Thanks to everyone who came along to this morning's webinar where we considered GBP in the light of the extreme numbers at the CFTC (90k+ short contracts). As I've mentioned in several posts already, this data becomes of great interest when we have these extremes. Gold is another example, and is a chart we will be considering in this afternoon's webinar.
For sterling, yesterday was the first day buyers stepped into the market with any degree of conviction with cable posting an impressive bullish engulfing candle on the daily chart. However, one swallow does not make a summer, and we will have to wait & see if sterling manages to hold up in the coming days and weeks.
Today's main news (other than the oil inventories) is the FOMC minutes, so focus very much on the USD & USD/JPY. The latter has a huge 1.32bn worth of contracts with a strike price of 100 due for expiry today, A big psychological number with a lot riding on it!
David & I tend to stick with the net shorts & longs at the CFTC, but not everyone does which makes interpreting this data a bit tricky. Taking the gross number is also valid & here's an alternative view. Both numbers for sterling at at extremes, and article also includes numbers for other instruments:
David & I back from our short break away from all things digital, and re-starting our webinars later this week.
Meantime markets have been doing what markets do - generally wrong footing most traders and investors, as we saw with the over reaction to US retail sales, as the USD sold off heavily in response, before coming back strongly on Friday's close.
The daily chart of the USD index we use, which is based on a basked of equally weighted currencies (eur, gbp jpy & aud) continues trade in a relatively narrow range, as it tests the 11990 region tot he upside, and 11910 to the downside.
In this morning's trading we are seeing a return to USD weakness, particularly in the faster time charts, and with the Nikkei closing lower, the JPY continues to strengthen, which will no doubt set the alarm bells ringing at the BOJ. Key level for USD/JPY is 100.66 with any break will see the pair test the early July low of 99.98, and thereafter we have the Brexit low of 98.99.
USD/JPY is also the subject of a largish option expiry on Wednesday, where we have almost 1bn, in fact 940m riding on a strike price of 100.00, so definitely one to watch.
This week we have the FED minutes, so expect a lot of media commentary on whether FED is likely to raise interest rates in September.
My own view is given the data, and the upcoming Presidential election, any interest rate decision is likely to be 'kicked into the long grass'. Of the two candidates Clinton is far more 'FED friendly' unlike Trump who has made some very 'unfriendly' FED comments, in particular calling for an 'audit' of the Federal Reserve. ... See MoreSee Less
Elaine DeckerWelcome Back!! :) Have been hearing on talking-forex today that 2 voting Fed members are commenting positively on a rate-hike in Sept; with Lockhart saying he thinks the economy is "stable" and that HE feels definite about a rate hike before Jan. As you say though, despite the polling, I just can't imagine Yellen doing a rate hike before the elections, and personally would be surprised if we got another one this year-whatever the outcome in Nov. With the numbers see-sawing as they have been, I just don't see the "stability" these guys are talking about.