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- Pour a vodka: Poland’s ratings affirmed by S&P
- USD/CAD technical analysis 16 August
- NZD/JPY longs were the best trade this week
- It’s not all bad news for growth says BOAML
- Euro and sterling falling like a feather
- USD/JPY taking a look at the highs of the day
- Don`t panic Mr Governor.
- Options expiration was a bit of a dud
- Merkel rules out cut in debt for Greece
- University of Michigan August consumer sentiment 80.0 vs 85.5 expected
- Spain-German spread narrows below 250 bps
- US stocks open 16 August
- The thing about those big reversals is they often continue
- Mexican growth is the next one on the chopping block
- Follow the flows
- Cable breaks 1.5650 as dollar slumps again
- Lots of talk about options today but USD/JPY is the only battleground
- US Q2 2013 Preliminary productivity 0.9% vs 0.6% exp
- July US Housing starts 0.896m vs 0.900m exp
- Canadian June manufacturing sales -0.5% m/m vs +0.3% expected
| Pour a vodka: Poland’s ratings affirmed by S&P Posted: 16 Aug 2013 09:09 AM PDT Na zdrowie. Bet you’re glad you’re not in the eurozone.
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| USD/CAD technical analysis 16 August Posted: 16 Aug 2013 08:37 AM PDT The last time I visited the pair in depth was back in May where I was looking to catch a trade around 1.0400/45. My order went unfilled and the pair came off 300 odd pips. The world and his dog would love another dip down to parity but that boat looks to have sailed for now as the trend is still looking up. On the daily chart we have a support line coming from April through July which has kept losses caged. The 100 dma has also played a big role.
Much like my view with USD/CHF I can see the pair coming down before September and we have another longer term support line that will be of interest. Currently at 1.0146 we have a trendline from Sep 2012 through Jan 2013. This also houses the 200 dma. Just underneath that we have a lovely confluence looking to form of the of the 55, 100 & 200 wma’s. At the moment there is only 40 odd pips between them.  USD/CAD when the stars align your profits will shine This is potentially one of those “perfect moment” times where the tech lines up for a beautiful trade. Whether we get the chance remains to be seen and it’s probably quite a stretch. However, what we should note is that the 55 and 100 wma’s are looking to cross the 200 wma which in itself is a bullish signal. As with USD/CHF I favour buying down below and down at that August trendline I’d fill my boots. Same warning as before though in that what happens in September could throw everything into disarray. If it does then it could be a case of trading the breaks rather than the bounces. |
| NZD/JPY longs were the best trade this week Posted: 16 Aug 2013 08:37 AM PDT The kiwi was the top performer this week followed by the pound and Aussie. The yen and CAD were laggards. The RBNZ has adopted a hiking bias in a world where everyone is easing or flat, it’s as simple as that. For the yen, it fell hard this week but it was a retracement from big gains the week before. Some bullish factors:
 NZDJPY weekly chart The main risk is that if the support at that double-bottom breaks, it’s a head-and-shoulders pattern that targets somewhere around 65.00. |
| It’s not all bad news for growth says BOAML Posted: 16 Aug 2013 08:19 AM PDT They’ve gone and raised their forecasts for for the Eurozone and Japan.
Italy get’s a good boost +0.3% to -1.7% for 2013. Inflations forecasts are also marginally up around 0.1% across the EU nations. |
| Euro and sterling falling like a feather Posted: 16 Aug 2013 08:00 AM PDT EUR/USD has knocked off nearly 50 pips in the last hour or so down to 1.3321 from 1.3370. Her Maj’s pound has peeled off around the same from the highs at 1.5657 down to 1.5608. EUR/GBP topped out just over the 100 dma but just shy of the resistance and the 55 mma at 0.8565 Already a little bounce is in place and both are over 10 pips above the session lows. I would suspect this is just profit taking as the European afternoon wears on. European stocks are holding the days highs and bonds are holding steady after drops in yields.
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| USD/JPY taking a look at the highs of the day Posted: 16 Aug 2013 07:54 AM PDT Maybe the option cut wasn’t such a dud after all. USD/JPY (and the dollar in general) has been creeping higher since expiration and is taking a loot at the 97.76 session high. Offers are protecting the high so it might take a jolt from stocks or the bond market to get things moving.
