Well, less than 24hrs after the FOMC decided they didn’t have enough strong data to stop printing their currency into the ground the yanks had a 6% drop in the dole queue, a 4% jump in new home sales and a massive spike in the Philly fed, from 9.3 to 22.3. Not enough data Uncle Ben…hmmmm. Whilst on the Fed, their mandate is to control the economy through interest rates. The yanks have rising rates despite the bond purchase program. So the cost of the mortgage is rising, along with spike in stocks (and only 11% of Americans own stocks, the wealthy Americans), oil rallying, commodities rallying yet inflation is flat so wages are not rising. All sounds like a gravy train for the wealthy end of Ben’s town whilst the middle and lower ends all suffer in stagnation. Long live the American dream!
As Brad Pitt says in closing scene of Killing Them Softly; “My friend, Thomas Jefferson is an American saint because he wrote the words ‘All men are created equal’, words he clearly didn’t believe since he allowed his own children to live in slavery. He’s a rich white snob who’s sick of paying taxes to the Brits. So, yeah, he writes some lovely words and aroused the rabble and they went and died for those words while he sat back and drank his wine and f***** his slave girl. This guy wants to tell me we’re living in a community? Don’t make me laugh. I’m living in America, and in America you’re on your own. America’s not a country. It’s just a business. Now ******’ pay me.”
Well, that business is crumbling from the inside out and not even Larry Ellison’s billions can win the America’s Cup, although wind conditions delayed the inevitable this morning. With the data out last night the US$ bounced and we saw some inevitable retracements in the currencies. So, let’s have a look at them.
DATA HIGHLIGHTS TODAY – BOJ Kuroda speaks again. CAD CPI.
AUDUSD – Yes, a bearish inside bar as it comes back to test 94cents. No RSI divergence but there is in Stochastic, so if you prefer that momentum indicator then there is your signal that the sell-off is coming.
EURUSD – With strong data coming from Germany, and their elections this weekend, along with the cable stumbling on retail sales last night, the Euro attracted buyers. The sellers did dominate at the end but still, it is a HH/HL and no sign of slow down in momentum.
GBPUSD – Like the Aussie an inside bearish bar and no RSI divergence, but stochastic divergence. As mentioned, with retail sales stumbling a bit and the US$ on bid the cable retraced some of its strong trend.
NZDUSD – An awesome run, like their big cat in San Fran. Ran up to tag the 1.618 extension level of 8433 and is now only a few hundred pips from all time highs. Incredible stuff. There is some divergence as it peaks up here and it cannot remain vertical for too long so expect some retracement today or Monday, once they have the cup in hand.
USDCAD – Tested round number of 1.02 before turning bullish and I am looking at taking the trade even though I have 2 CAD trades already. Well, I am effectively square CAD in my trades so that is ok.
USDJPY – A good strong buyer bar and I wish it would break the range. I am tempted to trade this but would prefer to see a complete cycle above 100 rather than risk it.
GOLD – A HH/HL as the bugs took a breather. With the Fed keeping the taps open for no discernible reason to me other than to keep the fat greedy ones rolling in it I am getting bullish gold again. This mad play by Bernanke will haunt them in years to come, and Yellen is no better in fact she is worse as she is on record wanting negative interest rates! Complete insanity. Bite the bullet you muppets and be done with it for a few tough years but come back stronger. This asset bubbling with your “free” money is creating a world of pain that will come in spades.
David Long/ Proprietary Trading Manager