RBA leaves rates and Aussie gets sold off. Doesn’t make sense does it; doesn’t correlate. One would think that keeping rates steady is a confidence sign and therefore buy the currency. Hmmm. I think maybe market had already done some buying prior to the announcement and so took profit. But heck, at announcement time we were trading 0.9220 and fell half a cent to 0.9165, since the low this week, month, year is 0.9112 that is not exactly a lot of profit taking. So it’s not that. Not profit taking at least. I think it is more of well, that is out of the way now, let’s get back to pushing the Aussie down to a level that starts with an eight. A lot of that has to do with an increasing US$, which gained across the board of its peers.
A quiet night out elsewhere in the markets but improving data from US suggests that the light at the end of the tunnel is getting brighter for the US Fed. Uncle Ben moved the posts last meeting from 6.5% unemployment to 7% as the target for them to stop QE. Which means “tapering” could commence earlier. This is what the market is trading towards, with a decrease in greenbacks (theoretically) and a continued demand US$ is heading north. Also with the Fed eyeing 7% this Friday nights NFP is staging to be a busy, as they currently sit at 7.6% and have been improving data all month.
DATA HIGHLIGHTS AHEAD (times are in AEST) – 1130am AU Retail sales & Trade Balance. 1255pm AU RBA Glen “6 months behind the curve” Stevens speaks to Economic Society. 630pm UK Services PM. 1030pm CAD Trade Balance. US Trade Balance. 12am Non-Manufacturing PMI
AUDUSD –A bearish inside bar has ruined any idea of getting long. Closed right on support and with sentiment clearly on the US side 88¢ this week is a very real possibility now. However, not to get ahead of ourselves I do not see any entry reason from an inside bar. If the market cannot decide what it wants to do then I am not going to be arrogant enough to presume for it. That gets one in trouble.
EURUSD –This is getting choppy and difficult to predict. We now have a bearish engulfing bar after posting a bullish bar, and a close under support level. With the ECB announcement tomorrow night, US holiday too, and then NFP Friday it will remain choppy.
GBPUSD –Bearish sentiment continues and I have a channel on the cable of all things! The low of March 12th to low of May 29th is the lower trend line, which meets us this week approx. at £1.51. Will be interesting to see if price turns on it. Until we see buyers though, continue to short on the shorter timeframes.
NZDUSD – Extreme chop…frothing as Mr Harris would say
USDCAD –A trend continuation for the Loonie as the US$ bulls up. Is getting into extended exhaustion area though so not surprised if see sellers up here.
USDJPY – As thought, it broke 100 and we won’t get the pullback to ema. A retest of 100 if we even get that, would be ideal for long long-term trade. As said yesterday, if not, then trade shorter timeframes.
GOLD – As US$ gained traction, gold lost it. Still, it is a HH/HL and I am still in the trade.
David Long/ Proprietary Trading Manager