Vantage FX |Aussie weaker on a quiet night as markets await Fed | 18 June 2013

June 18, 2013 By Leave a Comment

Recap

Considering that Jon Hilsenrath wrote an article almost guaranteeing the Fed taper yesterday morning and the FT followed up with a similar piece overnight stocks did pretty well all things considered. Even FX pairs were fairly quiet relative to what we have seen lately and commodities ended fairly flat.

So of the options available to markets in the lead up to the FOMC Wednesday night they choose the quiet one, which is of course great for a change.

Fed Talk intensifies

I saw the  Hilsenrath article yesterday morning Asian time just after it was released and it was really interesting in that he uses language that suggests he truly is the “Fed Mouthpiece”. His key point was that the Fed isn’t going to be tapering this month but they are likely to continue with forecasts that suggests they will and he notes that even though most private forecasters reckon the Fed might be disappointed by the growth the metric that matters most to them, employment, is improving. He writes,

When the Fed launched its latest round of bond buying last September, it said it wanted to see substantial progress in the labor-market outlook before ending the program.

Back in September, the economists surveyed by the Journal were projecting monthly growth in jobs of 142,000 in the year ahead. In the latest survey, they projected 183,000. In other words, they have become more optimistic about job growth since the Fed’s program was launched. Meantime, their unemployment forecasts are coming down, another sign of improvement. Their forecast for the December 2014 unemployment rate was 7.1% last September and 6.7% in the latest survey. The rate was 7.6% in May.

That’s progress—and the kind that matters most to Fed officials now.

So I’m expecting talk of tapering, but no actual tapering and a focus on the improving labour market. But I am not sure how the market is going to take this message.

Last night though stocks didn’t care, well they did because they finished off their highs but on balance stocks around the world did much better.

Asia kicked off the better mood with the Nikkei up 2.73%, the Hang Seng up 1.22% and the Sensex and Straits Times up 0.77% and 0.68% respectively. This helped Europe kick off nicely with the CAC and DAX up strongly at 1.55% and 1.08% respectively. The FTSE in London was up just 0.34% while its counterpart in Milan rose 0.25%. Spanish stocks rose 0.81%.

In the US stocks also ended higher but the question is whether the strong rise in the New York Empire Manufacturing index from -1.43 last to 7.84 in June. I think it reinforces Hilsenrath’s point above that the Fed is going to taper – so it is all about their communication now isn’t it.

At the close the Dow was 0.73% higher, the Nasdaq rose 0.83% and the S&P finished at 1639 up 0.75%.

FX Markets quiet for a change

FX markets were fairly quiet for a change displaying the sort of volatility that we see in what we might call “normal” times which is of course welcome. The Euro traded a 1.3316-1.3379 range to marginally continue its rally but it is looking a bit over extended. GBP likewise was fairly quiet up just 0.14% on the day at 1.5732 and it too looks like it might roll over if it doesn’t kick on this week while the yen had a negative day but the tractor beam of the 38.2% retracement level of the big rally seems to be keeping it anchored below 95. Only a break of 93.60/70 though opens up a deeper move and if anything support is expected near term.

Unless of course the Fed walks back from tapering and then all of the above is redundant.

Looking to the Aussie I wanted to use it this morning as a lesson between what should or could happen and what does or did happen. Yesterday in my CFTC Commitment of Traders Report  I talked about the fact that the big Spec traders are as short as they have ever been. That makes the Aussie vulnerable to a snap back and many twitterarti were commenting to that effect yesterday. Indeed I noted myself that the change of a rally to and through 97 is on the cards.

aud, audusd, australian dollar, australian dollar price quote, audusd hourly

But that is not the way I traded it – I traded the market in front of me yesterday and I went to bed short AUDUSD. Certainly I didn’t capture all of the move as I wasn’t expecting a move back to 0.9507 but rather into the 0.9550′s but as you can see in the chart above the AUD traded nicely from a techincal perspective after breaking the hourly uptrend it ran to the 200 hour moving average before rallying. It really was a beautiful technical move and reinforces that my “system” works as well on hourly charts as it does on the Dailies, Weeklies and Monthly charts – that is why I say my process is time invariant. It doesn’t always work of course we all have trades that simply don’t work but it does set up high probability trades.

And it is a lesson in the difference between trading and rhetoric – there was every reason based on market positioning to think the rally from yesterday’s lows had further legs but like I suggested there are lots of sellers around and in the end I traded the market not the rhetoric and my account benefitted from it.

Please note for all the trading I am doing I am holding a core small short Aussie position and will do for the next little while.

Commodities

All boring on the commodity front with markets seemingly becalmed as we run up to the FOMC. Of course this was one of two scenarios we might have seen and both come about because of a lack of players. Sometimes as people pull out of the market we see wild volatility, like the Aussie, while at others we see tighter ranges because the catalysts are lacking.

So at the close Nymex Crude was 0.02% higher at $97.87, Gold was -0.28% at $1383 and Dr Copper was -0.22%,

Data

The release of the RBA’s minutes will be important for the Aussie Dollar and Australia interest rates. Chinese FDI is out while the UK has a raft of inflation data before the ZEW survey in Germany and the BoE inflation letter. In the US it’s CPI, housing starts, building permits and the Redbook index.

Filed Under: June, Market Wrap Tagged With: , , , , , ,

Vantage FX |Markets enter a vacuum awaiting the FOMC, Yen stronger Aussie weaker | 17 June 2013

June 17, 2013 By Leave a Comment

Recap

Stocks in the US ended the week under pressure  as the Yen surged again and people reacquianted themselves with the relationship between USDJPY and the S&P 500. Data in the US was weaker than expected and the weekend just bought us a couple of days closer to the most important Fed meeting, probably announcement, of the Year this week.

The pressure remains on markets as we await Helicopter Ben

Since May markets have been under pressure as the Fed has signalled that it is actively contemplating when it will taper and when Bernanke and others added that it could be as soon as the next few meetings.

My sense is and has been that the Fed has figured out that the rally in stocks over the first 4 or 5 months of the year in the US and elsewhere threatened to blow an ugly asset bubble that could make the cure for the economic malaise worse than the disease. So this week is going to be very interesting and the language is terribly important for both bulls and bears.

The market shouldn’t fear tapering, is is just a slowing of the rate of bond buying not the halting and certainly not an increase in interest rates and I guess this is the message I expect the Fed and Bernanke in the press conference after to try to get across. But the market does fear tapering and as a behavioural finance/economics guy that’s what I am watching – I see this week’s meeting as a digital option. the market is going to ignite one way or the other depending on what the FOMC does and says.

