USD sales continue but lack the conviction to make it matter
Volumes and price action are decreasing dramatically and evidence of the fact is easily spotted on your screens. News overnight came in the form of a mixed bag of economic prints from China, however the market chose to take little if any real notice and the impact was muted, at best. Walking in this morning we see USD sales featuring rather prominently, well as prominently as lack of interest in this market actually allows for. And as such we’ve got the EURUSD, Cable and even the AUDUSD (clearly the USDJPY is an animal of its own making) all grinding higher. Entry into longs in the above mentioned are now tough and smalls unconvincing given risk/reward profiles and obviously time of year. Buying options to cover the position may be one way forward to getting this done however, time decay is likely to bite you directly in the backside given the reticence of the spot price to move with any real vigour.
On the day we’ve got very little by way of data out, save for Draghi speaking around lunchtime and US wholesale inventories out in the afternoon.
As you can imagine it’s tough to really get too enthusiastic about this market for now and paid mouthpieces are looking to sidestep the obvious lack of activity by speculating as ever about the timing of the FED taper. Will it be at the meeting next week or will it be any number of alternate months in the new year? You all know where I stand on the topic, so to avoid joining the plethora of paid pundits I shall refrain from espousing any further.
As far as levels, well the EURUSD begrudgingly found its way higher into 1.3770 overnight falling just shy of the 1.3780 resistance level. Trading close enough to there now and taking the above into account, the grind is likely set to continue as we approach the FOMC next week. There are a smattering of stop entries in the cross above 1.3785/7 from momentum types who would look for a fast move into 1.3830 to take some juice off the table. On the downside, 1.3730 has stops sat just below and buyers (profit takers on shorts) eagerly sit at 1.3610/20 hoping to lock in some joy.
In the Cable, while smalls far away for now, 1.6530 is a legitimate target for Betty and we should continue to move that way, albeit slowly. On the downside some mention of stops under 1.6400 but they’re weak at best and not likely to get a look in today.
In the USDJPY, optimality ahs the cross completely locked for now, seemingly between 103.50 and 102.50. Coming so dangerously close to this year’s highs overnight, it shouldn’t surprise if at some point we aim to get there, perhaps just not today.
The AUDUSD has found some love this morning and has been favoured by Asian central bank buyers as well as local Australian names with size behind them. Thus far no real note of orders be they to buy or sell or stops for that matter, however I would expect some recent shorts to get nervous above 0.9150.
Just another day at the salt mines for now and as such, helmets on.