The USD has been finding bids overnight, with the all currencies weakening against the Greenback, even after some managed to post fresh 2009 highs. Both Aussie and Kiwi are well off of their session and 2009 highs and the Euro has been struggling to stay above 1.4900.
MORNING SLICES
Fundys – The USD has been finding bids overnight, with the all currencies weakening against the Greenback, even after some managed to post fresh 2009 highs. Both Aussie and Kiwi are well off of their session and 2009 highs and the Euro has been struggling to stay above 1.4900. Many now however expect the major to test critical psychological barriers by 1.5000 in the very near-term. Data overnight was light with Swiss retail sales coming in weaker, while Eurozone trade also disappointed. Meanwhile, Sterling continued to shine, with the single currency building on impressive gains from Thursday. The more optimistic outlook on BoE monetary policy measures has been sourced as the primary driver for the relative strength. Elsewhere, Germany’s Wise Men have warned that the pace of economic recovery is “unsustainable” and that the country’s banks may face a fresh crisis over the next year. George Soros on the wires overnight saying that the world currency arrangements are fraught with danger and that global regulation is needed. The Yen has been offered on the day and underperforms with the currency potentially at risk for a pullback in the event of a major USD corrective rally which many have been anticipating. Analysts have cautioned that the DJIA move to 10,000 should be not be trusted, and this could prompt some renewed Yen buying as risk aversion sets in. Nevertheless, for the time being at least, US equity futures still point to a higher open, while commodities are slightly offered. Looking ahead, Canadian data takes center stage with the release of CPI (0.1% expected) due at 11:00GMT. US TICs data (30B expected) follows at 13:00GMT, with industrial production (0.2% expected) and capacity utilization (69.8% expected) shortly after at 13:15GMT. Michigan confidence (73.3 expected) caps things off for the week at 14:00GMT.
Techs - EUR/USD Despite the USD bid tone in overnight trade, the pair remains confined to an inside day and a break above 1.4970 or back below 1.4840 will be required for clearer directional bias. Above 1.4970 exposes direct test of psychological barriers at 1.5000, while back under 1.4840 could signal that a top is in place. USD/JPY continues the recovery out from 88.00 with gains extending thus far into Friday beyond 91.00. Key levels to watch over the coming session come in by 92.00 and 90.50. GBP/USD The impressive rally of the past 24 hours has stalled out by the 100-Day SMA and could be looking to roll back over. Ultimately, any additional rallies should be well capped ahead of 1.6500, while back below 1.6250 should accelerate declines. USD/CHF Trying to put in a bullish reversal day after bottoming out by 1.0115 on Thursday. However, a break back above 1.0200 will be required to take the pressure off of the downside. Back under 1.0115 exposes direct retest on 1.0000.
Flows – US investment house buying Gbp/Usd. UK clearer selling Eur/Gbp. US prime name buying Usd/Jpy. Model funds buying Aussie and Kiwi on dips.
Trade of the Day – Nzd/Usd: While daily studies are showing overbought, weekly studies are showing even more overbought and look severely stretched at current levels. The surge to 0.7500 directly coincides with the 78.6% fib retracement off of the major 2008 high-lows and as such, we like the idea of selling here in anticipation of a major corrective pullback. The trend has been intense so we will continue to trade cautiously and only recommend selling on an overdone intraday move. Look for stops above 0.7500 to be cleared with only limited upside follow through seen beyond the figure, before a very immediate and sharp reversal. STRATEGY: SELL @0.7510 FOR AN OPEN OBJECTIVE; STOP 0.7660. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NEW YORK CLOSE ON FRIDAY. POSITION SIZE SHOULD BE 3X EQUITY.
P&L Update and Overview: Many of you have been asking for a way to better track trading results and open positions. In response to these requests and in an effort to be fully transparent, a simulated portfolio was created in June to track and mirror all recommendations and trades. Below is a return on equity curve since inception on June 1, 2009, along with an open and closed position tracker. I am hopeful that this will make things easier for you all.
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