So it is a very cautious time particulalry in this early week vacuum.

FX Volatility continues

USDJPY is at 94.22 this morning after making a high above 99 at one stage early last week. Even given the incredible volatility of the recent past this move on the week was phenomenal. Indeed the 20 day ATR is on a steady climb toward 200 points which is double what we saw in Feb-April and almost 4 times a big a daily range as we saw in the back end of last year.

This is one of the reasons the levered bets have been coming off the table. If we assume, as would be fair, that investors sold Yen and Bought dollars as the Yen selloff became obvious and then invested those proceeds into the US stock market and or emerging markets and maybe some Aussie dollars then we get a leveraged levered bet on purely Central Bank actions by the Fed and BoJ.

But when the Yen reverses the easy money isn’t as easy and positions get closed which is what we have seen over the past few weeks.

jpy, usdjpy, jpy chart daily

The chart above is USDJPY on the dailies and you can see it has pulled up at the 38.2% Fibo retracement support, or just above it. A break of this 94.60 level would open a move toward 90-91.

The Aussie Dollar is front and centre to any debate about free money, global growth, the outlook for the Australian economy and of course any growing fear of uncertainty and risk off move in markets.

The market, as you will see in my CFTC report later this morning is as short as it has been at least since 2000 and probably ever given the increased volume over that time and it closed the week under acute pressure dropping to 0.9566 at the New York close from a high only a few hours previous at 0.9664.

This morning in early Asian trade Reuters reports it has slipped a little further to 0.9553 bid.

It remains under pressure but as I noted in my free weekly newsletter on Saturday there are many, including Vincent Cignarella at the Wall Street Journal who thing that the Aussie might just have one more rally in it before it falls into the 80′s. Cignarella writes,

 I like the Aussie dollar to bounce in the near term up to as high as perhaps $0.9875, a level that would complete the fourth wave of the current Elliott Wave cycle, longer term the U.S. dollar will prevail. So don’t get married to the trade.

By year end the Australian dollar should settle around $0.8500 but not before exploding one last time toward even with the dollar.

Now I have some sympathy with the idea that the Aussie might have another bounce higher but this is a bear market so I would rather sell the rally than get long in the hope of same. The reason I say this is that Cignarella’s comment echoes something I have seen so many times in so many markets over the past 25 years and that is people want the market to reverse from the current trend so they can get back on the trade – in this case a rally to sell into. Experience has taught me though that if a lot of people are looking for that it just might never happen.

aud, audusd, australian dollar, australian dollar price quote, audusd weekly

As you can see in the weekly chart above there is support for the Aussie here and the dailies are still suggesting a bounce but my JimmyR trend indicator is in a bear market on both time frames. 0.9741 should be very large resistance at present.

Stocks under pressure 

The relationship between the Nikkei and the USDJPY is obvious, the relationship betwween the S&P 500 less so. But many were focussed on this on Friday as US stocks were let down by no growth in industrial production, capacity utilisation that came in at 77.6% and a fall in the University of Michigan Consumer confidence index from 84.5 to 82.7.

So with weaker data but fears of taper the early morning strength of US stocks evaporated into the afternoon and the Dow closed down 106 points or 0.70% at 15070, the Nasdaq was off 0.62% and the S&P 500 was 0.57% lower at 1627.

In Europe the FTSE closed up 0.05%, the DAX rose 0.40%, the CAC was 0.18% higher while in Milan stocks were 0.23% higher and stocks in Madrid were flat.

Note though that the good news from the weaker data in the US is the rally in US 10 years which are back at 2.14% from above 2.20% earlier in the week.

Commodities

Crude is apparently up on the back of the tensions in Syria which do appear to be taking on a more global and regional significance as the big powers square off and take sides. Russia in particular is very bellicose about army rebels with President Putin posing the question at G8 over the weekend of whether you want to arm people who not only kill their enemies but open them up and eat their body parts – gruesome but the video exists and with news that the Iran revolutionary guard are now in Syria fighting for Assad as well things are getting interesting in Syria and crude prces are watching.

At the close Crude was up 1.20% or $1.16 to $97.89 after earlier trading at the highest level since January this year. Gold was up 0.70% to $1389 and silver rose 1.72%, Dr Copper was 0.61% higher.

Data

Westpac Consumer survey in New Zealand, Tertiary index in Japan and a G8 meeting where I’m guessing Syria will be more the topic than markets.

In Australia we have new motor vehicle sales while in Europe and specifically Italy we have Trade Balance before the Empire State Manufacturing in the US along with the NAHB.

 

Filed Under: June, Market Wrap Tagged With: , , , , , , ,

Vantage FX |Aussie dollar roars as buyers re-emerge | 14 June 2013

June 14, 2013 By Leave a Comment

Recap

You would have been forgiven after seeing the massive 6% drop in the Nikkei yesterday to expect to walk in today after a night of equity market carnage and it might have gone that way but for an unexpected dip in jobless claims and much better than expected retail sales in the US.

On FX markets the data helped the US dollar claw back some ground against the Yen but it was the Aussie dollar that was the key mover rallying more than 2 cents off the low of yesterday.

Commodity markets were mixed and US 10 year bonds rallied 5 basis points which makes no sense given the data.

Aussie dollar roars

I made the easiest 50+ points I’ve probably ever made in the Aussie Dollars rally up to 0.9520ish after the slightly better than forecast employment report yesterday as I sold and then it dropped back into the 0.9430 region. But once again as Europe entered the fray the buyers re-emerged and it currently sits at 0.9617 as I write early doors Friday.

What was different last night and what suggests that the Aussie might have a significant further upmove after a consolidation in Asia today is that the sellers didn’t knock it back when the Euro came under pressure last night nor have the knocked it back yet.  It speaks of a market that might be, we know the specs are, a little or a lot short on a daily time frame and suggests a market that now needs reasons to sell as opposed to reasons to buy which has been the modis operandi for the past 3 weeks.

One thing I will say and that I find very interesting about the price action, or at least the persistent buying since the low earlier this week is that I may need to reconsider whether if markets go pear shaped, especially if emerging markets are or have joined the rout, whether the Aussies recent safe haven status doesn’t by default come back.

It’s worth thinking about even if it would be very counter-intuitive in a market rout usually.

aud, audusd, australian dollar, australian dollar price quote, audusd weekly

Anyway to the charts and just like gold before its big crash the Aussie may be mapping out a long term decline for the moment and may have found support at the bottom of what is becoming the channel as you can see in the weekly chart above. If we assume this is the case and if we look at the Dailies (chart here) then there is now a fair chance of a further rally using my usual process with a target of 0.9752 with an outside chance of 0.9885. On the day moves back to 0.9557 are likely to be supported.

