Mind the liquidity gap and jawboning central bankers
If the market won’t do it, then we will! Or something like that. I think that’s the mantra taken on board by the RBA and its chief, Glen Stevens. Admittedly while the context of the quote was perhaps smalls unrelated, the sentiment certainly wasn’t misguided and the message loud and clear. The RBA wants the currency lower and if they won’t physically intervene they’ll jawbone it to within an inch of its life. A loss of over 1.5% yesterday in the little battler against the greenback saw model funds pile in (as noted here yesterday) on a break of 0.9000 and the rest of the world seemed to join the party shortly thereafter. Elsewhere news in the Asian session was light as were general market movements.
Walking in this morning and as I type it seems someone has a bee in their bonnet about owning the USD and in doing so has flushed some long standing (this week) stops in the Cable and EURUSD specifically. Bids are touted in the EURUSD sub the 1.3700 handle and some sneaky buyers are already making themselves evident just here into 1.3715/20. In the Cable, the move is likely nothing more than sympathetic and bids are noted (in size) into 1.6280/70. Any stops that may have resided in Betty have all now been done through the 1.6330 and 1.6310 levels.
The day ahead holds nothing of any real value in store for us as the calendar is light save for US PPI due later. The void continues to get larger as the year draws to a close and those that haven’t already closed books are likely still chasing shadows until the FED meeting next week. Will they taper? Perhaps. Is the market prepared for it? Not likely.
On the day your scribe hasn’t got a great deal more to impart regarding the market as its becoming ever so thin on the liquidity front and thus moves like this morning and technical levels that certain crosses approach seem to lose their meaning…
As ever on a Friday, don’t spoil your weekend with a cheap punt is my only advice, oh and of course, helmets on.