The time I was too scared because I could see the future too clearly [Powell] [Foreign Exchange Trading Diary 38]

Hello! I'm Yuki from the Knives Out generation!

In this article, I would like to talk about the economic events and trading situation on Friday, 8/22!

Here is today's table of contents!

The Jackson Hole Symposium started on Thursday, and there was some quite interesting movement on Friday, so I would like to thoroughly cover it in today's article!

Please feel free to jump to the parts that interest you, and I would be happy if you could support me with a like!

Let's get started.

Before reading this article

First, there is a request, or rather a recommendation, before you read this article!

In today's article, I will once again cover the Jackson Hole Symposium!

It is not mandatory, but I have a past article that summarizes 'what the Jackson Hole Symposium is,' so if you read that and come back, I think you will be able to enjoy today's article even more!

Please take a look if you have time! (It's okay to skip it)

Today's super hot economic events 🇺🇸

Now, let's get straight to the main topic!

Here is the list of economic events that took place on Friday, 8/22.

Just look at this.

If you have been reading every day since Monday, you might understand how amazing this is, but it is a parade of high importance 🟥, full of that final boss feeling perfect for the last day of the week.

At 8:30, Japan's Consumer Price Index (CPI) was released, and at 15:00, Germany's Q2 GDP was announced.

While both of these remain super important indicators, they are still

no match for the 🇺🇸speech by Fed Chair Powell at 23:00.

I would like to write about Japan's CPI and Germany's GDP if I have time, but in this article, please let me talk thoroughly about the Fed Chair Powell's speech!

Expected content of the speech

First of all, what kind of content was expected for this speech by Chair Powell?

The speech content and predicted market reactions were summarized by pattern together with Chappy from ChatGPT, so please take a look.

What did you think?

I summarized it simply, but whether or not there is a hint of a rate cut in Chair Powell's remarks becomes a major point.

The judgment itself is not difficult, but it was an event where there would definitely be a big movement in patterns other than "decision reserved."

However, which of these three patterns it would be was predictable to some extent.

Please take a look at this tweet.

As mentioned in this article, President Trump issued a statement calling for a rate cut on Tuesday, August 19th.

Because of that, there is a mood that Chairman Powell might give in to this and

implement a rate cut

and as someone who was pushed around by President Trump during the employment statistics at the beginning of August, I actually believed it.

The trades I made

-Trade 1-

Well, ahead of such a super important speech by Chairman Powell, I made a trade for the first time in a while! (It's been about 10 days??)

Please take a look at this.

First, starting with Euro.

There were about 3 hours left until 23:00 when the speech would start, but the 40,000 yen worth of 232.30 Euros I bought had made a profit of about 13 yen, so I sold it.

-Trade 2-

Next is this.

60,000 yen worth of 404.29 Dollars I bought also made a profit of 24 yen, so I sold that as well.

With this, I have returned all my funds to Japanese yen!

It might be the first time since the day the foreign currency trading championship started lol

-Why did I convert everything to Japanese Yen?-

Why did I convert everything back to Japanese Yen?

While it is true that I had made a small profit of 13 yen on the Euro and 24 yen on the US Dollar, that is not the only reason.

As I mentioned earlier, the answer lies in the fact that President Trump had already issued a statement demanding a rate cut beforehand.

It is likely that Chairman Powell's speech this time will hint at a rate cut.

If that happens, the price of the US Dollar will drop significantly, and in resonance with that, other foreign currencies will also fall.

In other words, I judged that holding foreign currency right now carries the risk of incurring a significant loss.

Even if, by some chance, Powell pushes back and hints at a rate hike, I can just quickly buy back in at that time.

For these reasons, this time, I converted all foreign currencies back to Japanese Yen before the speech.

Results and Market Reaction

Now, what kind of remarks did Chairman Powell actually make?

The answer is,

1. Interest rate cut suggestion pattern

was it.

Here is the market's reaction to this.

This is incredible...!

This is the price of the US dollar, but what was 1 dollar = 148.5 yeninstantly dropped to 146.6 yen!!

It wasn't just the US dollar. The Euro also showed significant price movement.

Please take a look at this.

The Euro also showed a similar movement to the US dollar, and what was 1 Euro = 172.6 yenfell to 171.8 yen.

It's a better drop compared to the US dollar, but it is still a significant decline.

In other words, my prediction that he would suggest an interest rate cut this time was spot on, and it means that converting everything back to Japanese yen in advance was also the perfect decision!!!

What would have happened if I had just kept holding it in foreign currency...

I would like to write a note article about it again if I have the chance.

Conclusion

I have introduced this in a rush, but since it has become quite long, I would like to end today's article here!

On this Friday, the end of the week (since we cannot trade on weekends), I was able to make the best move and get through it feeling great!

Regarding Chairman Powell's speech this time,
"What would have happened if I had kept everything in foreign currency"

and
"Regarding future trading policies"

and so on, please let me write about them in a new article again! (Because I cannot write it all in this article.)

I would be happy if you could like and follow me, and wait for the next update❣️

Thank you for reading until the end today as well!

See you in the next article!