Yen roars and Euro recovers from early weakness

With the Nikkei down more than 6% it makes no legitimate reason for the Yen to be stronger and at some point this relationship will break down as the market figures out that the Nikkei and Japan are mere shadows of their former self. But for the moment the Yen’s strength is probably the key reason that the Nikkei is under pressure along with questions about the efficacy of Abenomics. It’s a messy time and a very uncertain one in the lead up to the FOMC and BoJ Governor Kuroda’s comments yesterday that “Markets will gradually calm down” was hardly encouraging for Japanese investors.

So to see USDJPY down at 94.84 and to see it there after making a low overnight of 93.78 after a high of 96.08 yesterday is interesting an another example that Mandelbrot was right and volatility clusters.

jpy, usdjpy, jpy chart daily

As you can see in the chart above the USDJPY sell off has now satisfied, or within 20 pts anyway, what I consider to be a “Usual” or normal retracement of 38.2% which is of course a key Fibonacci level. We could be in for a big rebound but it is too early to tell and a move through last nights low of 93.78 and the “actual” level at 93.60 would be a sign of a deeper move. I don’t expect this level to break at present.

The Euro had an interesting night trading from a high yesterday afternoon around 1.3390 to a low of 1.3278 and it finds itself back at 1.3373 this morning essentially unchanged on the day and looking very strong. The pound was stronger trading ONLY (note irony) 90 point range for a gain and it sits at 1.5691.

Nikkei’s weakness fades as Stocks like the US data

Gee whiz it looked like it might be an ugly night in late Asian trade as the Nikkei was down 6.35%, Hang Seng off 2.19%, Shanghai of 2.84% and Europe walking in weaker down more than 2% in many markets. But the better than expected jobless claims which dropped 11,000 from expectations printing 334,000 and the big rise of 0.6% in Retail sales for May against expectations of 0.4% saw stocks rally all day dragging Europe out of the Doldrums.

So at the close the FTSE was up 0.09%, the DAX down 0.59%, the CAC up 0.11%, the FTSE in Milan up 0.57% but stocks in Madrid fell 0.64%.

In the US the Dow closed up 181 points or 1.21% at 15176, the Nasdaq up 1.31% and the S&P 500 rose 23 points or more than 1.4% to 1636.

s&p 500, spx, s&p 500 chart, daily 1

The chart above of the S&P 500 daily shows that it penetrated but rallied back above important support as shown by the trendline (if you would like to see how it looked yesterday afternoon in Asia the link is here). What you can also see is the low of 1597 (VantageFX MT 4 pricing) was also the low last week so a break of the line and 1595 would be a big move if it comes now.

Commodities

Nymex crude up again rising 0.89% to $96.73 bbl but Gold, silver, and Dr copper were all lower falling 0.35%, 0.98% and 1.24% respectively.

Data 

In New Zealand PMI and Food Price Index are released before inflation and employment data for the Eurozone as a whole. PPI is due out in the States and then industrial production and capacity utilisation.

So an interesting slide into home plate for the week over the next 24 hours without any real macro catalyst which implies last nights moves might continues.

Filed Under: June, Market Wrap Tagged With: , , , , , , ,

Vantage FX | Stocks and US dollar down again as risk aversion rises | 13 June 2013

June 13, 2013 By Leave a Comment

Recap

More concern over the past 24 hours about the path of Fed policy when the FOMC meets next week which caused more selling in stocks, bonds and FX markets and a generalised increase in volatility coming from fear of the unknown or should I say fear of the unknown market outcomes if the Fed tap is turned off.

Asian markets remain under pressure in a clear sign that capital is returning to the safety of home currencies which is helping the Yen, Euro and Pound but strangely putting the US dollar under a little pressure. Bonds remain under selling pressure too with the US 10 year at another 1 year high overnight.

It is another week before the FOMC meeting and it could be fraught with danger and uncertainty.

Stocks sell off again

Journo’s, pundits and blokes like myself are great for gather useless, but somewhat interesting markets stats sometimes and I picked up a cracker in a Reuters story this morning,

The Dow on Wednesday swung more than 200 points for the seventh time in the past 15 trading days, going back to Ben Bernanke’s latest Congressional testimony on May 22.

Yep, its all about the Fed and its all about the drugs that the stock market is on and knows is the only thing keeping the market up. As you can see in this chart below which I used in my Free Weekly Newsletter first a month ago and then again on the weekend saying,

QE is driving the stock market rally

What is clear is the relationship between the Fed buying bonds and the cash finding its way into stock prices.

As momentum built in April and May and as Abenomics was flooding the global economy with more cheap money the Fed has clearly made the decision that enough is enough and the cure of the GFC economic weakness disease should not include a new stock market bubble.

We’ll know more next week but in the mean time we have a bit of a vacuum where fear is trumping hope and stocks are under pressure.

Last night stocks were down from the get go in the US and just kept heading south. At the close the Dow was down 127 points and back below 15,000 at 14995. The Nasdaq was 1.08% lower and the S&P is once again closing in on critical support falling 13 points or 0.81% to 1613.

s&p 500, spx, s&p 500 chart, daily

The trendline comes in tonight at 1607 in terms of the pricing on my VantageFX MT4 platform which is the level to watch. Notwithstanding the fact I respect trendlines until they break my process suggests a break of the line.

In Europe it was the weakness in the US that dragged stocks lower with the FTSE down 0.65%, the DAX off 0.97%, the CAC off 0.43% and stocks in Milan off 1.61%. Somehow stocks in Spain rose 0.43%.

FX markets still don’t like the US dollar

The US dollar was stronger until last week on talk of the Fed taper but now it seems that the resonance that this delivered for the Buck has faded since then as markets have become more unstable and stocks in the US have come under pressure. The Yen’s resurgence makes sense from where I sit both fundamentally and technically but the Euro’s rally is harder to fathom but it just keeps on keeping on trading up to a high of 1.3359 overnight and it sits at 1.3338 as I write. GBP was also a little higher at 1.5678 and USDJPY continues to sell off within a wild range trading 95.13-97.02 in the past 24 hours and rests at 95.93 this morning.

aud, audusd, australian dollar, australian dollar price quote, audusd daily

The Aussie Dollar had a wild ride as well trading down to 0.9413 yesterday around lunch time before rallying strongly as Europe entered the fray yesterday afternoon/evening before making a high of 0.9563 before the sellers entered driving it back to 0.9470 this morning. The Aussie is trying to base but remains under pressure.

