Conflicting data overnight had the markets confused. US dollar benefited as bonds continued to rally as yields slid. The US 5yr bond being the most volatile retracing 19 basis points in the last month but still up 78 basis points from a year ago. For the Aussie, commodities continued to also retrace with copper off another 1% to close at 3.26, whilst oil was unchanged at 103.37.
Headlines in the US point to economic growth concerns despite highest home prices in 7 years. Budget talks with the debt ceiling as the centre piece also came into the picture. US Treasure Lew says the government will only have $50B by mid October. So the debt ceiling needs to be raised, again, to $16.7 TRILLION! A staggering amount that the mind cannot grasp, check this link out for a visualisation of it. Seeing this you have no wonder why people want to own gold or bitcoins and sell the US dollar.
However, overnight the US dollar was bid again. We thought as much, that the moves were over exaggerated in the Cable and Kiwi. Issue is, will the US dollar continue to strengthen with tapering still uncertain as to when it will happen? They cannot keep printing debt like that visualisation, can they? I suspect that the US Fed will taper somewhat this year, if data proves strong enough. So, I am looking for a minor pullback before going short greenbacks again.
DATA HIGHLIGHTS TODAY – NZ Trade Balance. US Durable Goods & Home Sales.
AUDUSD – An inside seller bar which is a tad boring. Still expect further deterioration to be under 93¢.
EURUSD – A LHLL bearish bar and read the same as Aussie, looking to get long somewhere b/w 1.3350 and 1.34.
GBPUSD – Also a LHLL but closed smack bang on the mid mark of the range. Which indicates no interest but with a lean to the downside.
NZDUSD – Can you hear the spluttering of chokes as 4.5M people begin excuses for giving up an 8-1 lead. Do or die tomorrow, if winds allow. The currency has taken it to heart and stepped off the cliff of 8343 to be 90pips lower. I jest, the selloff was well in place before the sun rose on San Francisco Bay.
USDCAD – An engulfing buyer bar but not convincingly moving in direction I had hoped. Patience and we shall see, at least there are no sellers.
USDJPY – Still faffing about with no clear direction.
GOLD – A low test bar of support level and hard to read but having bounced twice off this level in last 8 sessions I would play it long from here.
David Long / Proprietary Trading Manager