23 února 2010

Ken Veksler's Market Commentary

Good morning,

Little by way of earth shattering news overnight, other than some interesting comments regarding the AUD and the current rate cycle. BIS Shrapnel were out commenting that the RBA has at least another 2% left in this move…. Not really news to anyone I don’t think especially given the fact that this cycle could indeed last another 2 years or so. Nonetheless the AUDUSD was moved higher on the back of this but even so gains were a little more limited given rumors doing the rounds overnight regarding the potential for Yuan devaluation (gradual or otherwise). No one is disputing the mining boom that the Australians are currently experiencing but many I feel have forgotten and very quickly for that matter the fact that there was a new miners tax introduced only weeks ago…. I still hold the view that 0.9170 should cap this initial rally higher in the cross and then we settle down for some more sideways consolidation before we in all likelihood continue higher, this will take a while though. And in the interim I prefer to play this move on the cross via the AUDNZD as per yesterdays strategy.

Elsewhere SNB jawboning overnight saw the EURCHF move a little higher only to be back where it started…. They are starting to lose face in my eyes and becoming more like the BOJ with each passing day. While on the topic of the EUR I see a short squeeze here this morning having taken out stops ahead of 1.3650 and now making a firm push for the 1.3730 area ahead of the German IFO data this morning. I would think that we could see a knee jerk reaction on the back of the data and take out some weaker stops above 1.3730 taking us up to around the 1.3750/60 zone highs for the day. From there I once again look to sell keeping in mind the 1.3840 major pivot level highlighted yesterday. Also this morning hearing of short term stops gathering just below 1.3640 for those getting long the intraday rally.

Outside of the IFO data today we also have the US Consumer Confidence which might give the Greenback some added vigor in recent moves. Looking at the DXY I personally still see some more room for USD weakness/consolidation into 79.50/60 from where we most likely resume our bullish USD bias. On the USDJPY the retracement we had to have is still in play and I now look for 90.75 to hold on the day and am I buyer into that area, bearing in mind that I wouldn’t be against the idea of averaging into 90.50 and 90.30.

The Cable is still moving in tandem with the EURUSD and general USD sentiment and the levels highlighted yesterday still hold true for me. 1.5580 should be tested on the day and I sell all the way into 1.5650 should get the opportunity. All of this should be considered with a backdrop of the EURGBP which at this stage looks like its gearing up for an upside breakout.

Best regards,

Ken Veksler.

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