The market for risk will rally on any excuse lately, and today's FOMC minutes seems to have triggered another wave of risk buying. The minutes pointed out that the Fed worried high unemployment, tight credit, and modest income growth could constrain household spending. But the phrase that may have been the trigger for the market's fairly strong reaction was the statement that "a few members also noted that at the current juncture, the risks of an early start to policy tightening exceeded those associated with a later start." They were also surprised by the very low inflation levels, noting "a slightly greater deceleration in consumer prices than had been expected."
The minutes are rather USD bearish as long as the market stays in risk willing mode. And in that vein, AUDUSD touched a new high since mid January on today's development and NZDUSD reversed violently after a sell-off in Asia. This FOMC development might even be seen as an excuse for EURUSD to remain comfortably in the recent range above the 1.3265 low as long as intra-EuroZone debt spreads don't accelerate again to new highs.
Chart: NZDUSD
NZD couldn't stay down forever with all of the risk appetite elsewhere, it seems. Today saw a rather interesting bullish reversal in NZDUSD, as the NZD was likely pressured excessively by the AUDNZD cross rallying brutally overnight. Today's reversal sets up an interesting support level for the pair, which is likely to look higher as long as the Pollyanna's are in control.
NZD couldn't stay down forever with all of the risk appetite elsewhere, it seems. Today saw a rather interesting bullish reversal in NZDUSD, as the NZD was likely pressured excessively by the AUDNZD cross rallying brutally overnight. Today's reversal sets up an interesting support level for the pair, which is likely to look higher as long as the Pollyanna's are in control.
Two more commodity currency milestones
USDCAD broke the parity level in today's trade, though this did not generate any sizable follow-through. Likewise, EURNOK broke down through 8.00 as the focus seems to be a bit more on the negative EuroZone developments today rather than the slightly ugly Norway PMI. Strong oil prices are also giving NOK a lift.
USDCAD broke the parity level in today's trade, though this did not generate any sizable follow-through. Likewise, EURNOK broke down through 8.00 as the focus seems to be a bit more on the negative EuroZone developments today rather than the slightly ugly Norway PMI. Strong oil prices are also giving NOK a lift.
Chart: CADNOK
If both CAD and NOK are petro currencies, then the pricing here is getting extreme for CADNOK, which is at the top of its recent historical range. NOK would seem too weak from a commodity perspective, though its relative weakness probably stems from the recent, more dovish outlook from Norges Bank. CAD and AUD are the real superstars of the G-10 of late and when and if the market turns, they will then be the high beta dogs on the other side of the mountain.
If both CAD and NOK are petro currencies, then the pricing here is getting extreme for CADNOK, which is at the top of its recent historical range. NOK would seem too weak from a commodity perspective, though its relative weakness probably stems from the recent, more dovish outlook from Norges Bank. CAD and AUD are the real superstars of the G-10 of late and when and if the market turns, they will then be the high beta dogs on the other side of the mountain.
Chart: EURGBP
GBP overcoming the jitters from conflicting poll results and making a powerful statement today. The pair is nearing an important structural support soon in the triangular formation it has carved out since the late 2008 crisis wreaked havoc on the pound. Could this level be challenged before the election or would a challenge have to wait until after May 6?
GBP overcoming the jitters from conflicting poll results and making a powerful statement today. The pair is nearing an important structural support soon in the triangular formation it has carved out since the late 2008 crisis wreaked havoc on the pound. Could this level be challenged before the election or would a challenge have to wait until after May 6?
Looking ahead
After the market close we have the US Weekly ABC Consumer Confidence survey, which finally seems to be ticking up just as employment is finally showing signs of recovery as well.
After the market close we have the US Weekly ABC Consumer Confidence survey, which finally seems to be ticking up just as employment is finally showing signs of recovery as well.
Be careful out there.
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