Get Me Trading
John Fortune discusses the potential re-acceleration of inflation based on recent economic data, with a focus on the Japanese Yen as the best short-term trade. He also highlights the reversal in the disinflationary trade and recommends long dollar and commodity currencies versus G10 Majors. The dollar index is exhibiting a bottoming process and the Euro may fail in this area. Other currencies to watch include the Canadian dollar and Swiss franc. Overall, the plan heading into next week is to position into setups that benefit from the reflationary trade.
The Weekly Forex Forecast: Markets React to Inflationary Threats
– Introduction
– The Re-Acceleration of Inflation and Central Banks
– The Economic Calendar: Canada and Japan Show Beat in Inflation
– Yen Shorts as Best Forex Play for Next Week
– Interest Rate Decision in New Zealand and Short-Term Trades
– The Scorecards Indicate a Potential Regime Shift
– Disinflationary Environment vs. Reflationary Trade
– Best Markets to be Short for Next Week
– Dollar Index: Bottoming Process and Potential Breakout
– Euro: Weakening in Scorecards, Potential Negative Trades
– Pound: Negative Trend and Trade Setups
– Swiss Franc: Highest in the Scorecards, but Weakening
– Commodity Currencies: The Best Markets for Long Trades
– Conclusion
Introduction
In this week’s Forex forecast, John Fortune highlights the recent changes in the economic data and how it affects the markets. He explains how the threat of a re-acceleration of inflation is causing central banks to consider taking action on their yield curve control programs. In this article, we will examine the economic calendar, the potential regime shift, and the best markets to trade for the week ahead.
The Re-Acceleration of Inflation and Central Banks
Fortune explains how the recent data shows a threat of a re-acceleration of inflation, not just in the US but globally. He notes how Canada and Japan have shown beats in inflation rates and how this confirms the potential for re-acceleration of inflation. Fortune expects central banks to consider taking action on their yield curve control programs, which could lead to a recession later this year.
The Economic Calendar: Canada and Japan Show Beat in Inflation
Fortune highlights the recent economic data releases that show beats in inflation rates in Canada and Japan. He explains how this data confirms the potential for re-acceleration of inflation. Fortune expects Yen shorts to be the best Forex play for next week, citing Japan’s increasing inflation rates and the Bank of Japan’s reluctance to take action on their yield curve control program.
Yen Shorts as Best Forex Play for Next Week
Fortune recommends shorting the Yen as the best Forex play for next week due to Japan’s increasing inflation rates and the Bank of Japan’s reluctance to take action on their yield curve control program. He advises traders to bear in mind the risk of the Bank of Japan discussing their yield curve control program, as this could affect Yen shorts.
Interest Rate Decision in New Zealand and Short-Term Trades
Fortune advises traders to pay attention to the interest rate decision in New Zealand for short-term trades. He expects New Zealand dollar pairs to start moving after Wednesday and recommends looking for trending markets for long trades after that.
The Scorecards Indicate a Potential Regime Shift
Fortune explains how the scorecards indicate a potential regime shift, with a re-acceleration of inflation as the next phase of the business cycle. He notes how the commodity currencies are benefiting while the US dollar is bottoming in the scorecards. Fortune identifies the pound, Euro, and Swiss Franc as currencies that tend to benefit from a disinflationary environment, which may be coming to an end.
Disinflationary Environment vs. Reflationary Trade
Fortune explains how the scorecards are telling us to position ourselves into setups that benefit from a re-acceleration of inflation, as the disinflation trade may be coming to an end. He notes how the scorecards indicate a contraction and consolidation in the currencies but speaks to the potential for a regime shift. Fortune advises traders to look for long trades in commodity currencies and short trades in G10 majors.
Best Markets to be Short for Next Week
Fortune recommends shorting the Yen as the best Forex play for next week. He identifies the New Zealand dollar versus the Yen, the Frank versus the Yen, and the Canadian dollar as the best markets to be short. Fortune advises looking for short trades in pound CAD, euro CAD, and pound and Euro versus the dollar.
Dollar Index: Bottoming Process and Potential Breakout
Fortune highlights the bottoming process in the dollar index and the potential for a breakout. He notes how the dollar bottoming process indicates a potential re-acceleration of inflation, not a recessionary trade. Fortune expects the breakout to continue with momentum and believes the dollar will make a run at the seven-year breakout.
Euro: Weakening in Scorecards, Potential Negative Trades
Fortune notes how the Euro is weakening in the scorecards and identifies it as a potential negative trade. He advises looking for short trades in pound and Euro versus the dollar.
Pound: Negative Trend and Trade Setups
Fortune identifies a negative trend in the pound and advises looking for short trades in pound CAD.
Swiss Franc: Highest in the Scorecards, but Weakening
Fortune notes how the Swiss Franc is highest in the scorecards but weakening. He advises traders to look for short trades in Frank versus the Yen.
Commodity Currencies: The Best Markets for Long Trades
Fortune identifies the commodity currencies as the best markets for long trades. He advises looking for long trades in the New Zealand dollar versus the Yen, as well as long trades in dollar index and commodity currencies versus G10 majors.
Conclusion
The recent economic data shows a threat of re-acceleration of inflation, with central banks considering taking action on their yield curve control programs. The scorecards indicate a potential regime shift, with a re-acceleration of inflation as the next phase of the business cycle. Traders should pay attention to short-term trades and be aware of the potential risks in each market. The commodity currencies are the best markets for long trades, while short trades are advisable in G10 majors.