Commodities

Interesting night and I confess to not really being able to put the moves in context except to say that they were a result of a weaker US dollar. Indeed there was a huge and unexpected build in crude stocks in the US overnight but Nymex crude still managed to finish up 0.40% to $95.76 a Bbl. Gold was up 1.07% at $1388 Oz, Silver was up 0.70% and Dr Copper was 1% higher.

Interesting night.

Data

The US finally joins the fray tonight with jobless claims, retail sales, business inventories and export and import prices. But before that we see the release of the extremely volatile employment data in Australia with the punditry expecting a rise of 10,000 but the NAB business survey amongst others suggesting that the number might be undershot.

Filed Under: June, Market Wrap Tagged With: , , , , , , , ,

Vantage FX | Emerging Markets join the rout, time to watch out | 12 June 2013

June 12, 2013 By Leave a Comment

Recap

As if we need any fresh reminders that the Markets are on life support from central banks stocks were hammered yesterday in Tokyo and then overnight  and the Yen strengthened after the BoJ left things as they are – which is to say no less but no more stimulus.

In a worrying sign emerging markets have joined the rout recently with the Indian Rupee at all time lows and its counterpart in Indonesia under so much pressure that Bank Indonesia lifted rates 25 basis points last night to support the Rupiah.

Stocks in the US sold off, rallied and sold off and as I have been talking about again and again in the Free Weekly over the past month stability leads to instability and volatility clusters. Seems both Mandlebrot and Minsky are right.

But if you want a clear signal that last night’s moves were about fear then the emerging market and bond selloff is not the only pointer because we also saw commodity prices fall on a weaker US dollar. This could get ugly.

Increased Volatility puts Stocks under pressure

It’s been a theme for a few weeks now, longer actually, that I believe we were in a volatility transition from low to something more high given the Fed’s moves to taper and the general lack of volatility and the complacency that it brings with markets.

The BoJ’s actions yesterday which are entirely consistent with their overall plans but, and I know this is a crude analogy, like a junkie building up a tolerance to heroin the market just needs more and more and more of a hit to sustain itself. So the Nikkei was off 1.45%, the Hang Seng fell 1.20%, Shanghai was 1.39% and the Sensex in India was 1.53% lower.

This set a bad tone for Europe but so too did the unedifying spectacle of Joerg Asmussen arguing for the ECB’s OMT bond program which helped stabilise yields in the EU last year against his colleague on the ECB Board and doctrinaire Bundesbank President Jens Weidmann who was arguing against it in a German court overnight.

At the close the FTSE was down 0.94%, the DAX was 1.03% lower, CAC was down 1.38% while the periphery – reflecting increased risk aversion – of Spain and Italy were down 1.63% and 1.68% respectively.

In the US the S&P 500 traded down to 1623, up to 1640 and then closed at 1626 for a loss of 17 points or 1.02%. The Dow closed down 117 points or 0.77% and the Nasdaq was 1.06% lower.

Could the increased volatility stop the Fed from signalling a taper next week? Of course but equally the Fed might be about to stage its very own central banker style intervention for the junkie that markets have become.

Global FX markets messy

Given the BoJ was the catalyst for, or at least got the blame, for the stock shenanigans its no surprise that the USDJPY was the big mover overnight trading down from 99.04 yesterday morning to 96.03 as I write. Yesterday I wrote in the wake of the rally and as a result both of my fundamental and technical view said,

 It would be my proposition that while below the 99.90/100 level USDJPY has more downside ahead of it.

Which is what we have seen as you can see in the chart below.

jpy, usdjpy, jpy chart daily

We now have a big old range range between 99 and last weeks low at 94.93 a break of which would open a move down toward 92.37.

For the Aussie it has been a huge 24 hours with a test and rejection of my 93.77 level initially with a low at 80 before a solid 60 point rally which saw sellers come in and hit the Aussie hard. I had a short term trade on the way up for a recovery with a stop at 77 but that was taken out for a 35 point loss as the Aussie fell to a low of 0.9324 before recovering with the broad based US dollar weakness to sit at 0.9435 as I write this morning.

Thankfully my process suggested USDJPY was going to fall as I noted yesterday morning and I was short USDJPY for 100 odd points once the previous days low went so it ended up a good day all things considered.

aud, audusd, australian dollar, australian dollar price quote, audusd daily

I have targetted a move below 94 cents for a while now, or at least a test of support at this level, as a signal of the Aussie Dollar long terms outlook and I believe that even though a recovery of some sort is likely in the days ahead the very long term charts are warning of a cascading cliff – think waterfall – that the Aussie may fall off in the month/months ahead.

For the moment though yesterday’s sell off and rebound could be a good place from which the Aussie can recover – but remember its still a bear market and I can not see a situation where the instability is spreading to emerging markets in the manner that it is which is good for the Aussie. I going to buy some 3 month puts.

The Euro was higher taking out the previous high we talked about yesterday and the single currency strangely looks good techincally sitting at 1.3313 this morning – but I am not playing because I don’t trust it and know that I can’t separate my rhetoric from this pair so best I take it out of the quiver. Sterling also did better but not quite so technically and sits at 1.5646 up 0.48% to the Euro’s 0.43%. In a sign that these moves were about the US dollar the USDCHF rate is down 0.93% at 0.9244

Commodities

As noted in the Recap “global” commodities fell even though the US dollar was weaker which I take as a sure sign that things are getting messy in markets which are starting to correlate to one as they do when fear rises.

Nymex crude fell 0.90%, Gold was 0.66% lower, Silver down 1.26%and Dr Copper down 1.42%. The more specific commodities of the American mid-west however recovered the losses of the previous night with corn up 1.23%m wheat up 0.93% and soybeans up a whopping 1.87%

Data

Electronic retail sales in NZ, MAchinery orders in Japan and Westpac Consumer confidence in Australia and then the Japanese Economic indicator.

In Europe it is a bunch of CPI’s together with French and UK unemployment and EU IP and the BoE quarterly bulletin. In the US it is another quiet night on the data front.

Filed Under: June, Market Wrap Tagged With: , , , , , , ,

Vantage FX | BoJ day, Yen still biased lower? AUD finds support under 94 | 11 June 2013

June 11, 2013 By Leave a Comment

Recap

Stocks had a messy night as the competing forces of rising US bond yields, a Greek miss and weaker than expected Chinese data over the weekend competed with the S&P decision to take the US Governments Sovereign debt rating off negative watch and place it back to stable.

