Ask a trader who is the most influential central bank, and the answer should unequivocally be the Federal Reserve. Then, ask the same traders which central bank has the hardest job in setting policy, and you’ll most likely hear them say “the ECB” – They have to set policy for 19 different countries, where a one-size fits all model is fraught with challenges – all...
The event risk this week is really centred on Jay Powell’s speech at the Jackson Hole forum (Sat 00:00AEST), with other global data points unlikely to promote as much of a reaction – Powell should keep the option of a 75bp hike at the 21 Sept FOMC meeting firmly on the table, but offer the flexibility to go 50bp if we do see sufficient softening in the labour...
The Australian 200 stock index continues to move higher, despite weakness in the states. A fiscal boost from China could be helping to spur the high risk index higher. Weaker Aussie employment data could also lead to a less aggressive RBA.
From a technical perspective, price is nearing a key resistance level at the 61.8% Fibonacci level and the 200-day SMA. The...
After a 18.6% run since 17 June, the US500, NAS100, US2000 and US30 have all started to look a touch more vulnerable – the tone on social media is certainly more bearish - client flow has turned progressively more net short, with 60% of open positions now held short on the US500 – we can look at various oscillators like stochastic momentum and the 9-day RSI and...
Markets usually exhibit the same behavioral patterns over and over and we can see this clearly on EURCAD as it continues its downtrend.
We saw EURCAD close extremely bearish below 1.31 last month and last week's candle also closed bearish. Higher time frame bias shows a strong sell off in EURCAD.
On the daily chart, we saw EURCAD sell off then sideways range...
Weaker than expected growth in Japan led to markets expecting policy by the BOJ to be kept loose. This recent breakout now puts the index in positive territory YTD and it is now at a 7-month high. The question remains whether this is a breakout to be faded or has legs to move higher? The RSI seems to be rolling over from overbought territory. This could...
We saw JPY index triple bottom at 808 after a massive sustained drop, with the RSI also showing bullish divergence.
Triple bottoms are usually big reversal patterns after a big drop.
Buyers stepped in and price went up to 829 and in the process, formed a falling wedge which is also a reversal pattern adding confluence to the triple bottom.
Buyers continued to push...
In the week ahead the known event risks are less impactful than what we faced last week, and we see catalysts that are more idiosyncratic to a set region. The RBNZ should hike by 50bp and indicate more is coming, and while much of this hike is already priced, I favour following the technical breakdown seen in EURNZD, GBPNZD, and GBPAUD EURAUD.
We get UK jobs...
Looking at the calendar for the coming week, Aussie wages and employment, and UK CPI jump out as event key risks and potential price catalysts. You can see the expectations in the calendar, but one should consider how they will affect rates pricing and how this impacts the FX markets.
As it stands the market feels on balance that we’ll get a 50bp hike from both...
We argued in last week's ‘Traders’ week ahead playbook’ that with an unwavering focus on inflation Fed officials may look to push back on easier financial conditions. So, while the technicals pointed to further upside, from a tactical perceptive, we could see headwinds to risky assets. What transpired was that various Fed members, even well-known doves such as...
A big session ahead as we start to position for NFP and next weeks US CPI - good news seems to be good news for stocks, and bad news is good news too, as we see a weaker USD and further inverted yield curves' - an almost goldilocks scenario!
Technically, the index is making all the right moves, and we see the momentum indicators favoring a test of the downtrend...
We roll into August where after a scorching run in risk assets, the NAS100 closed July +12.6%, the best gain since April 2020 (rallied 15.2%). In Europe, the FRA40 was the best performing EU equity index, +8.9% for July, while in APAC/Asia the AUS200 rallied 5.7% and trending beautifully into FY earnings.
Ethereum gaining a massive 67% in July has shown us once...
After the bullish breakout of the multi-month wedge pattern, as well as the upside break of the range highs, we’re seeing better two-way flow and consolidation in the US500 – On the daily, we’re yet to see a bearish MA crossover (3-EMA vs 8-EMA) and the 5-day ROC is still positive, which keeps me holding a modest bullish bias, but we’re back testing the former...
We saw Cable plummet to 1.2000, which is a big monthly support area as seen on the monthly chart. Each time price has come into this area, buyers have stepped in aggressively. Price fell in a falling wedge as seen more clearly on the H4 timeframe. Falling wedges are usually reversal patterns after a sustained move to the downside in this case.
Price did not take...
Chris and Blake are back for another episode of The Trade Off! All eyes on Europe for a number of reasons. We're chatting gold, Bitcoin, Crude, FX, market sentiment and much more.
The focus of the market is firmly on EU assets as we head into the ECB meeting, and the Nord Stream 1 pipeline flow call from the Russians – not to mention Mario Draghi’s likely formal resignation. If you’ve got EUR exposure, be aware this is a news-driven market, and with EURUSD overnight implied vols at 52-week highs it could get a little wild out there.
I...
Talk of an unfolding energy crisis in Europe is well known, but we now come to a more defining and almost binary point in the proceedings – one EUR, commodity and EU equity traders should be aware of as a major event risk.
On 21 July, the Russians will need to make the call to resume the flow of natural gas (NG) through the Nord Stream 1 pipeline – the pipeline,...
