Is the Goldilocks trade back on? While longer-term global growth and macro trends argue otherwise, a dovish FOMC and a dip in 10-year US yields has sentiment on the rise in the short term.
Article / 09 July 2014 at 10:56 GMT

Summertime, and the tradin' is sleepy

Director / Accumen Management
United Kingdom
  • Sleepy markets await FOMC minutes
  • Going long AUD very selectively
  • EURUSD stuck in a rut despite jawboning

Just like Brazil reeling from its woeful effort last night, the broader FX market continues to languish in summer doldrums. All eyes today (those still open) will be looking for the release of the Federal Open Market Committee (FOMC) meeting minutes this evening.

Summer has arrived a month early. Photo: Thinkstock

Personally I wouldn’t be expecting too much from the event, given that the last meeting featured a press conference in which Fed chief Janet Yellen made it all perfectly clear. Clear as mud perhaps, but clear nonetheless. There are enough in the ranks looking (hoping) for any type of hawkish dissent and some sort of inkling that the Fed is aware of its curve status (behind or ahead) that they may actually move sooner rather than later. Hope is not a strategy, investment or otherwise.

Overnight news saw a decent bounce in Australian consumer confidence prints, however little, if any, real follow through in the currency. Otherwise it was a quiet night with even the Chinese data doing little whip markets into a frenzy. Alcoa reporting after market close and beating expectations also didn’t really flow through to Asian bourses and as such we remain stagnant this morning.

The day is truly bereft of any meaningful data and we continue to sit in rather lacklustre trading and tight ranges.

My preference remains for being long of the JPY, albeit selectively, for instance against the GBP which is due further capitulation ahead of tomorrow’s Bank of England meeting. While in terms of the AUDUSD good offers will keep the pair pinned under 0.9430 heading into the unemployment data due overnight in Australia. Bids now join below into 0.9370.

The EURUSD is stuck and despite jawboning to the contrary little movement is being seen. We remain tightly confined between 1.3580 and 1.3630 on the day.

In terms of the CAD, I remain bearish here against the USD and look for the Friday unemployment print to hopefully provide the final much needed catalyst for the pair to trade above offers and stops at present are positioned going into the 1.0710/30 area.

Little else to add today, folks, as summer markets truly take a hold, sadly this year an entire month early...

Helmets on and good luck out there today.

— Edited by Clare MacCarthy

Ken Veksler is director of Accumen Management


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