Some big selling of the US$ on the open this morning, with 50pips the average but the Aussie at 90pips. Over the weekend the news wasn’t that drastic I would think. Merkel looking like she will retain leadership but the big story is the egg on US face with Syria result. Issue as I see it, is now the US has to support al-Assad until all the chemical weapons are found, and that could be years. So Obama is now caught in Russian chess move and is forced to support the very regime they wanted out. Licence for Assad to continue to use conventional weapons in the civil war that has already cost 100K+ lives with these conventional weapons.
Sad as that is, it is no reason to sell the greenback. Gold got smacked another $20 on Friday night as retail sales disappointed in the US. So, I see this morning’s move as a continuation of the sentiment that tapering is not on the cards this FOMC meeting. I disagree with them. I think there will be tapering. However, is it priced in yet or not? Generally these things are. But the recent moves suggest the pricing is no tapering and therefore if (when) tapering does occur on Thursday morning our time, the move will be me more volatile and violent.
Otherwise, it will be a quiet and choppy week ahead of the FOMC and few opportunities for End Of Day trading.
DATA HIGHLIGHTS TODAY – EU Draghi speaks. US Industrial Production.
AUDUSD – Gapped up to pre Aussie jobs levels and too early to tell if this is a continued trend or not. I rather think the Aussie will struggle to get through 94cents this week.
EURUSD – Prior to the gap was aimless and it should track down to “fill” the gap back in, or last week’s high at least. With Merkel looking strong though I think 1.34 is under threat this week, more so if no tapering.
GBPUSD – Continues in the trend up all right, continues to outperform all peers. Again though, it does look overheated and should slow down or it will burn down. It has gone so far in fact that I have closed my trade and will get back in on the dip.
NZDUSD – Broke through resistance and like the cable is looking dangerously toppy. Certainly will not be buying into it, no FOMO’s here ok!
USDCAD – Has come down on the gap to tag my trend line and potentially giving me a trade for tomorrow as it bounces off it and 1.03.
USDJPY – Truly is messed up. No interest.
GOLD – Tagged my support level and bounced nicely. Will be interesting to see how it handles the open in an hour. With cash flowing away from the greenback I can’t exactly see it pushing into gold. Looking like a week of no direction.
Oh, and we won the Monica Geddes Trophy on Sunday taking line honours as well.
David Long / Proprietary Trading Manager