Thanks to the strong Chinese data on the weekend and yesterday the markets had a good day, with stocks healthily in the green side of the ledger. Copper and industrial metals too were up giving strength to the Aussie and Loonie.
Precious metals and oil however pulled back from the highs as Russia jumps onto a possible Syrian resolution. That resolution came from a throwaway line of Kerry’s that Syria could avoid an American military strike if they handed over all chemical weapons. Russia took it seriously though and are on the blower to Damascus right now to see if possible. So it seems that as usual the warmongers in America have an uphill battle to go to war legally with no-one really wanting to support the idea outside of the USA.
The greenback suffered too overnight as all pairs had healthy gains against it. The flow of funds back out of bonds and into stocks and commodities hurting the dollar as the investors see Friday’s payroll figures a sign that the Fed will not taper. All fun and games, smoke and mirrors. My bet is that they will pare the $85B per month spend to something like 70 or 65. We will find out next week.
DATA HIGHLIGHTS TODAY – Chinese Industrial Production
AUDUSD – Didn’t quite get as high as I thought it might, still a HH/HL and the little battler is on its way back to 93¢. Thursday we see jobs data and whilst the election is over I do not see companies racing to hire staff yet. They can get some cheap ex-public servants in a couple of months if the need. Plus it will take time for Abbott to cut the tangle of red tape that Labor created for the pure sake of creation to justify their jobs.
EURUSD – A higher high and higher low, the purest definition of an uptrend. For End Of Day trading it puts us in a dilemma as we would be looking at a 200+ pip stop loss but are only 150 pips from large resistance at 1.34 making the Risk:Reward for the trade not worth it. So then one would ask if the resistance will hold this time or better yet, look elsewhere for a trade. Sometimes the best trade is to walk away, plus if in doubt STAY OUT!
GBPUSD – Good strong bar that managed to post a HH over last month’s high and getting the cycles as HH/HL’s too. 20 pips higher is large resistance though so the next couple of sessions will be interesting to watch.
NZDUSD – Also getting close to resistance as momentum indicators show signs of exhaustion, so I don’t think the kiwi will get through it on this run up. Unless they raise rates at Thursday’s RBNZ meeting.
USDCAD – Despite oil’s tanking, the Canadians had a record building permits figure come out that pushed the Loonie stronger (therefore the USDCAD down). Forecast was for a 4.4% increase after previous of -10.6%. The number came in as +20.7%, a huge result.
USDJPY – Choppy mess and not something I would touch with your money let alone mine.
GOLD – Tracked sideways in a tight 10 range as it decides if it wants to run higher again.
David Long / Proprietary Trading Manager