On FX markets regardless of the better Japanese data yesterday the Yen sold off again as we await the BoJ and the Aussie rallied off a low yesterday while I was at the beach of 0.9390

US Stocks watching the Fed

Looking back to Friday night the  non-farm payrolls were slightly better than expected at +175,000 but with the unemployment rate rising to 7.6% so we ended up with a Goldilocks number and a stock rally. But I I noted in our Free Weekly Newsletter on Saturday the Stock markets ability to hold up is directly related to and conditional on the Fed Balance sheet continuing to grow – so the Fed’s actions and tapering are of vital import to the stock market outlook.

So it’s no surprise that after Jon Hilsenrath has hit stocks with two subtly aggressive notes over the weekend about the chances of Tapering that US stocks ignored the big 4.94% bounce in the Nikkei yesterday in Asia closing either side of flat. The Dow was down 0.06%, the S&P 500 down 0.02% and the Nasdaq up 0.14%.

The key for me is the Hilsenrath articles and while I’m not sure many people would pick this nuance up or even interpret it the way I do but he wrote a couple of interesting articles after non-farm payrolls saying the Fed will both signal the “Taper” but then also noted in a separate note that the Fed hated Taper because it’s not aggressive enough – Ouch.

In the Wall Street Journal after the jobs data last night he said,

A good-but-not-great jobs report Friday ensured officials wouldn’t want to act right away and would instead want to see more data before taking a delicate step toward winding down the program. But they could point at their next meeting to improvement they’re seeing in the economy, a prerequisite to reducing the so-called quantitative-easing program.

And then followed up with,

The hangup for Fed officials is the word “tapering” suggests a slow, steady and predictable reduction from the current level of $85 billion a month at a succession of Fed meetings, say to $65 billion per month, then to $45 billion and so on. And that’s not necessarily what Fed officials envision.

Ouch – watch out we may be in for a bit of a shock as soon as the next weeks FOMC meeting.

Certainly the message might have got through to US bond traders as both the 30 year and 10 year were higher with the former at its highest since April 2012 and the 10 year closing at 2.21%.

This and the Fed is becoming a threat to the Stock market rally and a very real threat.

In Europe Germany continues to be a law unto itself with the DAX rising 0.65% but the rest of the market was under pressure. The FTSE was down 0.19%, the CAC down 0.22%, Milan fell 0.81% and in Madrid Spanish stocks fell 0.48%. BUt the real action was in Greece with the Athenian stock market fell 5.8% after the news that one of the cornerstone revenue raises for the Greek Rescue package, the sale of DEPA the Greek natural gas firm – failed to attract a bid. This makes it harder for Greece to hit its targets agreed with the Troka but it is worth noting that globally almost everyone except the Germans are acting more conciliatory for countries in strife at the moment.

US dollar stronger against the Yen as market awaits BoJ, Aussie struggles

Nothing matters in Asia today except the BoJ decision this afternoon but I would struggle to see how they might be more accommodative given they seem to be gaining traction as we saw in yesterday’s GDP data with a 1% growth rate QoQ and 4.1% annualized both better than expected. But USDJPY rose and I saw some reports that it was because of these data which makes no sense, none at all. What might make sense though is that the GDP deflator which fell 1.1% much worse than the -0.8% expected.

So Japan and the BoJ still has a deflation problem not the 2% inflation they are aiming at – so I guess the BoJ might pull a rabbit out of the hat today.

jpy, usdjpy, jpy chart daily

 

Looking at the chart above you can see the important juncture that the USDJPY is at presently. Having broken the 99.90 level and the 6 month+ uptrend USDJPY fell out of bed with a huge move last week into the 94′s before rallying hard for a retest yesterday of the uptrend line. It would be my proposition that while below the 99.90/100 level USDJPY has more downside ahead of it.

The Euro had a big week last week too but even with a strong  rally yesterday it has to break the 1.3300/20 region to kick on. Sterling looks exactly like Euro over the past few days and needs to take out 1.5680/1.57 which is last week’s high and the 200 week moving average.

The Australian dollar is struggling hard and I’m not sure whether the signals suggest that I should be very bullish or very bearish. Yesterday it got knocked under 94 cents on the back of the weaker than expected Chinese trade data that looked to me like authorities had cracked down on the “invoicing” racket with Hong Kong which is really just a way to get money off the mainland. But the Aussie did find support and rallied with the EUR and GBP overnight to a high of 0.9480 off a 0.9390 low.

The bullish signal is the fact that the CFTC COT report released Saturday morning showed a net short position in the Aussie dollar of m0re than 58,000 which looks like an all-time net high for shorts. The bearish signal is that the Aussie continues to make 52 week lows as it did again yesterday and with Friday nights close.

aud, audusd, australian dollar, australian dollar price quote, audusd daily

My sense is that I need to see 0.9377 trade as a clear signal that the support zone has broken otherwise I am going to treat it as intact and indeed I bought yesterday in the mid teens after the low and sold last night at 0.9477 last night just below the high of 0.9480. BoJ today is going to be important as is the home loan data and NAB Buisness Survey – the most important economic stat in Australia each month.

Commodities

It’s all a bit boring on Commodity markets, or at least the ones we watch, at the moment. Nymex crude was down 0.31% to $98.73, Gold rose 0.23% to $1386 and Silver was 0.85% higher at $21.78. Dr Copper fell 0.83% and Corn, Wheat and Soybeans were under intense pressure falling 2.14%, 1.04% and 0.93% respectively.

Data

Big day today with the BoJ interest rate decision and the Australian NAB business survey and home loan data.

In Europe tonight we have industrial production and the German Constitutional court ruling on the OTM bond buying program.

The US is quiet.

Filed Under: June, Market Wrap Tagged With: , , , , , , ,

Vantage FX | Yen, Euro, GBP and Aussie surge on USD weakness | 7 June 2013

June 7, 2013 By Leave a Comment

Recap

A huge night in FX markets as the US dollar came under sustained pressure with the Yen, Euro, Swissie and Pound all pushing sharply higher as it seems fears of a weak non-farm payrolls unwind much of the US dollars “tapering” strength. The Aussie also had a remarkable recovery off the low at 0.9423 yesterday. Concerns about the non-farm payrolls and the weight that a weak data print might take off the tapering talk rfesonated in Stock markets as well with a bug mid day rally in the US leaving stocks in positive territory and bonds down a little

Non- farm payrolls driving markets a day early

I spend a lot of my time talking about expectations and how often, actually usually, it is where the data prints relative to expectations that is more important than than the actual data print itself. In footy terms its like playing the man not the ball and its something I would tell my young bloke not to do when he is playing for the Nelson Bay Marlins under 11′s but in markets it works and it works well. Last night though was amazing however and really tells us what a hold that QE, bond buying and unconventional monetary policy has on the markets and trader psychology.

