Your forexlive.com ENewsletter |  |
- The money is coming in on Larry Summers but tapering a better bet
- ForexLive Americas wrap: Canadian dollar brushes off weak jobs report
- CFTC Commitments of Traders: Speculators bet on the euro
- Obama sounds like he’s hunting for a dove
- Obama says it’s appropriate for US to take a pause in relationship with Russia and re-assess
- It’s been awhile since I was able to say this: The Australian dollar was the best performer this week
- Big week ahead for the euro – technical analysis
- I get the feeling AEP doesn’t own any Japanese bonds
- Any of you guys been to Panama?
- Cable heads down the pub after crushing all in its wake this week
- Ireland looking for the bailout exit door
- Euro unimpressed by European stock market gains
- AUD/USD breaks 0.9200
- USD/CAD turns around like an unemployed Canadian looking across the Detroit River
- Stocks falling further, S&P 500 down 0.4%
- US ECRI weekly index 131.8 vs 131.8 prior
- EUR/USD & GBP/USD Technical analysis 9 August
- The #1 most under-reported story this year
- June US wholesale sales +0.4% vs +0.7% exp m/m
- US stocks open 9 August
| The money is coming in on Larry Summers but tapering a better bet Posted: 09 Aug 2013 03:44 PM PDT Larry Summers is now a prohibitive one-to-two favorite to become the next Federal Reserve chairman, far surpassing Janet Yellen at two-to-one, according to Paddy Power. Zero Hedge has been tracking the odds and their numbers show a quick shift to Summers that has continued since Wednesday.
I have to take that with a grain of salt because you have no idea what kind of volumes are at work. If they’re small, a single large bet on Summers (betting was closed for a period so it’s possible) could have driven Summers higher. The odds could simply be a reflection of them wanting to hedge by getting money in on Yellen. The Paddy Power bets on tapering might be more interesting. They have a prop on “the first month of the implementation of reduction of quantitative easing bond buying currently set at $85bn per month.” The 7/4 odds on September imply a 36% chance which seems low but the word implementation is an important caveat. The Fed decision isn’t until Sept 18 and that might not give the Fed enough time to implement a stop to QE purchases. Even if they announce tapering in Sept, they might not implement it until October. With the October odds at 7/1 indicating only a 12% chance of tapering, that might be the better bet. In any case, stuff like this makes me miss InTrade. |
| ForexLive Americas wrap: Canadian dollar brushes off weak jobs report Posted: 09 Aug 2013 02:17 PM PDT Forex headlines for August 9, 2013:
As the hours the week wound down the US dollar recovered some of its losses against the euro and pound but fell further against CAD and AUD. The Canadian jobs report was the highlight on the calendar and it was an atrocious report. As you might expect, USD/CAD jumped a half-cent on the release. The surprise was that it didn’t continue higher. Instead, it turned around a fell to the lows of the week. As I told Reuters, “That sort of move on a data point makes people change their perspective on a currency.” EUR/USD looked more like a round of profit taking, especially after the failure to take out 1.34001.3415. There is some major resistance ahead and the pair chopped lower, hitting some sell stops at 1.3340 on the way to a low of 1.3333. It was a similar story for cable as it pulled back after a big week of agains. After topping 1.5560 it struggled at that level on Friday and profit taking took over afterwards. The pair slipped below 1.5500 several times but couldn’t break 1.5497, suggesting some heavy buyers were loading up just below the big figure. That’s something to watch at the open. AUD/USD snuck above 0.9200 in its fifth consecutive day of gains. This week was the virtual mirror of last week and better days may be ahead for the Aussie. The high of the day was 0.9214. USD/JPY couldn’t muster the same kind of bounce and has declined in 5 of the past 6 days. The pair started US trading at 96.45 and ends the day at 96.21, just a hair above the lows of the day.
