US bond yields at six week low. US stocks down again. US durable goods negative. US new home sales slipped too, and revised down last months. As Europe was quiet too, it meant we got a lacklustre night in the markets. Gold and soft commodities outperformed whilst other commodities also ended in the green. Despite this, commodity currencies weakened and the Kiwi also failed to attract buyers. The other majors strengthened against the US$ as cash moved into Cable, Yen and Euro due to US cliffs and ceilings.
Creeping into headlines is the wrangling between Democrats and Republicans over the budget spending, bringing the fiscal cliff back into play. Haven’t seen this cliff edge since May, they kicked the can quiet some way down the road, but here it is, again…will the US avoid another downgrade. Remember last year the political fighting over the budget and debt ceiling caused the US to lose its AAA rating and they avoided it in May by a week. The circus continues.
The Senate likely will not vote on a stopgap spending bill until this weekend, leaving the House just one full workday to act before spending authority for the federal government expires on Oct. 1. The House and Senate are at odds over language that withdraws funding for the 2010 health-care law. On another fiscal front, Treasury Secretary Jacob J. Lew told Congress that the extraordinary measures being used to avoid breaching the debt ceiling “will be exhausted no later than Oct. 17.” Failure to increase the debt limit could lead to a downgrade of the U.S. government’s credit rating. The wrangling comes as Americans are losing faith in the nation’s economic recovery, according to a Bloomberg Sep 23rd National Poll. 44% of poll respondents say they expect the economy, which has expanded for nine consecutive quarters, to remain about the same over the next year, while 28% see it weakening.“ Bloomberg.
DATA HIGHLIGHTS TODAY – UK Current Account. US Dole Queue & Pending Home Sales.
AUDUSD – A LHLL in a tight market of 54 pips. Inching lower to support and a potential buying zone.
EURUSD – A very soft level of 13456 (Aug high) turned the euro around as it performed an engulfing bullish bar. Can this run higher into the weekend? Not much to stop until the mid 36’s so it is highly possible.
GBPUSD – A bullish HHHL, a similar high with momentum divergence is what I am waiting for to get a run down on the Cable. Generally I am bullish cable still but looking for it to work off its overheated status more than it has this week.
NZDUSD – With a terrible trade balance figure yesterday to compound our antipodean cousins worries the kiwi dollar posted a LHLL but still hasn’t found support yet. More downside coming.
USDCAD – A HHHL but even smaller than the Aussie at 33pips. The Loonie does this tho, tracks sideways in small pips before exploding for a 200+ move. So am positioned for this as it is back in the trend with HHHL’s.
USDJPY – mmmmmm it is a string of LHLL this week but, seriously it is not doing anything, a lot like their inflation rate for last 30 years, ever since they bought the Gold Coast.
GOLD – A nice swing low and so so tempting to play this one.
David Long / Proprietary Trading Manager