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Sir Pipsalot's Tuesday Market Update 09-07-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Sep 6, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    The markets were fairly dead Monday due to the US Labor Day holiday, but the shorts on EUR/USD, GBP/USD and AUD/USD all worked to either hit TP's or are at least clearly in the green right now with EUR/USD and GBP/USD down over 100 pips from yesterday's signal and AUD/USD only somewhat lower but still poised to fall much more if/when support around 0.9135 gives way (now 0.9155). GBP's weakness has been attributed to bond flows while EUR/USD in the last few hours is hitting major weakness now that a report from the WSJ indicates that European banks understated their soverign debt holdings substantially during their stress tests. If you're still long EUR/GBP from last week, I'd close it early with this rough turn of the news (now 0.8323 for +120 to +170 pips).

    I expect EUR/USD and GBP/USD to exhibit further bearish price action today, so stick with the shorts after taking some partial profits since we are near interim support levels. Unless AU news offers a hawkish surprise, AUD/USD should catch up with weakness as well.

    In news Tuesday:

    0030 AU Interest Rate Decision (no change at 4.50% unanimously expected) - There is very little chance they'll make a move today, but if they do hike it would lead to a 100-200 pip rally. The price action should come from the statement itself. Right now the market is pricing in very little chance of a hike this year, so...

    -- If the RBA highlights recent improvements with a more hawkish tone, AUD/USD should rally 30-50 pips as markets adjust interest rate expectations to a stronger possibility of a hike before the end of the year.

    -- If the RBA continues to cite the sluggish global economy or risks of a deeper recession as their predominant concern, then the little hope that exists for higher rates will erode further and AUD/USD should trade lower albeit more gradually than for a hawkish surprise. I would expect a 40-70 point slide over the course of 4-7 hours.

    That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only. If you have any questions, you can also email me at sirpipsalot@profitmongers.com

    To our success!
    Sir Pipsalot
     

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