Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 09 June 2015 at 11:28 GMT

FX Noon: Don't understand this price action? You're not alone

Director / Accumen Management
United Kingdom
  • EURUSD zipped up to 1.1345/50 early today
  • Fundamentals seem to matter less and less
  • Broader DXY gives back all its NFP gains

By Ken Veksler

No, your eyes don’t deceive you, EURUSD is in fact back at 1.1280/00 and has been as high as 1.1345/50 odd very early today. And yes, the nonfarm payrolls print on Friday was +280,000, but let’s not let that get in the way of a market that truly has no sense of being or environment. Suffice it to say not only has the broader DXY given back all its gains from Friday but has actually in some instances capitulated even more. The Greek issue as ever remains unresolved and fundamentals generally matter even less than they would normally. 

All manner of pundits will attempt to offer you explanations and theories as to why certain asset classes are behaving in whichever manner, but the truth is, they don’t have a clue. Genuinely. And I’ll be the first to admit, that as this type of environment drags out, I too have less and less of a clue right now.

Chatter of poor liquidity in FX is gathering momentum with each passing day and in truth, not without merit. Market makers are seeing less and less business as the bulk of it is being passed to e-commerce platforms and aggregators, and those that do occasionally get asked to make a physical price are more reticent than ever to do so, for fear of being run over. Thus the erratic nature of market movements in FX are being even further exaggerated with increasingly smaller deal size pushing the market around.

The day ahead holds little in store as far as tier one data is concerned and thus we are again drawn to paying attention to headlines and sound bites, be they about Greece or... well, yeah Greece...

Personally, I no longer have anything open on the books simply because I’d rather sit on hands until such time as something makes even the smallest of sense from a risk/reward perspective rather than getting chopped up on nonsensical price movements.

On the radar however are the AUDUSD and Cable. In terms of the former, we’re simply basing and this process is yet to finalise and likely take some time yet, however, once done, the upside looks likely to print into the 0.8100 area again. In terms of the Cable, the downside looks like it’s about to get a look in so to speak with another visit of the 1.5150/80 area possible. But here too, it’s a waiting game.

And finally USDCAD... Colloquially known as the widow maker, no one seems to have the long USDCAD trade on board presently and are doing their utmost to buy every dip sub the 1.2400 area, hence keeping the pair well supported into that area of 1.2380 or so. We should see one more move higher in the pair perhaps re-testing 1.2530 but unless the USD gets a real move on or alternatively the data out of Canada continues to support failure, the downside will likely be revisited as last minute longs throw in the towel. Well, so at least say today’s tea leaves...

As always, helmets on and good luck out there today.

– Edited by Clare MacCarthy

Ken Veksler is director of Accumen Management
buelte buelte
tea leaves have never been speaking clearer to me ;-) thank you - seriously
Jim Earls Jim Earls
Maybe it's as simple as the U.S. NFP numbers aren't what they appear to be as 213,000 of the jobs were derived from the Birth-Death model.
Dimitrios Tamvakas Dimitrios Tamvakas
closing of shorts and discounting a progress on the Greek saga could explain the movement, if it will be susutained...


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