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| Posted: 16 Aug 2013 07:46 AM PDT It was only just over a week ago that Mr Governor gave his prognosis and forward guidance; meant to calm us all down, so that we could rest securely in the warm glow of cheap mortgages and low borrowing costs for the next three years. WHAT HAPPENED ??? We get a couple of bits of good news about the economies both sides of the pond, and wacko, according to the UK press, rates are going up next Monday at the very latest, stock markets are tumbling and life – so good last week – is now futile !!! So, what has happened to interest rates to spark this - 10 year gilt yields rose a few basis points to about 2.8%, not exactly armageddon is it. A couple of facts here in this silliest of seasons; firstly, we all know that rates are going up at some stage, and that QE will end, it`s just a question of when – but basically, rates are not going up by much and not just yet, thank you. Secondly, there are profits to be taken in equities, and September/October are regular down periods, so to take some profit seems a reasonably smart move (ps. hearing some of that cash going into gold ). So, lets not get ahead of ourselves here, sure the stock market looks to me as if it can come down by another 5% or so, but that doesn`t mean diddly squit in the larger picture. Things are improving in a lot of the major western economies and perhaps the next three months will show that maybe the pace of that recovery is faster than anticipated. BUT, we need to see that this recovery has some legs before we start to put the brakes on – we`ve got at least until Tuesday… |
| Options expiration was a bit of a dud Posted: 16 Aug 2013 07:13 AM PDT
There’s always Monday! |
| Merkel rules out cut in debt for Greece Posted: 16 Aug 2013 07:09 AM PDT Says Frankfuter allgemeine zeitung via BBG
Aside from the obvious, anyone would think there is an election around the corner. |
| University of Michigan August consumer sentiment 80.0 vs 85.5 expected Posted: 16 Aug 2013 06:55 AM PDT
 U Michigan consumer sentiment |
| Spain-German spread narrows below 250 bps Posted: 16 Aug 2013 06:39 AM PDT The 10-year yield spread between Spanish and German debt narrowed to less than 2.5%. Italian spreads are also at a cycle low at 2.33%. Those are the kinds of headlines you would expect to read just before EUR/USD rises to a six-month high.
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| Posted: 16 Aug 2013 06:36 AM PDT
US 10 year yields 2.78% +1bp |
| The thing about those big reversals is they often continue Posted: 16 Aug 2013 06:29 AM PDT The dollar is going limp once again. EUR/USD edged through minor offers at 1.3370 and is now eying the 200-week moving average at 1.3394. Large offers stretch from there up through the June high at 1.3417.  EUR/USD weekly – nice reversal this week The Australian dollar also hit some buy stops above 0.9200. The weekly high is at 0.9221. |
| Mexican growth is the next one on the chopping block Posted: 16 Aug 2013 05:58 AM PDT Santander cuts it’s 2013 growth target to 2.2% from 2.6% citing slow construction and manufacturing spending. All around they’re coming down. Update - No sooner do I post that then Citi cut Brazil’s 2013 GDP forecast to 2.1% from 2.2% and 2014 to 2% from 2.5% |
| Posted: 16 Aug 2013 05:52 AM PDT Flows can steer you in the wrong direction sometimes because of seasonality but BofA flow data jives with what we’ve seen in the FX market recently:
A flow of money follows the stream of good European data. |
| Cable breaks 1.5650 as dollar slumps again Posted: 16 Aug 2013 05:47 AM PDT Up to a high of 1.5657 breaking the resistance held this morning and yesterday. EUR/USD following and now looking towards August 8 and 9 highs and the 200 wma at 1.3390. Currently at 1.3364. USD/CHF sees Morgan Stanley further out of the money as it falls to 0.9226 from 0.9265 |
| Lots of talk about options today but USD/JPY is the only battleground Posted: 16 Aug 2013 05:45 AM PDT There is some chatter about big option expirations rolling off at the NY cut (1400 GMT) for EUR/USD and GBP/USD but I’m skeptical. The USD/JPY expiries, however, are huge and they’re real:
The cable option at 1.5650 is around $100m and the 1.5675 is even smaller and that’s just not big enough to have any kind of effect. The only other ones I can dig up that might influence markets are around 1.0400 in USD/CAD but with spot below 1.0330, that’s a stretch. Also keep in mind that U Mich consumer sentiment data will be released at the same time as the options cut so that could add some volatility. |
| US Q2 2013 Preliminary productivity 0.9% vs 0.6% exp Posted: 16 Aug 2013 05:30 AM PDT
Labour costs rising and above expectations will add to the inflation equation In the sectors the biggest increase in labour costs was non durables which rose to 2.8% from -4.8%. In productivity the non-farm sector rose to 0.9% from -1.7% in Q1. Given the swings from Q1 prelim figures to revisions you could probably drive a bus through the differences when they’re finalised.  US productivity and labour costs 16 08 2013
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| July US Housing starts 0.896m vs 0.900m exp Posted: 16 Aug 2013 05:30 AM PDT
Housing starts have been on a slide for the last couple of months. It’s nothing alarming after the robust gains but it is showing signs of flattening out  July 2013 housing starts
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| Canadian June manufacturing sales -0.5% m/m vs +0.3% expected Posted: 16 Aug 2013 05:30 AM PDT
It’s a weak number and USD/CAD touched a session high after the data. It’s a volatile series so it’s not something to freak out about but it’s something to monitor. |
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