Now I was ready for a move tonight on the back of the data – I’m guessing a number around 120,000 versus the markets (at least the pundits) expectation for a number around 165,000/170,000 but after last night the question I’m asking myself is where is the market really betting the number will print. based on last night’s moves in FX and the recovery in US stocks my sense is that traders at least are betting that the recent run of weak data in the US is going to be replicated with a low number tonight and so a number on consensus is going to have an outsized impact compared to a number that is weak.

At the close the S&P was up 14 points or 0.88% to 1,623 after making a low of 1,598. The Dow was up 0.54% to 15,041 and the Nasdaq rose 0.66%. As you can see in the chart below the trendline has been rising as time goes by and the low last night was right on the line of support. This is the level to watch tonight.

s&p 500, spx, s&p 500 chart, daily

In Europe the market closed before the strong gains in the US and the FTSE closed down 1.30%, the DAX fell 1.19% and the CAC dropped 0.61%. Milan was poleaxed falling 2.16% and in Spain stocks dropped 0.48%. Part of Italy’s problem no doubt is the alarming rise in peripheral bond rates with the Italian 10 year up a whopping 23 basis points – but only to 4.36% so its hardly punative.

In Japan the Nikkei remains under pressure as flagged over the past few weeks in my Free Weekly Newsletter and I’ll update the outlook tomorrow morning but with the Yen so strong against the USD relative to recent moves the Nikkei still looks vulnerable.

US dollar hits the skids

An amazing move overnight with some huge ranges in the Majors, massive and remarkable moves really – just huge moves.

The Euro traded 1.3074-1.3304 to sit at 1.3245, GBPUSD was incredible trading 1.5380-1.5683 and sits at 1.5602 and the Yen had a big win against the USD trading 99.47-95.96 before bouncing back to 97.13 this morning.

These sorts of ranges in the three big currency pairs speaks of the kind of instability that the Fed, BoE and BoJ’s unconventional monetary policy is putting into markets. These are not unprecedented moves but they are certainly on the far right hand side of the bell curve.

eur, eurusd, euro, euro (eur) price quote

As you can see in the chart above the Euro has broken up and out of the trend line and last nights move above 1.33 makes for a very ugly shoulder now on the putative head and shoulder pattern I drew a week back but this in itself is a lesson in how to trade esoteric patterns such as this – don’t pre-empt them wait for the levels to the downside to break.

On a night when FX traders were thinking about US economic data, its weakness and a postponement of the “taper” ECB boss MArio Draghi’s comments after the ECB decsion to leave rates on hold that a recovery was on the way in Europe solidified my belief the ECB has no idea what it is talking about but reinforced to the market that the ECB is in no hurry to ease – so Euro got the double whammy positive push.

The Aussie was also volatile trading 0.9432-0.9673 and it sits at 0.9607 at the moment. The AUd low was just 20 points above the big support zone I have identified for a while now and the candle on the chart speaks of a potential bottom in the exact right place for the moment. At MacroBsiness this morning there is a report that everyone is queuing up to sell the Aussie Dollar which is a necessary precondition for a sustainable bounce of 3-4 cents so we’ll see how we go. If and only if 94 break will I get uber bearish.

On Commodity markets Crude and Gold were both up more than 1% but copper fell 1.5%.

Data

In Australia today we have the AiG Performance of construction index before trade data in Germany, France and the UK tonight but it is non-farm payrolls that are the key in the close out to week’s end.

Filed Under: June, Market Wrap Tagged With: , , , , , ,

Vantage FX | Aussie, Stocks and USDJPY fall heavily – more to come | 6 June 2013

June 6, 2013 By Leave a Comment

Recap

What a night with stocks smashed lower, the USDJPY under intense pressure the Aussie hammered by the weak economy that was so in evidence in yesterdays GDP data while GBP has rallied hard on the back of data that is not as bad as many feared.

It is going to be a very interesting last couple of days into the end of the week with the ADP employment survey released last night suggesting a weak non-farm payrolls on Friday night.

Of Stocks, of falls and of weak weak data

Now regular readers, and particularly subscribers to the weekly newsletter - YES, that is an unashamed add and you should subscriber here to recieve my Macro Musings each Saturday morning - know that I have been expecting stocks to fall for a few weeks now and indeed stock pundits need to be careful what they wish for with many lamenting the fact the S&P hadn’t had a 5% retracement for ages. Well after last nights fall of 22 points or 1.37% to 1,609 the S&P 500 is just under 5% off from the high last month.

But in many ways I/we here at GlobalFX, think that this stock reversal is only really just getting going and as noted yesterday the targets are 1,591 and if that breaks 1545.

s&p 500, spx, s&p 500 chart, daily

Elsewhere in the US the Dow was down 217 points or 1.43% and the Nasdaq fell 1.28%.

The key point behind the weakness in the US stock markets, besides following the Nikkei lower after PM Abe announced his latest plan, “the Third arrow” which seemed to circle round and hit him in the backside, is the weak data. And the data isweak in a way that really undermines the idea that the economy can cope with any sort of Fed “tapering” of its bond purchases as it seems to be communicating it is about to do.

The ADP private sector employment data was lower than expected printing 135,000 jobs against expectations of 165,000 suggesting the markets current expectations of a +165,000 non-farm payrolls on Friday is way over the top. Factory Orders were also weaker than expected printing just 1% against 1.5% expected and the Beige Book noted that the sequestor is starting to bite. Indeed Bloomberg re-quoted NY Fed boss Bill Dudley and what he said back on May 22nd and he is dead right,

I don’t really understand very well how the tug-of-war between the fiscal drag and the improving economy are going to sort of work their way out

Time will tell – but in the mean time the Fed goes on about tapering and the economy slows – not good for stocks, not at all.

Europe Economic CalendarIn Europe stocks also were slammed now doubt both because the US markets were under pressure but also because the Data in Europe (click on the pic to enlarge) continues to be weak even if its not as bad as it has been.

At the close the FTSE was 2.13% lower even though the Markit Services PMI for the UK was the one genuine bright spot in the data releases last night printing 54.9 up two full points from last month and much better than the 53.0 expected. GBP caught a solid bit on the back but the FTSE could not.

On the continent the DAX was 1.20% lower, the CAC fell 1.88% and strangely the peripheral markets of Milan and Madrid fell 0.96% and 0.86% respectively.