Here is the performance of various currencies against the US  Bet against the US dollar? Everyone’s a winner! |
| CFTC Commitments of Traders: Speculators bet on the euro Posted: 09 Aug 2013 12:40 PM PDT Futures market speculative positioning data from the CFTC Commitments of Traders report as of the close on Tuesday, August 6, 2013:
Speculators shift to euro net long position for the first time since late June. I don’t do technical analysis on fundamental charts (because that’s straight voodoo) but this one looks like a ‘buy’.  EUR CFTC net positioning August 9 2013 |
| Obama sounds like he’s hunting for a dove Posted: 09 Aug 2013 12:37 PM PDT Obama spoke some vague comments on the next Fed chairman, saying the nomination will come in the Fall and notes there are a range of candidates including Yellen and Summers. These
Translation: I want a dove. Not exactly the kind of thing you want to hear if you’re an inflation-fearing bondholder. |
| Obama says it’s appropriate for US to take a pause in relationship with Russia and re-assess Posted: 09 Aug 2013 12:25 PM PDT That’s a major statement. Obama is seriously pissed about Edward Snowden. Obama adds that the US made a lot of progress with Russian when Medvedev was President but when Putin came back to power there was more anti-American rhetoric. This is a spat that is turning into something a little more and could hurt some businesses. |
| Posted: 09 Aug 2013 11:20 AM PDT AUD/USD longs were the best trade this week, gaining 3% or 291 pips. It was impressive gain after months of declines but it still wasn’t enough to wipe out the losses last week.  AUD/USD weekly chart The important thing to note is that it came after some bad news, albeit better signals out of China mitigated some of the worries. Later today, we get the weekly positioning data from the CFTC and it shows the best reason to be long AUD. The market is extremely short.  Australian dollar net position COT I have been short AUD/USD and argued for more shorts but when the market is so one-sided, you have to be on extra alert. It’s not time to go long AUD/USD but a rally above 0.9330 would likely kick off a long-awaited relief rally. If you want to avoid the risk of a US dollar rally, look to AUD/CAD which is trying to break above its recent channel.  AUD/CAD daily chart |
| Big week ahead for the euro – technical analysis Posted: 09 Aug 2013 10:54 AM PDT The euro has been a technical trader’s dream for the past month. It bounced precisely from the annual lows in April and has climbed more than 500 pips. Resistance at 1.3300 proved to be a tough technical challenge but once EUR/USD finally scored a daily close above, it was a straight shot higher. The euro is lower today but technically it’s in a good position for a breakout above the June highs and the 200-week moving average to a test of 1.37.  EURUSD weekly chart with 200-WMA The week ahead is extremely light on economic data but Tuesday’s ZEW could get things moving along with Eurozone GDP on Wednesday. The threat might come from the US side of the equation of the dollar finally shakes of the slack. US retail sales are on Tuesday and CPI comes Friday. An initial failure at 1.34 won’t be a big setback for the euro but it would bear close watching. |
| I get the feeling AEP doesn’t own any Japanese bonds Posted: 09 Aug 2013 10:19 AM PDT Like a thundershower on a sunny day, Ambrose Evans-Pritchard can put a negative slant on just about anything but today he takes on Japan’s enormous debt problem and says not to worry.
Just in case you thought he was turning over a new leaf with all the summer sunshine, he also wrote about Greek youth unemployment hitting 65% in data released today. |
| Any of you guys been to Panama? Posted: 09 Aug 2013 10:10 AM PDT I’m thinking of heading down to Panama for a few months. Good internet and good food is all I need to keep ForexLive rocking. Good music helps too: |
| Cable heads down the pub after crushing all in its wake this week Posted: 09 Aug 2013 09:16 AM PDT Not a bad week for the old bird really. A hold above 1.55 into the weekend would be another positive sign but the way markets are at the moment either direction looks a slow slog. It may be a ghost of its past glory but it’s given a brief reminder of what cable used to be like to trade everyday. Anyway, I’m clocking off for the week. With the new football season only a week away I need to get into pre-season training with a big session down the pub tomorrow. Got a long 9 months drinking ahead following my hapless team around the country. Don’t worry though, I won’t bug you with it as much as Mike does with the cricket (Only joking MP) Hope you all have a spanking weekend and thanks for spending your daily grind with us.
