Good morning,
I have opted this week to go without a weekly outlook and concentrate on the day’s events instead. Ironically though today is going to be the lightest data day for the whole week but nonetheless…
We have all now seen the Friday NFP numbers and while many in the market were seemingly disappointed by the print I for one wasn’t really surprised after the nonsensical print in the previous month. Net result of all of this has seen the USD sold off across the board and that trend continues this morning. With thin trade overnight in Asia (Japan on holiday) we saw the antipodeans take full advantage and both the AUD and NZD ticked higher, with the AUD in particular being helped along by better Job ad numbers. I think this AUD is still overdone and only really here on the back of this slightly sold off USD, so I continue to fader the rally looking for sells into 0.9330/70.
Elsewhere the temporary death of the USD has meant that commodities and in particular gold and oil have both surged higher and this has in turn had an offered effect on the USDCAD. Overnight we tested significant support around the 1.0250 level and have since then seen a small bounce out. I still think this thing is overdone and continue buying the pair on dips, stops need to be going in below 1.0225 looking for corrective moves back into 1.0420 with 1.0380 needing to be cleared as the first hurdle and indicator.
The USDJPY has failed to do anything really impressive on the downside in light of a weaker USD and this to me signals that for the short term dips are opportunities to get long. I appreciate that clearly this is a shift in my own sentiment, but you can’t argue with the market. I do however believe that the topside is still limited to 93.50/80, but in the mean time moves lower into 91.90 are seen to be good buying. The JPY crosses in general look like they are set to continue gaining for this week, but I advise caution as this might turn very quickly. I remain long of an AUDJPY Put option (strike 83, exp. 21/1/10).
On the EURUSD, well this thing is poised to go higher and at the very least take out stops that have been sitting above 1.4530/40 for about the last 2 weeks. Once these are cleaned out and the market wakes up a little, I think we’ll be seeing this thing coming back into 1.4250/4300. Till this happens I suggest spending some quality time on the sidelines.
The Cable is behaving similarly to the EUR in that its making the most of an offered USD, however, fundamentally clearly nothing has changed over there and if anything this thing is just being geared up to be sold off once more. Not surprising to see some retracement after the last 2 weeks price action, but all in all still a sell. On the day 1.6130 stops should be taken out and I would be a seller into 1.6180/6200.
Best regards,
Ken Veksler.
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