One of the reasons Europe is sinking is that it has so many leaks. Nothing is kept secret in Europe and there’s now very little drama left in the stress test results after the major newswires obtained draft copies. It looks like 25 banks were asked to raise money and only 10 of 190 are on the naughty list.
No great trading theme developed in the FX market in US trading although stocks remained bubbly and that helped the US dollar but only mildly.
Ebola fears greatly dissipated and until there are signs about a genuine uncontrolled outbreak, I don’t think the market will flinch too hard on headlines any longer.
USD/JPY took a quick trip down to 107.78 early in US trading as stops were run on jitters but it bounced back quickly and we finish midway through the daily range at 108.13.
The Australian dollar put a bit of a squeeze on shorts early in US trading as the broad commodity complex did better. But the shine came off later in the day and AUDUSD drifted to 0.8797 from 0.8824.
Canadian dollar sellers are clearly lurking in the weeds and for the fourth consecutive day and test of 1.1200 in USD/CAD was rejected and the pair climbed back to 1.1239.
Forex futures market speculative positioning data from the CFTC Commitments of Traders report as of the close on Tuesday October 21, 2014:
EUR net short 159K vs short 155Kprior
JPY net short 72K vs 101K short prior
GBP net short 4K vs short 3K prior
AUD net short 32K vs short 30K prior
CAD net short 22K vs short 16K prior
CHF net short 18K vs short 17Kprior
NZD net short 2k vs short 2k prior
Not much change, right across the board except in yen crosses. Looks like USD/JPY longs rushed to the sidelines last week and early this week on the rout in risk. I think what we started to see on Thursday was them rushing back in. The -72K leaves plenty of room for fresh shorts to push USD/JPY back 1.10.
Yen net at the least extreme since July, when USD/JPY was at 101.50.
This is a good buying signal if you were already thinking about USD/JPY longs.
No clarification yet in EUR/USD as key-support at 1.2605/1.2592 (pivot/minor 76.4 %) has not even been scratched yet, which however also applies for the now relevant resistance cluster at 1.2697/1.2706 (minor 38.2 %/pivot), notes JP Morgan.
“Only a breakout of this range would now provide an early indication whether we can expect another corrective leg up (wave c) towards the upper T-junction at 1.2959 (int. 38.2 %) or the straight resumption of the broader downtrend next,” JPM adds.
“Towards 1.2959 though, we’d see a very good risk reward given to re-establish a strategic short position,” JPM advises.
JPMorgan likes selling near here
Same goes for cable, according to JPM, where the range trading affair goes on without giving us the final hint yet whether another up-swing might be missing or whether the broader downtrend has already been resumed.
“That said we need a range breakout between 1.5948/44 (minor 76.4 %/pivot) or a break above hourly neckline resistance (currently at 1.6170) to receive an early indication whether we are heading towards 1.6525/33 (pivot/int. 50 %) or for a test and possible break below key-pivotal support between 1.5852 and 1.5752 next,” JPM argues.
It’s that time of year again when clocks start to change.
Trying to keep track of what time it is in London, Paris, New York, Tokyo and Sydney is a head-scratcher at the best of times but it finally starts to feel a bit easier after 5 months of stability.
No more. The confusion has started already. Ryan posted about how Mike will get less light and less sleep in the morning but it’s actually the opposite but it means the trip home from work will be in the dark.
If we could all switch clocks together (or not) it would be an easy exercise but there’s a one-week lag between Europe and North America.
Europeans turn their clocks back early Sunday morning and then North America does the same on Nov 2 (except Arizona and Saskatchewan).
Meanwhile, most of Australia doesn’t change the clocks but our beloved Eamonn is in Melborne where they do. Thankfully that was already dealt with early in the month (New Zealand as well). Of course, they move the clocks in the opposite direction.
For traders in the UK or New York, the bottom line is that the difference will be 4 hours — for a week. It means all the economic releases will feel like they’re coming out at odd times. For the next week, lots of eyes will be on our clocks at the top of the page.
The New York ebola patient didn’t have an elevated temperature before 10-11 am ET on Thursday, according to the NYC health commissioner.
The patient (who is a doctor) is being roasted because he went out bowling and took the subway on Wednesday night. If he didn’t have symptoms the viral load would have been extremely low when he was out and it’s highly unlikely the disease will be transmitted.
Then again, he could be lying about the fever to save face.
The NYC health commissioner is also saying there’s no reason to close off his apartment building except his residence. How would everyone feel about living in that building right now?
UK GDP came in as expected today. The news was a relief to GBPUSD after more dovish BOE Meeting Minutes and weaker Retail Sale on Wednesday and Thursday. The data release created a volatile period in the first hour after the report, but since then the price has rebounded and is trading by a cluster of technical levels as London traders exit for the weekend.
For the week,
The price closed last week at 1.6085.
The high reached 1.61829
The low reached 1.59916
The midpoint is at 1.6088
The 100 hour MA is at 1.6085
The current price is within 5 or so pips of the 100 hour MA, the close from last week the 50% of the weeks trading range. Right in the middle. If you look at the weekly chart, the 100 week MA is at 1.6093 . So that too is around the current level. It’s like kissing your sister in that respect but there is one more bullish signal. That comes from the weekly chart.
GBPUSD ending London week near the close from last week, the week midpoint and the 100 hour MA.
The low for the week fell below the 50% of the GBPUSD move up from the 2013 low to the 2014 high at the 1.6000. Although the price fell below the 1.6000 level, there were no closes below the level. The price of the GBPUSD has traded above and below these levels in the last 4 trading weeks.The fact the price just barely made it below might be a little more bullish bias. Buyers held that line.
Of course, the pair was only a 0.6% reading in GDP today from the pair ending the week on a more bearish technical bias, and next week the bulls will still have to prove that the price can sustain a rally, but for now and from what happened today, the action is more positive in what has been a “kiss your sister” type of week.
GBPUSD traded above and below the 50% and 200 week moving average for the 4th week in a row.
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