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| Ireland looking for the bailout exit door Posted: 09 Aug 2013 08:43 AM PDT
So says a government source via BBG |
| Euro unimpressed by European stock market gains Posted: 09 Aug 2013 08:37 AM PDT The euro is at the lows of the day after running through the stops below 1.3340 that I mentioned earlier. There is some modest demand at 1.3320 and on either side of 1.3300. Here are the closing changes:
Small gains/losses on the week for European stocks with the periphery outperforming the core. Meanwhile, the S&P 500 is at the lows of the day, down 9 points. |
| Posted: 09 Aug 2013 08:08 AM PDT 0.9204 the high so far and it’s very touchy feely. Given the recent move down I suspect bulls will have one finger over the exit button at the first sign of big offers coming in. A further move higher will bring the 55 dma into focus at 0.9282, ahead of the big 0.93 which held big resistance last time. EUR/AUD is feeling the heat from the rise falling to strong support at 1.4500 which is holding for now.  EUR/AUD technical analysis chart 9 August 2013
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| USD/CAD turns around like an unemployed Canadian looking across the Detroit River Posted: 09 Aug 2013 07:58 AM PDT USD/CAD tried the upside and narrowly took out 1.0352 but it has been hammered back down toward the lows of the day at 1.0305. I was skeptical of USD/CAD weakness yesterday but this move is harder to doubt. Key support is down in the 1.0280 zone and the July low at 1.0246.  USDCAD daily chart 100-day moving avg |
| Stocks falling further, S&P 500 down 0.4% Posted: 09 Aug 2013 07:50 AM PDT It’s starting to get interesting in the stock market with the S&P 500 down 7 points. There is scattered support down to 1685 but it could begin to weigh on USD/JPY.
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| US ECRI weekly index 131.8 vs 131.8 prior Posted: 09 Aug 2013 07:30 AM PDT
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| EUR/USD & GBP/USD Technical analysis 9 August Posted: 09 Aug 2013 07:28 AM PDT Well we’ve managed to get the days range to 41 pips in the euro and 62 in the pound but it’s slow going. Bids cited by Adam at 1.3350 have held up for now but the slow grind lower looks to continue. Support is minor on the way down with the first being tech support and the broken May 2011 trendline at 1.3338/40 then The Feb 2013 broken trendline and Tech sup at 1.3297/02.  EUD/USD technical analysis chart 9 August 2013
In what are quiet market conditions the tech at the edge of a 50 odd pip move may provide good levels to take profit or get into small positions. It’s a similar story in cabel where we have not managed to gain a foothold above the 200 dma and Dec 2012 trendline at 1.5531/38. We’re back below and these levels are likely to bring in minor resistance on any move up.  GBP/USD technical analysis chart 9 August 2013 I’m liking the look of support in cable down at the 1.5303/25 region. There’s both 55 & 100 h4ma’s and dma’s. There’s obviously a way to go but if we do get any big moves next week those areas (particularly the dma’s) could provide some decent support.
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| The #1 most under-reported story this year Posted: 09 Aug 2013 07:17 AM PDT Emerging market growth is sputtering. There has been plenty of chatter about China but the story is far bigger than one country. Is there a single emerging market country that’s put in surprisingly good growth this year? I’m sure there is one but as a whole it has been a parade of disappointment. Today, Russian reported Q2 GDP growth at just 1.2% y/y compared to 1.6% in Q1. Brazil also cut its 2013 GDP estimate to 2.1% from 2.3% (and 2014 to 1.7% from 2.2%). Update: And now JPMorgan has cut its 2013 forecast for Mexico to 2.4% from 2.8%. Here is the progression in IMF global and EM/developing world forecasts for 2013 since January:
They’re now on the wrong side of the consensus in a handful of large EM countries, including a fanciful 7.8% forecast for in China and 2.5% for Brazil. What’s one takeaway? Oil at $105 doesn’t make much sense. Commodity currencies are bouncing now but at some time in the not-to-distant future (Sept?) they’ll be a screaming sell. |
| June US wholesale sales +0.4% vs +0.7% exp m/m Posted: 09 Aug 2013 07:05 AM PDT
That’s the second straight unexpected fall. The inventory/sales ratio is dropping but that’s only a good thing if sales are picking up. They are but not at a great rate. There were big drops in auto inventories but big increases in computer equipment. Excluding autos inventories were flat. It’s this component that goes into GDP so we could get economists marking down growth estimates Sorry for the delay folks it all went a bit pear shaped round our back end. |
| Posted: 09 Aug 2013 06:35 AM PDT
US 10 year yields 2.60% +1bp |
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