I think the gold price is the closest indicator to funds view of “tapering”. It was down 3% or 40 bucks. That is a large move when last night I would consider there should have been a flight to safety. Syrian’s al-Assad taunted the US as he said “hey Obama, up yours, if you want my weapons take yours out of my country too”, not a result the US were looking for, so a strike is still on the table and this won’t be resolved anytime soon. Whilst this was said, investors are also dealing with great economic figures coming out of the US (last night’s US budget) and people are in the dark as to what the Fed will do, but tapering is looking more and more likely. These are the two major drivers of the market and they are giving confusing signals.
Syria and a strike is bullish oil, gold, US dollar and bearish stocks. No strike has the opposite effect. Whilst tapering by the FOMC next week is bearish stocks and gold, bullish US dollar and bonds. No tapering is bearish US dollar, bullish stocks and gold. A lot to consider aint it!
Anyway’s, back on the home front and with no-one to poke fun at in The Lodge anymore it is time to focus on the data. So jobs came in weaker, to be expected. Now it’s onwards and upwards.
Today will be quiet and early next week will be frothing as everyone waits for the FOMC, Thursday morning our time. Me, I will be watching the woeful Wallabies against the Puma’s and if we lose…crikey I dunno what I will do but it would be a tragedy. Sunday am back out on the water in the Short Haul Offshore series. Hope you all have a good one.
DATA HIGHLIGHTS TODAY – US retail sales
AUDUSD – Dropped on the jobs data and overnight copper was off too so will struggle today and I don’t see much in it. It is in the middle of nowhere and not giving me any insight as to whether to look for long trades or short ones. Fundamentally I would prefer to be looking for shorts though.
EURUSD – No interest here either, with an inside low test bar. Of the majors though, it is the most likely to move. Still, I would prefer to leave it alone and enjoy the weekend not thinking about it as there is no setup.
GBPUSD – A HHHL but I get the sense that the run has finished for the time being and have moved stop up to protect against the coming drop, leaving the window open for being wrong and it continues in the trend up.
NZDUSD – Also overheated and topping out at resistance levels. Expect a move back under 80cents next week.
USDCAD – Looking like it isn’t going to tag the trend line before rotating north again. Oil ran up a little on al-Assad’s comments but not enough to push the Loonie under $1.03.
USDJPY – Ever been to Teppanyaki and seen the chefs slice and dice? Looks like the ¥ to me, chopped.
GOLD – Got monstered and mauled by the bears as stops under 1350 triggered further selling. Back into having little reason to own gold, unless Uncle Ben keeps the taps open next week.
David Long / Proprietary Trading Manager