Two way business that amounts to no business at all

The IMF has downgraded its growth forecasts for both 2014 and 2015 for China and with that proclamation has seen the commodity FX block take a downside hit with the AUD and CAD being the most notable victims as a result. Otherwise we’ve seen the Nikkei recover some of its lost ground from Tuesday staging a 2.3%+ return to form overnight. With it, it has taken the USDJPY higher once again as this pair generally plays into renewed USD strength (albeit for now). Everyone I speak to (admittedly it’s still early doors as far the year is concerned) seems to be getting chopped up on flow and lack of general, clear directional plays. Those that have been bullish the Greenback, remain defiantly so, while the camp that sits the other side of that fence looks as though they’re losing conviction. But let’s be honest better retail sales data yesterday out of the US has only really just stemmed the deplorable tide of USD selling we witnessed on the back of last week’s NFP print. As a former colleague of mine noted over an adult beverage last night, those positions that everyone was so desperate to get into on Monday were literally yesterdays news as by Tuesday no one wanted to have a bar of any of it.

Messy is perhaps the best way to describe price action when we get to see it and is tantamount to nothing more than flow business getting executed as and when need be rather than convictional bias and strong sentiment driving price at the moment. Plenty are quoting the fact that it’s very early in the new year etc and claiming this as the main reason behind such erratic moves etc. I’d like to believe this to the case and with that in mind look forward to seeing things finally settling down somewhat.

On the day, having seen off the Euro zone trade balance release (non event) we await US PPI and Empire State Manufacturing releases, with good prints in either (but perhaps more specifically the former) leading to more bravado from USD bulls and an increase in purchases of said currency. But in truth, not a whole lot to really guide the day or price action.

In terms of the crosses;

USDJPY: Having staged a recovery off (what I only later found out) were solid Japanese bids around the 102.90/103 area, we’re trading a fair bit higher today and look to likely extend that move as talk of a $1bn option expiry at 105.00 today will likely prove to be magnetic. On the downside, there isn’t a great deal to speak of, outside of the fact that 103.75/80 now is home to some midsized stop orders.

EURUSD: The pair has dribbled rather than moved and is for me further looking like there simply isn’t anyone trading it, unless they absolutely have to. Stops at 1.3635 were taken out this morning and a low of 1.3609/10 printed, since which we’ve stage a mini recovery (20 pips kids…). Talk of offers once again into 1.3650/70/80 should keep a lid on the pair, while buyers are noted into 1.3580 and 1.3550.

GBPUSD: A USD leg story awaiting fresh impetus, that’s pretty much the story in Cable for the time being. Levels seen in the last few days still hold merit and on the topside that means sellers at 1.6450/80 and downside buyers into 1.6380/50.

AUDUSD: The little battler has taken a decisive leg lower and trades heavy. Be it in combination of general sentiment and/or the news related above from the IMF, it doesn’t really matter. Outside of the fact that we’re nearing testing a double bottom once again and potentially reaffirming the recent 0.8850 by 0.9150 range we’ve seen. No love on the street for the AUD at the moment and sellers predominate the landscape. Some vague mention of stops on the topside above 0.8935/55 but that’s about it really.

Helmets on and good luck out there today.