Ken Veksler, Senior Manager, Trading Advisory.
Well risk is firmly ON!
Intel out last night after market reporting not just well, but in fact their best quarter ever….
This type of print is exactly what I have been talking about for the last week or so in terms of market expectations and interpretation. That is to say the market needed something extraordinary to be really propelled higher. And that is in many ways what we got last night. Having taken out the important 1085 resistance level in the S&P we now edge ever higher looking for 1115. No earnings reports today, however tomorrow promises to be the marquee day with many financials reporting and it is then that we could see another real surge higher.
Understandably the risk crosses received a healthy boost from this price action and we saw the EURUSD running into important technical resistance in the 1.2730 area, while the Cable also ran straight back into 1.5230 resistance, but at the time of print it has now taken this level out and the associated stops printing a high this morning already of 1.5260 on the move. I have now stopped myself out of this trade and look to reevaluate once the dust post reporting season has settled. Overnight the AUD was a star performer running higher on good skilled vacancies data as well the treasurer indicating that the budget for the next year was looking healthier and healthier with each passing day and that the surplus was likely to get even stronger. This in turn understandably pushed the cross into the next point of resistance around the 0.8830/50 area and that’s where we open up this morning still looking well bid.
The day ahead in the absence of earnings reports holds data in the form of UK unemployment, Euro zone CPI and out of the US advance retail sales. While I hate trading around data releases the stubborn part of me believes that this move in the Cable was all just a squeeze to clean the market out ahead of what is likely to be a rather ugly unemployment print this morning.
The JPY crosses also took a run higher as the JPY was sold off across the board and the USDJPY now looks at 89.30 as the next immediate point of resistance. Does it get through there? In my mind not just yet, but then again tomorrow is another day…
The USDCAD is also softer today and fast approaching levels (1.0280) where I am ready to start scaling into fresh longs having cut most of my shorts already.
The other cross to keep on the radar is the GBPJPY at present which above the 135 level presents good potential to open shorts especially in light of the pain that trading the Sterling against the big dollar can bring (and has brought).
Outside of all of this interestingly the DXY has managed to hold the 83.50 support level and for the time being is still hanging in there. It’s now a question of what gives first, the equity indices or the DXY.
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