Momentum on tapering “sooner rather than latter” is building. Starting with jobs data (why are we suddenly taking that number seriously??) on Friday and two Fed officials stating that “some discussion of tapering could well take place next month”. The fact that the market is reacting to it the way is tells me a few things. Firstly that the US is starving of other reactionary headlines. The market is so used to bouncing from one news announcement to the next that in a drought of bad news they are “creating” one. Thursday will give us the answer when Bernanke talks and 20 hours later Yellen testifies. The second thing the market is doing is that it is getting top heavy. Despite VIX still languishing under 13 how much further can the stock market rally? With all the “above estimates” earnings and Wall Street pumping Ben’s free cash still going, when it stops, where will it go to? So here we have the combination of “tapering” headlines, which is in effect turning of the greenback tap, and some money coming out of stocks looking to lock in profits and go away for Christmas in less riskier assets. This combo sees the US dollar gaining in strength. This could continue till the next headline. That could be Aunty Janet telling us there is no way she is going to stop tapering.
DATA HIGHLIGHTS TODAY – RBNZ Governor. UK Unemployment. UK BOE Governor. UK Inflation. US Budget.
AUDUSD – Breaking below 93 cents and 30 Sep lows buts the recent uptrend in serious jeopardy. Glenn you bugger I bet you are loving this. Don’t you take credit though, it is not your doing, it is the USofA mate. Our economy is doing fine without your help thanks, stay out of it. With the breakdown it may be attractive in shorter time frames. Day trading though, we need to see a complete cycle under the ema before looking for shorting opportunities. I see some mess for a bit though.
EURUSD – A nice little rally that has me very interested in looking for shorting opportunities right here right now.
GBPUSD – Broke below recent support and stopped on the 50 fib. Next support line will be interesting to watch price action on.
NZDUSD – Tested 200ema, 61.8 & 50 Fib and support line of 8190 and has closed above it but sentiment is clearly on the side of the Listerine’s (Septic tank…yank…) at the moment.
USDCAD – An engulfing buyer bar as it starts to knock into resistance levels. No sign of entry around here.
USDJPY – Making its way back to the top end of the range. Would want a cycle above the resistance of 100.00 before getting carried away with wedges and trend lines.
GOLD – Looking rather sick on support. It is overdone too but with gold, if it breaks support there will be very few buyers about.
David Long / Proprietary Trading Manager