After a U.S. holiday and a relatively quiet although negative Asian
session we walk in this morning to see not much changed but perhaps a
slightly more active market. The Reserve Bank of Australia last night
continued to sit on its hands and essentially repeated the same rhetoric
we’ve been hearing now for the last three or so meetings. Quoting the
overall global outlook and uncertainty, I’m putting (once again) my twig
and two berries on the line and saying that the RBA has now reached the
top of its rate hike cycle. This coupled with whispers of S&P
downgrading the ratings on the four major Australian banks gave the
little battler a fairly large headwind to trade into and thus leaving it
still looking heavy this morning.
Otherwise on the FX front it was a fairly quiet night as the USD put
in a decent performance against the likes of the EUR and the Sterling,
with both crosses trading lower and tripping various light stops that
were still floating in the market. A whisper about Merkel saying that
Greece would not receive its next tranche of help (not ever, just an
open ended delay) also put a dampener on things and certainly put pay to
any bounce in the EURUSD out of overnight lows.
On the day little by way of data to guide the market with the
exception of German factory orders and later NON Manufacturing ISM out
of the US.
Looking at the crosses and levels for the day, I still like the
EURUSD lower with 1.4130 likely to cap the upside, with stops just above
and the next obvious level of resistance at 1.4160, right now I like
the idea of fading rallies intraday while the pair looks to test and
consolidate the now well established downside range boundary around
1.3980/1.4050. While I’m on the topic, I will hark back to a call I made
about six weeks ago, saying that the EURUSD should be trading (+/-
1-2%) into 1.2750 by the end of Q3, beginning of Q4. Well I still stand
by this and think we will head that way… More on that a little later
today perhaps.
On the AUDUSD I too remain bearish for the time being and see more
chance of downside opening into 1.0480 as first port of call and then
stops cleaned into 1.0430/1.0380. The topside should be contained at
least at first by good offers sitting into 1.0570/80.
The Cable looks heavy and 1.6030 could be a decent intraday buy. At current levels however I wouldn’t get too involved.
On the S&P500, I’m looking for a small (almost irrelevant) bounce
into 1165/70 at best, before we capitulate and look to target 1120/25
on the downside. I prefer a fade rally play rather than buying at market
looking for negligible growth.
That about covers it for today folks as I’m smalls still trying to get my bearings in this market.
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