Large moves in the interest rate market saw bonds rushing higher (rates falling) and the greenback took most of the fund flow. This saw some large moves, particularly in the Cable and Kiwi, the two most over stretched pairs. The yen took some in too, which would suggest a safe haven flow. Since there is no major tensions out there I see the flow as the start of the stock sell off. Stocks were off a little as was the VIX index, nothing huge. The seasonal “sell in May” maybe starting with 1 day to go! Haha, we will see. If it doesn’t then this is one rare year in which May finished as a positive month for stocks. No real other reason for the run on bonds, but that it was in US, Euro and Japanese bonds it was pretty widespread. So something has spooked the smart money.
DATA HIGHLIGHTS TODAY – AU Private Cap-Ex. US GDP. US Home Sales.
AUDUSD – A LHLL now, tracking sideways along flat ema’s. Not much to see in it as it holds above support.
EURUSD – Broke through support but showing minor divergence.
GBPUSD – I am not bearish the cable, but I will find it hard to be bullish now either. It has had a good run from 1.48 over the last year and we have pulled some good profit from that. Will look to see it test 1.63 and see what happens from there. The economy up there is doing fine, but not good enough to warrant it trading through 1.70 just yet.
NZDUSD – Broke the significant low in the extended seller bar. Finally the market agrees with me and now we must wait for the cycle to complete under the ema so we can short this little baby.
USDCAD – Higher on greenbacks and still hanging around support. Am still bullish the Loonie so will look at other pairs as against the greenback it will struggle. The Canadian economy is hugely dependant on the US but is also selling rocks, soil and oil to Asia like Australia. So, it is in a pretty good position. As long as the US continue to grow and improve the Loonie will do a-ok.
USDJPY – A LHLL as safe haven funds flowed into bonds, but this is also a signal for us bulls to tighten stops up.