it will take for the market to do what you think it should. If you don't do this, you run the risk of making bad decisions. It's as simple as that. At the moment, I am sitting on two positions that need time to play out and this is something I was committed to when I got into both of them. Now of course, the Cable long has really stretched things out, pushing towards the limits of those bounds that I have set for it. But even still, this is all within the plan and it's quite amazing how when you sit back and keep to the plan, a market that one day looked like no one would touch it, is all of a sudden a market everyone wants to be buying. I don't know that this will be the case here, but it is something that happens quite a lot in markets.

cartoon july 5th

THE POUND - On Wednesday I highlighted a positive run of developments for the Pound and later in the day, we got that final PMI print, with services PMIs also coming in above expectations, resulting in a trifecta for the data set. Manufacturing PMIs were solid on Monday, construction PMIs beat on Tuesday and then services PMIs exceeded estimates on Wednesday. And remember, we also had that UK GDP beat and hawkish speak out from various BOE officials. But the Brexit overhang has been a drag on the trade and the broad Dollar demand in protest to US soft Dollar policy has been another big weight. These aren't things I dismissed when I took the position and my view remains the same with respect to both of these combative themes. I think Brexit will work itself out and I think the US administration will succeed in weakening the US Dollar. But right now, the momentum off the lows needs to carry through what I believe to be an important level at 1.3315. Right now, that's where I'm focused and if we get a close above there, I believe we will get a lot more wind at our backs.

Things are looking up but it's still early days.

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