US durable goods came in poorly last night, down 7.3% compared to an adjusted figure of +3.9% previous. I see this, along with Friday nights New Home sales as rogue figures and not a new trend. The greenback punched lower against most peers but managed to regain the losses within a few hours.
More interesting was the US Sec-of-State Kerry warning Syria. I see this as sabre rattling by the US armaments industry. Yes al-Assad’s use of chemical weapons is despicable and he should be in Guantanamo or at least the Hague for war crimes, but the US also need to use their stockpiling weapons, it is good for their economy, so this could go further than just a warning. Kerry’s comments sent US stocks south again and VIX up 7%. If this develops into a full blown intervention by the US into the Syrian conflict, oil and gold will rally and funds will move back into bonds, pushing the US$ back up towards 85.
DATA HIGHLIGHTS TODAY – German Business Climate. US Consumer Confidence.
AUDUSD – Did post a Higher High/Higher Low but closed under resistance in what was a very quiet trading session globally. I still see the Aussie lower throughout the rest of 2013.
EURUSD – An inside bar and dojii too. Complete indecision having opened and closed in the middle of nowhere. If the market cannot decide which way it wants to trade, should we make a trading decision? I think not.
GBPUSD – With the UK on holiday it was to be expected it would be a quiet night in currencies, since London accounts for 60+% of trading volume in FX. Another inside bar.
NZDUSD – Managed to post a swing low with some buying momentum stepping into the kiwi. Like the Aussie it did close under resistance. One bar does not make trend so another HH/HL would be needed to be seen before a new trend is confirmed.
USDCAD – Inside bar yes, but the sellers have clearly dominated the last two sessions. With a pick up in Mid-East tension potentially pushing oil prices up, the Loonie should see some strength on the back of that. We are seeing that potentiality in Loonie prices now. If it eventuates expect 1.01 and perhaps even parity to be seen. That said, trade what you see, not what you believe. Belief is the death of intelligence.
USDJPY – Still wandering aimlessly like a caravan with a broken axel and flat tyre. No interest.
GOLD – Has a good trend going on making HH/HL’s. I said back in late July I would like to see a complete cycle above the 50ema before stepping into gold. Therefore a pullback to test support in the 1,350 area will get me excited. Whether or not we get that opportunity is another thing, will keep you posted.
David Long / Proprietary Trading Manager