I hope you have all had some fun trading the large moves, not that there were many setups to take, it was close your eyes and pull the trigger stuff. The potential threat of the stop in cash flow from the US Fed spread through the markets like a bushfire on a hot windy day in the Aussie outback. The “rout” wasn’t limited to currencies. Commodities and stocks also took a beating and traders will be welcoming the calm of the weekend (or they will be letting loose the tension in bars around the world tonight). The panic will continue today.
In the normal news we saw positive data out of the US again in their home sales. More interesting was the surge in US manufacturing, posting the highest figure in over a year and the first positive one in 6 months. So, Ben’s crystal ball is pretty good. So, there is every reason to believe in the US economy and its growth potential. The boom continues, once the panic of the free cash wears off. It will be interesting to see if the US economy will continue to grow without free cash, but that is next year’s story, let’s not get ahead of ourselves.
Elsewhere, unfortunately, the story is not so rosy. Germany and France and Europe as a whole all posted manufacturing data that shows shrinkage in output. China too is in negative growth territory. On a positive note, the poms posted a decent retail sales figure; let’s see if that trend can continue next month.
So it seems that globally the world is struggling but the secular Americans are floating high and dry on a li-lo of greenbacks. Ben didn’t say it but I am sure he is watching carefully the global situation, he won’t turn that tap off whilst there is a threat to the US economy. The US domestic is large, but we are in a global economy now, they cannot afford to rely on purely domestic consumption anymore.
DATA HIGHLIGHTS AHEAD (times are in AEST) – 1030pm CAD CPI
AUDUSD –Well, there was a little more selling than I expected. That fire got a little fiercer than it should have. So, again the lesson is learnt, trade what you see, not what you believe. I do not see buyers, only seller sentiment.
EURUSD –Has closed under 13250 and closed just under the half way mark of the day’s range. A seller bar for sure, bearish, not so much as it bounced off strong support level of 13176.
GBPUSD –Stopped and reversed perfectly off the 50ema. An aggressive BUY (long) entry would be to enter as it makes a higher high today. The bar is certainly bullish but has the US$ strength finished yet? A conservative approach would be to wait until Monday and look for today’s bar to be a HH/HL then trade the new high from that.
NZDUSD – Kiwi has been smacked about like everything else, more so than the Aussie, playing catch up I guess.
USDCAD – Powered higher as the combination of spiking US$ and falling oil sent the Loonie through resistance and almost tagging the weekly trend line. Will be interesting to see if it can get through that next week.
USDJPY – Has come back to touch the 50ema and “Abenomics” has been forgotten briefly. We have a cycle under the ema so normally I would be looking to short from here. However, I will wait and see as the fundamentals tell us this is going higher.
GOLD – Nice move overnight, breaking out of the range as margin calls and panic pushed the yellow soft lower. All those queues of people who rushed into the Perth Mint and other forms of buying back in April will be sweating and wondering what the hell happened. I warned back then it would be a dead cat bounce. That’s what a dead cat bounce looks like, they don’t bounce and its not pretty.
David Long/ Proprietary Trading Manager