Alright, it may be time to face reality, otherwise this year could just become truly ugly.
The reality? Well, simply put no one, and I predominantly mean officialdom out of Europe and the US has any clue about how to resolve the issues at hand.
Overnight we heard more mutterings about the inability to reach a conclusive deal on the Greek haircut and a new deadline, another extension to oblivion this time out to the 13th of February. Almost irrespective of what is agreed, targets of reducing debt to GDP ratios by 2020 will not be met and yet another reason for Greece to be turfed out on its proverbial rear. Uncannily though as I type this, yet another headline announcing the PSI deal to be finalised in the next couple of days... So what the hell do you need an extension of another 3 weeks for? And shock horror, USD sales and EUR purchases ensue...
Broken (insert expletive here) record....
How can you write something on a daily basis when fundamentally nothing has changed in the market for over 9 months and we continue to trade headlines, stop hunters and liquidity squeezes with an underlying “hope floats” undertone to the market. Feel like screaming and/or throwing rocks at your screens? Welcome to my world.
Data on the day is relatively light with UK Public Sector borrowing, CAD Retail sales and a plethora of US companies reporting before, during and after market. But of course as well know all too well by now, just keep an ear out for headlines and be prepared to trade for 20 point gains if and when you can get them. Utterly ridiculous.
On the major pairs, the EURUSD will continue higher and is set to test conclusively that 1.3080 resistance level and at its current pace do more than a simple false breakout above that area looking for 1.3130.
The AUDUSD has taken a small retracement break this morning, however good bids are sitting into the 1.0480/60 area, with stops needing to be tight and going in below the 1.0445 area for another move to retest yesterday’s highs of 1.0570. With the RBA due in about 2 weeks, I see no reason that we trade below 1.0330 before that day and if anything look for more upside. As absurd as this is, price action just does not lie.
The Cable is looking healthy and I firmly believe in another leg higher, looking for a retest of recent highs into 1.5780. The price action around the 1.5550 pivot level continues to be constructive and dips into 1.5480 will be met with strong bids.
Overall while I can’t condone the market in its present state, its proving utterly pointless to fight the obvious trend, that is, overall USD sales while we continue the downside DXY retracement and then begin consolidation.