Not exactly a surprise and the pound has come under attack after early gains, but what have we really learnt from this morning's price action?
The weaker than expected CPI data release seems to have been leaked, as I pre-empted in an earlier post but markets were expecting soft/negative readings and subsequent knock-on effect as per my preview
The fact is, and I'm certainly not taking any sides here or condoning leaks, but there is little we can do as traders to stop them. We just have to position accordingly and use the info/direction/flow to our best advantage, even if that means staying square
GBP longs have been complaining here in the comments sections (I'm sure the shorts aren't) but that is the risk of fx markets. The extent of the move in the pound into/after the data was made greater by the early demand generated by the M&A news which I did warn was made in thin markets and already largely priced in.
So to remain long into the CPI data based on that move, especially in cable with serious supply into 1.5400-10 that I had also highlighted here and here, was a little irresponsible/optimistic to say the least
I know some of you regard me as the devil incarnate for once being an interbank trader/price maker but I'm on this side now and keen to pass my 37 years of market experience on to you. This morning, as in other times recently, it appears that my guidance is falling on some stony ground.
Forex markets have always been the most fickle of places and that carries a risk well above that seen for most other trading/revenue opportunities. The very least you owe yourself is to prepare as best you can
And if that means recognizing your limitations, as indeed I still do, and/or erring on the side of caution then so be it.
We can not control those things over which we have no influence. And as I've said here on many occasions, quoting Kipling's If, we really must, as traders, deal with defeat and victory with equal respect.
There will always be opportunities and we must be best prepared to take full advantage whilst living to fight another day
Complaint, anger and bitterness really have no place in the trader's armoury
