Woohoo what a night! A great fun ride. Carney, Canada, US all pitching in for the entertainment.
The rollercoaster took off with BOE Governor Carney linking their Asset Purchase Program to economic targets, following Bernanke’s thinking to target unemployment. This will make the unemployment data each month (as in the US) a bigger deal than necessary and create huge volatility around it. Curiously the Cable initially sold off 100 pips but then took off the other way for 300 pips. The strength being the curiosity, as one would think having a sustained position of low rates and bond purchasing program would weaken a currency, not so. There is something else I am missing here. When I work it out I will let you know, in the mean time I would be looking to short it.
Then we moved across the pond to the America’s and Canada, where Carney came from just a few short months ago. The maple leafs had a shocking building figure, which weakened the Loonie and favoured my positions. Then the US got involved with their stock market continuing to have a correction. So, do you buy into the US on this pull back? I would say no. I think that the smart money will halt the flow into the US and begin looking for other higher yielding opportunities such as Australia. The US is well off the bottom of their cycle, not at the peak but in comparison to other markets like Australia which is at the bottom. Therefore the mid to long term return will be higher by taking positions in Australia, NZ, Asia and even in the South America’s.
DATA HIGHLIGHTS AHEAD (times are in AEST) – 1130am AU jobs data. (?) Chinese trade balance. (?) BOJ press conference.
AUDUSD – I took the 4hr trade only to watch the US dollar weaken against me. This put the daily into a HH/HL and trending back to test resistance. Have my stop in place and will watch it closely as the daily could push me out. Still, I prefer to be short the Aussie overall and this stance hasn’t changed.
EURUSD – Inching higher and being very quiet. The Eurodollar sneaking up to 1.34 with no headlines reminds me of Elmer Fudd…”Be wery wery quiet, we are hunting wabbits.” However, there is still no entry of interest and still inside the range of 1.28-1.34.
GBPUSD – Well, that is an interesting bar and one to avoid with a 10foot barge poll.
NZDUSD – 77 cents such a distant memory, botulism? What botulism. Nothing to see here, just a mad cow running through the field of prices. Like the aussie the kiwi is a few cents short of fair value. Should be at 75 and aussie at 85. But the market will not do what I tell it too damn it. Currently sitting right on the 50ema and could go either way from here.
USDCAD – Call me crazy but the Loonie is the only one behaving. Continuing in the trend and manage to close above resistance.
USDJPY – Yen continues to strengthen against all peers. The BOJ today will add some more volatility but in reality it is chopping about between the two figures Abe wanted back in November, 95 and 100. Happy to trade this short on smaller timeframes but not yet ready to take a trade on the daily.
GOLD – Still heading lower and I just took a short on the hourly cycle off the 50ema.
David Long/ Proprietary Trading Manager