05 ledna 2010

Ken Veksler's Market Commentary

Good morning,

And welcome to a bright new year and decade. You may be able to tell that I’m feeling somewhat chirpier and indeed actually excited about what the year has to offer (amazing what a few days away from the screens can do for you). Markets seem to have taken to the new year equally excitedly and what I had initially expected to be a rather quiet start to the year seems to be far more rambunctious. Traders are currently trying to reconcile an increase in risk appetite with a still strong greenback. The DXY is now looking to test the 77.40 area as part of the consolidation from the clean out late in the last year. I remain wary of shorting the big dollar but equally so warn punters not to get too excited about entering fresh longs just yet. In my view we need to see a little more consolidation and with NFP out on Friday we’re likely to see some volatile positioning ahead of the data.

Worth noting is the recent movement in the USDJPY and the bulk of the rationale behind it has been the spread widening between the 10y UST and the Japanese equivalent which at the close of last year was trading at historically wide levels of 2.55 but has since come in to be trading at 2.46 at print. This is systemically the result of the US 10yrs being well bid this week and as such we’ve seen the USDJPY drop from resistance at 93.10 to be now trading 91.90. Keep an eye on this picture as I firmly believe the USDJPY has further downside to come over the next few weeks. 91.80 marks intermediate support with 91.50 congestion proving to be probably a little too much wood to chop on its first attempt lower.

Further afield we take a look at the EURUSD which has for the very short term a bid tone, but again please refer to the general USD comments above for my view here. I remain bearish the EURUSD and save for some small bids coming through the market taking us into 1.4530 (definite sell) I look for 1.4385 to be tested and finally broken. Look for stops under this level for those that left prop books unattended over the holiday break.

On the Cable I remain bearish and see this move only as the result of yet against the greenback moving a little. On the day 1.6020/30 proves important while the topside is likely to be limited into 1.6150/60.

And for the first piece of positive sentiment, I am a buyer of the USDCAD again holding the 1.0320/80 zone as good buying opportunities with 1.0365 likely to hold any downside attempts on the day.

Data wise little of any significance today with the only bump in the road being the US pending home sales number and what likely to be an interesting speech from the Fed’s Hoenig regarding the ending of US government bailouts.

Best regards,

Ken Veksler.

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