I don’t have the space here this morning but check out your charts on European markets, further downside beckons.

 

Aussie Dollar, weak growth and interest rate cuts

Australia Q1 GDP BreakupThat GDP data in Australia yesterday was as bad a set of numbers you can ever get for only just missing the estimate of the market – if you scrutinise the data table from the ANZ at right what you will see is an economy that is seeing the retraction of the mining boom and a lack of domestic demand to fill the void. Indeed the fact that net exports were such a positive contributor to the overall GDP return of 0.6% for the quarter and without which the economy would have produced negative growth (I know this is a bit mischievous given any other partial could have moved as well) speaks volumes for the fact the Australian econoy is in strife.

It remains my un-abiding  belief and has been since I saw the HILDA survey from back in 2009 on debt and Australian households share by age and intention, that the debt burden carried by Australian households will inhibit the efficacy of interest rate cuts in the future and as a consequence inhibit the transmission mechanism from rate cut to economic growth. As a result my belief since 2011 that rates in Australia would head to 2.50% has been adjust ed down to 2.00-2.25%.

So it is no surprise then that the Aussie Dollar got absolutely smashed last night making a new 12 month low at 0.9509. Initially after the data the Aussie held up very well – surprisingly so given the weak data. I sold on the rally into the 40′s on 96 and in the 20′s on 96 again and rode it down as the Yen strength kicked AUDJPY lower and increased the pressure on the Aussie across the board.

audjpy daily, australian dollar japanese yen cross, daily

AUDJPY and AUDUSD both look like they have further to go – while on the hourly charts things look like they may rally a little the focus is now on 92.95 and 0.9400/20 respectively.

Yen and Sterling the big FX movers

I was short USDJPY yesterday looking for a test down to the uptrend line for this big long term trend which we effectively saw overnight. I had a take profit in at 98.97 but it missed by a point then bounced up to the 99.30′s before falling back and I closed at 99.02 adhering to the old adage of respecting trendlines unless or until they break. I might sell some if it gives way today.

On the Euro as noted it is becalmed and I am still watching the formation of 1.28-1.3260 box. A break either side would be decisive. GBP was a big mover overnight and I was asked on Twitter yesterday what I thought I said that it is having a big old counter-trend rally within an overall move back to 1.42 which regular readers know is my long term core view. But I also noted that I thought GBP had a coupl of big figures topside a large part of which we saw last night. So wehre to from here? A break of 1.5420 gives another 150 points but I am inclined to fade this move from here.

Data

Australian trade data might get people going today after yesterday and then we have German factory orders before both the BoE and ECB decisions and jobless claims in the US.

Filed Under: June, Market Wrap Tagged With: , , , , , , , ,

Vantage FX | Aussie and stocks reverse, watch GDP today | 5 June 2013

June 5, 2013 By Leave a Comment

Recap

An interesting night last night without the big data catalysts of the previous evening some of the previous day’s Topsy Turvy trading gave way to something more akin to what I’d say recognises the economic reality. Stocks in the US came under pressure, the Australian Dollar got smashed but the USD had a mixed night up against the YEn and loosing ground against the Euro and the Pound. Gold was down but Copper rose.

Stocks

Perhaps it was just that for the last 19 Tuesday’s Wall Street had finished higher and people were front running the move on Monday so there was give back last night – who knows but at the close of play the Dow was down 76 points at 15,178 after a high of 15,305 for a loss of 0.50%. The S&P fell 9 points to 1,631 or 0.57% and the Nasdaq was 0.59% lower. There was of course more talk of Tapering with the Kansas Fed Governor the latest to voice he desire to see a reduction sooner rather than later.

In Europe it was catch up on what they missed the day before after they closed with the FTSE up 0.52%, the DAX rose 0.12%, CAC rose 0.14% and the Milanese and Madrid stocks markets were up 0.45% and 0.95% respectively. Who would want to be a European stock trader – always a day behind.

On Stocks, noted Stock Guru Byron Wein was on Fox Business overnight talking about his outlook for stocks and I think what he says is worth noting, I’ll post the video later, and even though it accords verbatim with my own view this is not confirmation bias just me quoting someone better known and with more gravitas than myself. Anyway Wein said,

The market has already given you a full-year’s performance and we’re only at the beginning of June. It’s unrealistic to think the market could continue to go up at the rate it’s gone up so far this year. There’s bound to be a correction.

You have earnings problems, you have the economy slowing, you have all the economies around the world slowing, demand for U.S. products are slowing, so my view is it’s time to be cautious.

This is an interesting  way to think about it – the market has already given you the years return and is due for a retracement - that is what happened last year and given my technical view I think fits with the retracement I am looking for in the S&P and other Stock Markets.

s&p 500, spx, s&p 500 chart, daily

1591 seems a reasonable first target and if this breaks then 1545 is the next target – the former is only 2.5% away and the later only 5.2% so hardly shocking.

Part of the reason for the late weakness in the US has been laid at the feet of Nikkei futures falling back in US trade but as you can see in the chart below it is pretty clear that the Nikkei IS breaking down now.

nikkei 225 daily, nky, (nky), nikkei chart daily

Australia, Aussie Dollar,  RBA and GDP

The behavioural stuff of economics and markets is one of my core strengths I think and we got a very clear view of how sentiment and behaviour toward the Aussie dollar has changed over the past 6 weeks. Having called for a move back to 0.9780 last week as a garden variety retracement for the Australian Dollar we saw that achieved on Monday night. But there was absolutely no follow through yesterday in the lead up the RBA’s meeting.

RBA June 2013 Wordle

Then of course in one of the briefest RBA statements in ages the Governor articulated that he felt rate cuts were still working through and as this wordle cloud shows the key message that came out was of consistent growth.

But AUDUSD traders heard two things it is clear – one, that inflation remains low and is not an impediment to further cuts and two that the Aussie Dollar is still high even though it has fallen relative to moves in exports. Which knocked the AUD down to a low of 0.9606 after a high of 0.9771 yesterday.

So we know this is still a bear market for the Aussie and it reinforces that sellers are coming into the market to meet short term rallies regardless of the fact that the specs might be structurally very short.

