A very late start for me this week so having to have a bit of a catch up. However, some interesting moves today across the majors as USD weakness continues. Biggest gainers so far have been AUD and NZD whilst Friday's momentum for eurodollar and break away from 4th Camarilla pivot at 1.1104 running out of steam at 1.1263.
And following on from last Monday, this week's CFTC data shows euro long positions increasing along with open interest suggesting further upside for eurodollar. This is certainly supported by the technical picture on the DXY as the price action here continues to move lower and into the congestion region that started in January 2015.
What is also significant for both euro and usd is the degree to which politics appears to be a principle driver. For USD it's been Donald Trump's lack of finesse in dealing with his now ex director of the FBI, while for the euro Angela Merkel's comments about the single currency being 'too weak' was an attempt at explaining away Germany's huge surplus. But whilst it may be 'too weak' for Germany, for others it's still too strong, and such comments simply highlight the huge faultlines that exist within the euro project.
From a technical perspective some levels for eurodollar are 1.1228 where it has been basing since the London fix with 1.1262 (today's high) the first significant resistance for any further move higher. If cleared we are then looking at levels last seen back in September/October 2016. To the downside a break of the current 1.1228 support would see the pair back to test 1.12., and any break here would then take the pair to 1.1180 which coincides with our fourth Camarilla support line based on last week's price candle.
Eurodollar price action also has been seen against tomorrow's German IFO and any further comments from Mama Merkel. ... See MoreSee Less
Another Monday and despite cyber attacks and ongoing threats from North Korea markets appear determined to stay positive with VIX staying low and even dipping into single figures. In forex it's last week's COT data where we saw a big reduction in both eur and gbp shorts. In fact euro is now showing the non-commercials (ie speculators) net long for the first time in three years. What's also very interesting about the euro is that since 2008 net long periods for the single currency have been few and far between as the bias has always been heavily bearish. Chart is courtesy of Oanda. ... See MoreSee Less
A very happy Monday in eurozone as Macron was duly elected President yesterday, but even more happiness in Swizterland as eurchf moved strongly higher. This is the pair which always bears the brunt of any problems in europe, so SNB can breathe a sigh of relief - at least for the time being.
Other euro pairs have not fared quite so well, primarily because markets never really believed Le Pen could win it, because the numbers simply did not add up, so Macron victory already baked into last week's price action.
Correction in the euro is evident on our 4hr CSI while daily, weekly and monthly still showing euro looking positive. Will be taking a closer look at these charts later today. ... See MoreSee Less
With so much going on it's easy to forget it's NFP today, plus we also have two FED members and Janet herself speaking later in the session, which means this week is not going to go away quietly.
Traders will react in their usual knee jerk way to the headline NFP numbers, before taking a closer look at the data, which on the surface would appear to support the FED's decision to continue with its rate hikes. And rising interest rates are generally perceived as positive for a currency.
However, the USD is not responding as we would expect and looks decidedly bearish on the USD index as it tries to hold above the 98 handle.
And a quick look at our majors matrix reveals this weakness as well as the USD's divergent performance against the CAD, where it has been rising strongly as a result of the fall in oil prices. What we also tend to forget on NFP day is that Canada too releases its own employment data, so the USD/CAD will be pulled and pushed by three forces.
From a technical perspective key levels for USD index are 98.65, 98.40 and 98.15 before we get to 97.40 to the downside, & 99.15 the first major resistance to the upside.
For eurodollar, which is also awaiting result of the French presidential election, and which failed to close the gap from the first round, levels to watch are 1.0859, 1.0824 and 1.0789 to the downside with 1.0999 to the upside which if breached takes the pair into a low volume node and the opportunity to attack 1.10, a price point that has seen plenty of two way action in the past.
So everything nicely balanced for both economic and political events. ... See MoreSee Less
Those of you who come along to our webinars will have heard David & I stress how important it is for index and stock traders to keep an eye on the currency markets. Not not just the USD, but also the Japanese Yen whose performance will often signal a change of both short and longer term sentiment.
The pair we always watch is the USD/JPY, but there is another pair that correlates well with stock markets and that is the Aussie Yen, as the Aussie is considered a risk currency by virtue of Australia's status as a major commodity exporter, particularly to China.
Furthermore, there is no a Yen index we can follow to make life a little easier. This has been developed jointly by the Dow Jones and FXCM, and we also have one available from our Quantumtrading stable of indicators.
The session thus far has seen the AUDJPY in free fall with the pair now approaching a low volume node on the daily chart which will add additional momentum should the pair breach the key 83 level. Indeed the 4th Camarilla support pivot also sits at 82.90 renforcing the importance of this level.
All now hinges on the US session and whether traders decide to reverse the currency bearish Globex tone. ... See MoreSee Less
I wrote this at the end of January for the VIX which is moving into worrying complacency levels, and reflecting the strong performance of the indices. We are not quite at single figures - but came perilously close yesterday at 10.74, so this afternoon's US session will be interesting. We also have to bear in mind that the index can stay low for an extended period of time, ie years, but as Wyckoff's second law of cause and effect tells us - the longer the complacency, the greater the reaction when it comes.
USD divergence in the majors with USD weakness not reflected in the USD/CAD which is currently being driven by dramatic fall in oil which has seen the commodity to a low of $43.76. However, we have seen a strong recovery back to the open at $45.51 as value buyers step in,
Daily CSI shows extent of CAD fall with AUD & NZD also looking weak on the back of poor Chinese data. ... See MoreSee Less