Hello traders,
This trading week is coming to an end and if there’s one asset that earned quiet respect this week, it’s the U.S. dollar. No drama. Just steady moves, backed by solid data.
As a futures trader, that kind of setup always gets my attention.
Just a few days before, I wrote to you here in the Trading Room why I can’t take my eyes off the dollar right now and how its next move could ripple through every market you trade.
If you were reading my newsletter back then, you positioned yourself and your trades perfectly for this week.
June retail sales came in firmer than expected, surprising economists who were bracing for a slowdown. Then, jobless claims considerably dropped to new lows, showing continued resilience in the U.S. labor market.
All of that reinforced what traders have been starting to price in: the Fed has room to wait.
Rate cut bets softened. Treasury yields held steady. And the dollar got its second weekly gain in a row.
But what really caught my eye was how the dollar gained while others stumbled.
The Japanese yen, for example, slipped to a new lower low this week. With Japan’s upper-house elections coming up on July 21 and disappointing export numbers in the background, traders started pulling away from the yen. The euro and pound both saw weekly losses as well, each giving up around 0.6 percent against the dollar.
In my book, that kind of global divergence is the best kind of confirmation.
When the dollar is strong and everything else is softening, it tells me I’m on the right side of the flow.
I also lightened up my gold position slightly. With the changes in the dollar and inflation stickier than expected, gold eased back a little this week. No panic there, just good risk rotation.
If this changes the way you analyze your trades now, you’re ready for the next step, building a system that removes doubt and makes true discipline automatic.
As we head into the weekend, I’m watching how markets digest this week’s signals.
If the Fed stays quiet and the data keeps printing firm, I see more upside in the dollar next week.
In a market full of noise, the dollar won this week by simply doing its job.
No flash, no hype, just confident moves. And that’s exactly how I like to trade it.
See you in the next one.
Imre Gams
Editor, The Trading Room
