So the week of the central banks is over and the stock market is very bullish with the US S&P500 surpassing the 1700 mark for first time ever. Europe and UK also had strong sessions. Ben and his counterparts all have kept their stance of easing, keeping the flow of cheap money going. For Ben, despite great economic numbers and positive news, he still sees significant risks with low inflation and “high” unemployment.
The “tapering” will come at some point within the next 18months but for now, the flood of money is pushing markets higher. Most of the cash is staying or entering the US to be involved in the new growth economy and that is breaking the usual correlation of “US stocks up, US dollar down”. So last night with the run on stocks we also so a stronger greenback.
Tonight’s non-farm payrolls could give some increased volatility. A bad figure of +200K or more (unlikely given the claims last night) would see dollar weakness. A figure on the mark or less will see the dollar continue to rally and stocks soar.
DATA HIGHLIGHTS AHEAD (times are in AEST) – 1130am AU PPI. 630pm UL Construction PMI. 1030pm US Unemployment and Non-Farm Payrolls.
AUDUSD – Great move this week by the Aussie and I am glad to hear some of you got the short on, I missed it but won’t be FOMO’ing into it. Today it is expected the Labor governmentt will bring us more bad news economically and it is now a 94% chance of rate cut next week. Will this drive the Aussie lower? It would make sense to, but I wouldn’t be surprised to see a little bounce as this week’s move is taking the cut into account.
EURUSD – Pulled up on support, but with greenback strength the euro like all the majors is being pushed around by the worlds’ largest economy. Expect this to rotate back to the 50ema.
GBPUSD – Some big selling pressure on the cable too and the range is getting tighter on it.
NZDUSD – Did get short this the other day and is now just sitting above the froth that it was in for a couple of weeks. Will keep an eye out to see if this area will support the buyers but at this stage no sign yet of buying sentiment to go against my short.
USDCAD – A good strong day that brought the Loonie back above the 50ema and resistance. Took this long on Wednesday and survived the volatility, just. Will look for this to get back into the 1.05 area with the US$ on a tear.
USDJPY – Awesome bar, but gone too far. Prefer the euroyen to trade and will look in that pair’s lower timeframes for an entry.
GOLD – Have bearish sentiment back, more bullish US tho. Still it is under support now and I might look to play now.
David Long/ Proprietary Trading Manager