Australia wins The Ashes but loses out to New Zealand
All eyes were southward bound overnight as Australia defeated the rather unimpressive England 3-0 in the Ashes clash in Perth, cementing the series win and reinstating some national sporting pride. Oh yeah and there were also some economic news of note… The RBA released minutes of its last meeting and while certainly not even remotely deviating from the overriding message that the currency needs to be lower there was also no real change to the overall rhetoric we’ve become accustomed to hearing from them in recent times. This was hardly market moving as such and there still remain those out there that would look for the central bank to cut rates early in the new year. On the other side of the pond, in New Zealand, things couldn’t possibly look any different with GDP guidance for the new year coming in ever stronger and expectations of a rate rise imminent, the disparity between the two neighbours couldn’t be greater and growing. The obvious trade was for the AUDNZD to take a major downside hit and trade at levels not seen in over 5 or more years.
Otherwise it was a fairly quiet and orderly night as little goes on until we have the FOMC decision released tomorrow night. Clearly year end also means that plenty is being taken off the table by way of positions and general market exposure (there’s only so many times I can repeat myself).
On the day, well thus far we’ve had UK inflation print its lowest level in 4 years coming in at 2.1% and edging ever so tantalisingly close to the BoE target of 2%. Interesting to see this happen when the man in the street can attest that things are only getting more and more expensive while real wages do anything but meet the growing gap… Just out as I type was the German ZEW number which was once again far better than expectations and shows that “financial experts” are optimistic and growing even more so in their delight. Frankly who cares, neither the real world, nor the currency market as both are completely un phased. The man in the street once again sees things differently to all manner of experts while the currency market is simply, well… not bothered.
With regard what to expect today and this afternoon, cloudy with a chance of rain… Oh, you mean as far as the market? Yeah well, nothing basically, nada, zip, zero, you get the picture. As far as data we’ve still got US Core CPI as well as CAD manufacturing sales and the BoE’s Carney speaking. But once again given the time of year and what awaits us tomorrow night, please don’t feel the need to remove your heads from your pillows.
In the currency space, well the EURUSD is 1.3730 by 1.3800, with stops under the lower bounds and to be honest I’ve got a feeling in my bones that we may just see them done before an ugly reversal.
The Cable is glued to that 1.6300 level and doesn’t want to budge for the time being. On the downside look for some stops around the 1.6280 area, but if anyone is still long Betty then they have real size into 1.6250 by way of stops (don’t think we’ll be seeing them today though). On the topside sellers join into 1.6330/40/50.
The USDJPY has options expiries etc in and around present levels of 103.00 and thus I certainly don’t expect us too far moved from here.
As ever, helmets on and good luck out there.