The Long View, 15th May 2013

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I am not going to go into the budget, there is plenty of articles, spin and some utter bulldust (Jessica Irvine, I am looking at you when I say that). I will say that it did surprise me in the lack of pork barrelling and I have to give them that. Swanee has constantly crowed about our triple A rating from all three agencies. However Standard and Poor’s, the largest and most respected, just last month stated we would lose their AAA if we fail to produce a surplus and debt continues to rise (Fitch is the baby and no-one cares about it really http://www.theaustralian.com.au/news/breaking-news/labor-coalition-clash-over-aaa-ratings/story-fn3dxiwe-1226628588042). Well, with a $19.4B deficit and most of the $43B in revenue and savings built on wishes and hopes by Labor I dare say we will lose our AAA whilst Liberal is in government, no doubt Labor will point the blame at Turnbull.

However, mine is not to reason why, mine is to sell and buy.

So, to the markets. Oil came off 1% as US shale mining seen to be bolstering supply and OPEC now has a glut. Metals, in particular copper (-2%), also had a rough night of it. Softs and grains had a mixed bag of it. The big story overnight was the adrenalin seeking S&P500 as it scales new heights without a harness. The Europeans were negative to flat until the Listerenes opened and all markets never looked back. The major cash flow went into the US market and this benefited the US dollar the most, breaking above recent highs of 83.50 to close at 83.79. Very strong moves, and no political headlines or economic data to push it. Ahh gotta love free markets left to their own design will always establish true price and trend. One can see the pure optimism of the global economic future right there in price. Very Ayn Rand eh.

DATA HIGHLIGHTS AHEAD (times are in AEDST) – 1130am AU Wage Index 4pm German GDP. 630pm UK Unemployment. 7pm EU GDP. 730pm UK Inflation and final report from King. 1030pm CAD Manufacturing. 1030pm US PPI.

AUDUSD –Has been punched around enough I think, kinda feel sorry for the little kid on the block. It stopped right on the 23.6% fib retracement of 2012 High/Low. Hard to buy it in front of the huge bearish sentiment but I think we will get a bounce. A dead cat bounce to be sure, it will hit 94¢ before winter is over but I think we will see some temporary buying come in soon. Even if it is profit taking from the bears, it will be some.
Resistance: 9930/10028/10118/10220
Support: 9850/9707/9620/9400

EURUSD – We got back above $1.30 only to be thwarted by the Yankees again. With the ema’s starting to turn for the first time in a month it seems to indicate a trend. Whilst we are lower than April it’s not clean and hasn’t been since Feb.
Resistance: 13000/13040/13112
Support: 12935/12880/12750

GBPUSD – No buyers on the horizon for the cable. The channel is null and void now. We have a clear downtrend. Support at 1.52 may provide some solace as it is a reasonably strong level recently.
Resistance: 15410/15606/15665
Support: 15265/15200/1.5000

NZDUSD – Having ridden the Aussie budget, it’s their turn tomorrow. Round number of 82.00 has given some support. It was here a month ago but don’t expect to trade this up to 85.00, the antipodes are a dirty word for the time being.
Resistance: 8360/8475/8533
Support: 8230/8162/8050/7815

USDCAD – With oil off and US$ breaking higher the Loonie is a cooked little goose. Minor resistance held but 1.03 is looking likely to be tested this week.
Resistance: 10183/10266/10335
Support: 10100/10000/9958/9868

USDJPY – Was reminded again overnight of why being cautious and waiting for the confirmation third bar of swing high’s is sooo very important. Shorted under the high test to only be stopped out. Yes, against the trend and BOJ so it was only minor amount of capital on the trade. How many times do I still need to learn my own rules?? Hmmm.
Resistance: 102.53/104.10/105.60
Support: 100.00/98.52/9670

GOLD – With the world looking rosy on the economic front and no political tensions on the horizon there is little reason to own gold. Investors are chasing yield and gold offers none.
Resistance: 1440/1477/1525
Support: 1425/1385/1320

David Long/ Proprietary Trading Manager
Knowledge to Action – Specialist Forex Education

 

 

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