While NOK (Norwegian krone) has the strongest statistical relationship with Brent and WTI crude, we can see a strengthening correlation between crude and the CAD. We see the 1-month correlation between crude and CADJPY at 0.68, so it's meaningful. We also see (on the daily) price breaking out of the top of its recent range of 108.50. While many will be concerned...
Further highs in crude have been seen in this momentum move. This time courtesy of some punchy OPEC forecasts for a 3.3m barrel p/d deficit in Q4. The IEA (International Energy Agency) are due to provide their update in the session ahead, and one can also expect a change in the forecast, given they previously pencilled in a 230k bpd deficit. $90 is the obvious...
It was all very exciting on the floors in Asia yesterday, with traders reacting to a hawkish interview by BoJ Governor Ueda. Essentially, Gov Ueda laid out a conditional path and timeframe for the first-rate hike and a move away from its Negative Interest Rate Policy (NIRP), should the data permit.
One can assume that the BoJ are also one step closer to moving...
Trading Overview
We head into the new trading week with the USD index (DXY) closing higher for the 8th straight week, a fate we haven’t seen in some 18 years – it's little surprise that retail traders are countering that move, accruing a solid net short position. EURUSD has closed lower by the same duration, and that makes a fitting backdrop for the two...
Westy and Blake are back and talk about all market factors you need to have on your radar! Macro (USD, ECB, FOMC & Crude Oil), juicy charts (GBPUSD, EURMXN, Apple (AAPL) & Russell 2000) and actionable trade ideas (KRE ETF & EURUSD). See you there!
To understand the fundamentals at hand we can revert to the USD smile concept. Essentially, this portrays a model where the USD outperforms in times of ‘risk off’ (equity drawdown/higher volatility), and/or when global economic data slows, and the US economy looks 'exceptional'.
In the past 24 hours, one could argue that both the left and right sides of the...
We saw a lot of confusion in the headlines as to the weakness in AUDUSD yesterday. The RBA meeting had very little to do with it, and the AUD has just been a proxy of Chinese markets. A higher USDCNH and weaker HK50 saw AUD lower, and a simple overlap will highlight this. Weaker China Caixin services PMI data was behind this, so as we look ahead at China trade...
We come into the new trading week with several major equity indices losing steam, and with the VIX index closing at new cycle lows. Short exposures seem hard graft with volatility so low, but we have some defined levels to set risk to for those positioning for drawdown – EUSTX50 – 4350, GER40 -16,000, US500 – 4540 and NAS100 – 15,628 – an upside break though in...
Westy and Blakecover all market factors you need to have on your radar! Macro (Sentiment, PCE & NFP, China & looking ahead), juicy charts (Gold, AUDJPY, GBPUSD & AUDUSD) and actionable trade ideas (EURCAD & USDCHF). See you there!
The current flow suggests this is the risk. On the daily chart, we see price closing above the 61.8 fibo of the July/Aug sell-off, as well as the 24 Aug highs. We see price holding above the 3-day EMA, with this ultra-ST moving average pulling above the 8-day EMA. Momentum accounts would be increasing net long positions on this move. On a micro level, Nvidia is...
Last week we saw GBPUSD print a bearish outside week reversal, although the buyers staged a solid defence of the 100-week MA (now 1.2534). Those positioned short will want to see price close below this moving average to increase the prospect of further downside.
Given the weekly reversal, any potential downside break of last week’s low of 1.2548 is also worth...
We move past Jackson Hole with a slight hawkish lean from chair Jay Powell, and this adds increased empathises on US core PCE inflation and US nonfarm payrolls as the big macro event risks. It remains unlikely we get a hike from the Fed in September, but November is shaping up to be a ‘live’ event, where both data points have the potential to throw interest rate...
Westy and Blake take you through all the market factors you need to have on your radar (equities, US, Crystal ball & Jackson Hole), look at some juicy charts (NAS100, Corn, Gold/Silver & EURUSD) and actionable trade ideas (USDJPY & EURAUD). See you there!
Gold has been shunned by investors, but many are now questioning if the yellow metal is nearing an inflection point, for a potential turn, or should we position for further downside.
With US growth likely at a peak and as good as it gets, gold longs partly flushed out, positioning paired back and sentiment as bearish as we’ve seen for years, could we be seeing a...
The big market themes last week were trading increased China risk and a resilient US economy with higher US ‘real’ yields (TradingView - TVC:US10Y-FRED:T10YIE ) – the result was broad USD strength and global equity weakness. GBP longs also saw tailwinds from the UK data flow, with GBPNOK the best performing major currency pair on the week – Services PMI could...
Westy and Blake are back and take you through all the market factors you need to have on your radar (volatility, yields, USD & inflation), look at some juicy charts USDJPY, Gold, GBPAUD & AUDCAD) and actionable trade ideas (L/S R2K & USDMXN).
When trading the AUD you’re essentially expressing a view on China. USDCNH has been on a one-way tear of late and has weighed on AUDUSD, reflecting poor China economics, concerns of a credit event, but also the comparative returns seen in US Treasuries (over China bonds). We’ve seen underperformance in Chinese equity and industrial metals. The AUDUSD daily...
US 10YR ‘real’ rates are essentially US 10yr Treasuries adjusted for 10yr inflation expectations – TradingView users can set this up using the equation: TVC:US10Y-FRED:T10YIE.
We can see this as the true cost of capital and in effect, the higher yields rise the more this supports the USD and negatively impacts US equity valuations. The rate of change (ROC) is...
