Yesterday and last night the currency markets started to reverse their trends as traders locked in profits ahead of the minutes and Ben’s speech. As I said yesterday, the QnA session after his speech would be the interesting time. The markets read the minutes at 4am and not much was given away in them, other than that there is no clear majority amongst the members to if and when the QE3 should end. Then Ben came out in response to a question and slammed the door on any ending soon.
“Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,” Bernanke said today in response to a question after a speech in Cambridge. (http://www.bloomberg.com/news/2013-07-10/bernanke-sees-highly-accommodative-policy-in-foreseeable-future.html)
The interest rate sensitive currency markets motored and only the Aussie (due to jobs data out today) has not had significant reversals. Although I just raised my head and see the Aussie taking off now…putting on 80 pips since I started.
So, the outcome from Ben is that RISK is OFF and there is plenty of cash about to support the buying spree. He is manning the printing presses and fighting the good fight for Uncle Sam and driving the US dollar back down. RISK OFF means focus will be back on chasing yield in stock markets and particularly the US and emerging markets.
Other markets were flat ahead of Ben, having closed before he spoke. So no trend or momentum off them but the stocks will pick up speed in today’s Asian session. Today we have the BOJ meeting end and statement plus conference out at some time, usually this is around 1-2pm Sydney time.
DATA HIGHLIGHTS AHEAD (times are in AEST) – 1130am AU Unemployment. ? BOJ Monetary Statement and Conference. 4am US Federal Budget
AUDUSD –Like all the majors/minors the Aussie is pedal to the metal screaming back up. It will look to test the 9390 horizontal level today if job data is good. If nasty data today then it will test in coming sessions.
EURUSD –A stella 350pips since 4am this mornings’ FOMC release. What more can I say?? Has stopped briefly at resistance but 1.34 is looking good target.
GBPUSD –The buyers sure came in and supported my trade… has stopped at 1.52 for the time being but I will be looking at this to break 1.52 and test 1.57.
NZDUSD – Got a boost from Ben to almost complete the cycle back to the 50ema.
USDCAD –Has broken under the support of 10420 and looking to complete cycle and tag the 50ema. Is also back under the weekly trend line I have on the Loonie.
USDJPY – The 50 fib at 9980 is like a magnet, so is parity at 100. We are under this now having tagged the 50ema and sitting on it now. With the BOJ out today stay on the sidelines but I suspect that they will look to take on Ben and weaken the yen more. Headlines have been stating the opposite, that Kuroda is not going to increase the spending. Shall be interesting.
GOLD – Uncle Ben has helped the gold bugs/bulls and sentiment is strongly to the upside for the time being. Broke through resistance and next stop is above 1300.
David Long / Proprietary Trading Manager