Stocks continue to slide as central banks in the mother lands remain tight, risk comes off and commodities retraced some of their recent rallies.
Both the ECB and BOE left rates as they were and the statements were benign. The minutes may show some dissent amongst the boards but the main theme is that the UK is on hold with a view to reducing the quantitative easing whilst in the mainland Draghi is also on hold but with the view he still has his foot hovering over the printing press pedal. Naturally this would be a sell of the euro and buy of the pound. However the market seems to have priced it in prior to their meetings and so the market sold the pound and bought the euro. Fun isn’t it?!
With NFP tonight I would avoid playing in the greenback. In current price moves it is weaker however there has been two jobs numbers that would suggest the expected 183K number tonight will be exceeded. The ADP NFE was 33K stronger and the dole queue last night was 30K weaker. A stronger number than 183K tonight I would think bring buyers into the greenback on the concept that tapering would be given the green light at the Fed’s Dec 19th meeting.
DATA HIGHLIGHTS TODAY – Swiss CPI. CAD Unemployment. US Unemployment (Non-Farm Payrolls) & Consumer Sentiment. – (SAT & SUN) Japanese BOJ Kuroda speaks. Chinese Trade Balance.
AUDUSD – Fell under the 91 but stayed above 90 and has clear divergence now in the momentum indicators. Still, I will not be taking this just yet, not with NFP out.
EURUSD – Broke through the 1.36 level decisively and has now ruined what some where looking at as a head-and-shoulder reversal pattern. Would like to take this higher with the trend, but like a broken record (does anyone remember listening to vinyl? I do, yep that young) I will repeat myself, not trading greenbacks today/tonight, will look at it next week.
GBPUSD – A nice roll over and retest of 1.63, could go either way from here but I would lean to the downside temporarily and look to buy any dips back up to 1.65 and potentially 1.70
NZDUSD – Was looking to take this short at 8150, missed by 1.5 pips, thankfully. It has rallied back to the 50ema and above 82 support. Really is a mess and with NFP will definitely leave this alone.
USDCAD – No divergence but the expected strength has come back into the Loonie overnight as traders are locking in profits. A LHLL would suggest we are heading back to retest 10550.
USDJPY – A string of LHLLs is now getting my interest as it comes to retest the 100 mark. Like the pound I will be buying any dips in the yen.
GOLD – The “anti-inflation” hedge which is what gold is considered is breaking down due to the fact that we have no inflation, but deflation in Europe and stagnation in US and Japan. There seems to be a floor around 1180 to 1200 at the moment though. Potentially this could break though, then in 2014 when economies start to really pick up again and inflation does become a worry, with the mountain of debt we might see gold back above 1500. At this point, I do not see it though.