And both bulls and bears might get a chance to play today with the Australian Q1 2013 GDP being released at 11.30 today. TThe Majors seem to be looking for a growth rate of around 0.7-0.8% for the quarter and 2.7/2.8% for the year which is bank on what the market is looking for. Net exports will have a very positive contribution so it is going to be hard to get a bad number it seems and if GDP is weak then this is a very big sign that Australia is slowing and slowing fast. So the chances are GDP might surprise to the upside but the impact on the market will be less than weakness given current market sentiment.

aud, audusd, australian dollar, australian dollar price quote, audusd daily

Looking at the chart above you can see a huge rally followed by a big retracement the next candle, not exactly unprecedented but certainly very unstable and as I note above it reinforces the notion that rallies are going to be met with selling. Key levels to watch today given that I am going into the number flat are 0.9525 on the bottom and then huge support at 0.9400. Topside it is 0.9685/95 then 0.9780/90 and 0.9870 which is the 38.2% retracement of the big fall.

Other FX markets

The Euro is breaking up and through the top of the down trend channel that has constrained it since earlier this year sitting at 1.3085 this morning- I’m a bit out of touch short term on the Euro as it has rallied back from the mid 1.28 region for an impressive move as the US growth data has disappointed recently. It could rally as far as 1.3260 and still be consistent with a break lower – perhaps it is just mapping out a 4-5 big figure range in which to trade as both the US and Europe disappoint in alternate measure.

jpy, usdjpy, jpy chart daily

USDJPY climbed back above 100 to a high of 100.41 but is back at 99.96 today with support about 100 points below – the Nikkei/Yen dance is going to be interesting over the next week or so.

GBP is flat on the day at 1.5314 after a 1.5271/1.5342 range. USDCHF traded 0.9448/0.9520 but the USD gained on the CAD rallying from a low of 1.0271 to a high of 1.0363 and sits at 1.0340 up 0.63% this morning.

Commodities

Nymex Crude is up 0.41% at $93.83 Bbl, Gold is down 1.03% or $14 to $1,398 with silver off 1.39% to $22.33. Copper rose 1.14% and corn was 0.80% higher while Wheat was flat and Soybeans fell 0.26%.

Data

GDP in Australia and HSBC Services PMI in China and then onto Europe for Markit Services PMI and European Q1 GDP and retail salestonight.

In the US it is Mortgage Apps, ADP Employment Survey, non-farm productivity, factory orders, ISM non-manufacturing and the Fed’s Beige book.

Filed Under: June, Market Wrap Tagged With: , , , , , ,

Vantage FX | Aussie and JPY hit targets amid USD weakness| 4 June 2013

June 4, 2013 By Leave a Comment

What a 24 hours of data we’ve had to kick the week off and what a change from what has been seen recently with the Chinese HSBC PMI on the weaker side as was data in the US from the ISM while in Europe the data for the Markit manufacturing PMI while still in contraction zone was stronger than expected. Worth noting for the longer term and abstracting from one months noisy data PMI reports from South Korea, through Taiwan and on to Indonesia and India were all pointing to a slowdown.

As a result the US dollar came under pressure across the board with even Nymex Crude and Copper higher even as the globe clearly slows because of the US dollar effect. Stocks in the US made a decent comeback with the S&P trading down to a low of 1,623 closing at 1,640 up 9 points or +0.57%. The Dow finished up 138 points or 0.92% and the Nasdaq rose 0.26%.

The key to the rally in US stocks is that even though there were two Fed officials talking about a reduction in the bond buying program last night the view is that the economy is too weak and the Fed wouldn’t dare. Bad news is good news – the world is upside down!

In Europe they seem to have missed the rally in the US late in the day with the FTSE off 0.88%, Dax down 0.75%, CAC off 0.70% while in Italy and Spain stocks fell 0.91% and 0.44% respectively.

In Tokyo yesterday the Nikkei was once again poleaxed and has fallen down and through important support which precursed the fall of USDJPY down and through support at 99.90. There has been a recovery in futures trade overnight as you can see in the chart below but if USDJPY continues to fall then the Nikkei will remain under pressure.

nikkei 225 daily, nky, (nky), nikkei chart daily

While talking about the Nikkei it is worth mentioning the Yen and its recent strength against the US dollar. While the reality is that these daily notes are in many ways the tabloids of market commentary and as such tomorrows electronic fish wrappers for me the articulation of my thoughts in this note form a core part of my process. So regular readers will recall that i argued that 102.70-103.50 was where the USDJPY would pull up due to a plethora of overhead technical resistance and we then looked for a test and break of 99.90. This has occurred and support is now 98.98 a break of which would open a very deep retracement. But this is the uptrend line from the start of the move so we respect it unless or until it breaks.

jpy, usdjpy, jpy chart daily

The perverse nature of the relationship between economic statistics and data was on show in the US stock market last night as it was with regard the value of the Australian Dollar over the past 24 hours. The Aussie hit a high of 0.9792 more than 2 cents higher than the low yesterday morning of 0.9587. Of course the Aussie rally was expected by us here at Global FX as we targeted a move to 0.9780 last week after the AUD found support at 0.9525 but coming on the day that the ANZ Job Ad’s fell 2.4%, when retails sales grew at just 0.2% last month and when the AiG performance of manufacturing printed better but still appallingly at just 43.80 many fundamentalists might find it strange that the Aussie has rallied so hard when it is clear that the domestic economy is going to be unable to fill the mining void and when the data from around the world is still weak as we saw in the PMI’s over the past 24 hours.

The key here and why we always stress a combination of drivers as key determinants of traders and investors is that the rally is not about Australian fundamentals it is about AUD market positioning (which hit an extreme as you can see in CFTC data released Friday night), its about technicals (market got oversold and suggested a normal bounce of up to 4 cents), and its about the US dollar which was weaker across the board and traded down and through the 99.90 level in USDJPY we highlighted.

aud, audusd, australian dollar, australian dollar price quote, audusd daily

Interestingly the daily charts suggests this recovery isn’t over yet. As I wrote in the Free Weeklys newsletter on Saturday the rally was expected to head into the 0.9780-0.9870 region. So we’ll see where it goes in the next day or so but it has satisfied our minimum retracement level.

Watch out for the RBA today as I would note that over the past couple of years they often move twice in close order and then step away for a while so this is not a zero probability of a cut day, maybe 20-30% chance. My view, they should cut today. 

Elsewhere the Euro is trying to make my H&S call look silly and in fact it almost does now but the key was and is a break down through 1.2840 and or 1.2740 to confirm the break down. As it stands at the moment thought the Euro is threatening to break up and out of a descending wedge.

On Commodity markets as noted above Nymex Crude was up 1.61%, Gold rallied 1.37%, Silver pushed 2.19% higher and copper rose 1.16%.

Data

RBA the key for Australian and Aussie dollar traders – 2.30 pm Sydney/Melbourne/Brisbane time.

Otherwise fairly quiet.

Filed Under: June, Market Wrap Tagged With: , , , , , ,
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