Sir Pipsalot
Former FPA Special Consultant
- Messages
- 511
Hey folks,
The USD whipped around from strength initially into weakness on Monday and is now yet again running into resistance areas on the EUR/USD, Gold, etc. As with yesterday, it was a good move to sell into resistance with some modest profit goals (see yesterday's post) by shorting the EUR/USD here around 1.4700 to 1.4735 looking for some potential "Turnaround Tuesday" type price action, but you may want to look for some form of short term confirmation before getting in just in case this short term USD weak momentum carries onwards. Much more bullish behavior on the Euro (break of 1.4850) will force us out of our shorts and put us on the sidelines for a bit. For now though, we'll continue to hold the line and see what Tuesday brings us.
We've seen some renewed bearish USD sentiment as the RBA hiked interest rates and Persian Gulf states are considering shifting away from the USD for oil trading. It is possible that the fundamentals will push USD to yet another extended low before bottoming, but there's still a decent chance we can get things turned around this week as the deflation issue has sneakily been brought up by fed officials today. They're concerned about lowering wages and insist that pressures are more deflationary than inflationary right now. I agree. When it comes down to it, the big engine behind inflation or deflation (the cause) is wage growth or contraction, not the price of goods and services (the symptoms).
Gold is trading close to the edge of it's 1024 highs, which is troublesome, but fortunately I've recommended Silver as the preferable short compared to Gold. With the stock market pretty subdued, Silver should remain under more pressure than gold which helps out the shorts there.
Stocks bounced back a bit today but are now at some interesting trendline resistance. The signals are mixed for Tuesday but I think the odds are leaning towards a selloff tomorrow. I'm continuing to hold stocks short for a long term trade expecting the 1070 highs to hold up and for us to see considerable more downside.
In news Monday, we saw UK Services PMI come out too close to expected for a buy, but still having reasonable price action upwards. The RBA raised interest rates somewhat surprisingly causing a fairly quick 80 pip rally on the AUD/USD which consolidated, reloaded and has since pushed into a bit of a daily chart breakout higher as I speak. This RBA move could unfortunately be a catalyst for further USD weaknesses across the board as traders and investors see it as a sign that the US recovery is lagging many overseas markets. In news Tuesday:
0430 UK Industrial Production m/m (0.2% expected) - Look out for potential rumor/leaked based price action in the minutes before the news. This trade is a bit hit or miss, but with services PMI yesterday posting nice follow-through after the pullback, we could see another good trade today. Make sure there's no conflict though with Manufacturing Production.
If it comes out at 0.5% or higher, GBP/USD should rally 30-40 pips.
If it comes out at -0.1% or lower, GBP/USD should fall 30-40 pips.
1000 CAD Ivey PMI (56.2 expected) - When we used to trade this more often in years past, it would work well on a +/- 5 deviation, but lately it's been working well on small triggers, and having trouble on large surprises. I have a feeling the last 2 months aren't a fluke though and guess that this month will see a decent move. When it does work, the move usually comes about slowly (10-30 minutes) so don't expect a huge surge.
If it comes out at 60 or higher, USD/CAD should drop 30-40 pips.
If it comes out at 52 or lower, USD/CAD should rally 30-40 pips.
The USD whipped around from strength initially into weakness on Monday and is now yet again running into resistance areas on the EUR/USD, Gold, etc. As with yesterday, it was a good move to sell into resistance with some modest profit goals (see yesterday's post) by shorting the EUR/USD here around 1.4700 to 1.4735 looking for some potential "Turnaround Tuesday" type price action, but you may want to look for some form of short term confirmation before getting in just in case this short term USD weak momentum carries onwards. Much more bullish behavior on the Euro (break of 1.4850) will force us out of our shorts and put us on the sidelines for a bit. For now though, we'll continue to hold the line and see what Tuesday brings us.
We've seen some renewed bearish USD sentiment as the RBA hiked interest rates and Persian Gulf states are considering shifting away from the USD for oil trading. It is possible that the fundamentals will push USD to yet another extended low before bottoming, but there's still a decent chance we can get things turned around this week as the deflation issue has sneakily been brought up by fed officials today. They're concerned about lowering wages and insist that pressures are more deflationary than inflationary right now. I agree. When it comes down to it, the big engine behind inflation or deflation (the cause) is wage growth or contraction, not the price of goods and services (the symptoms).
Gold is trading close to the edge of it's 1024 highs, which is troublesome, but fortunately I've recommended Silver as the preferable short compared to Gold. With the stock market pretty subdued, Silver should remain under more pressure than gold which helps out the shorts there.
Stocks bounced back a bit today but are now at some interesting trendline resistance. The signals are mixed for Tuesday but I think the odds are leaning towards a selloff tomorrow. I'm continuing to hold stocks short for a long term trade expecting the 1070 highs to hold up and for us to see considerable more downside.
In news Monday, we saw UK Services PMI come out too close to expected for a buy, but still having reasonable price action upwards. The RBA raised interest rates somewhat surprisingly causing a fairly quick 80 pip rally on the AUD/USD which consolidated, reloaded and has since pushed into a bit of a daily chart breakout higher as I speak. This RBA move could unfortunately be a catalyst for further USD weaknesses across the board as traders and investors see it as a sign that the US recovery is lagging many overseas markets. In news Tuesday:
0430 UK Industrial Production m/m (0.2% expected) - Look out for potential rumor/leaked based price action in the minutes before the news. This trade is a bit hit or miss, but with services PMI yesterday posting nice follow-through after the pullback, we could see another good trade today. Make sure there's no conflict though with Manufacturing Production.
If it comes out at 0.5% or higher, GBP/USD should rally 30-40 pips.
If it comes out at -0.1% or lower, GBP/USD should fall 30-40 pips.
1000 CAD Ivey PMI (56.2 expected) - When we used to trade this more often in years past, it would work well on a +/- 5 deviation, but lately it's been working well on small triggers, and having trouble on large surprises. I have a feeling the last 2 months aren't a fluke though and guess that this month will see a decent move. When it does work, the move usually comes about slowly (10-30 minutes) so don't expect a huge surge.
If it comes out at 60 or higher, USD/CAD should drop 30-40 pips.
If it comes out at 52 or lower, USD/CAD should rally 30-40 pips.