Video

#SaxoStrats
Optimism from Australia's central bank drove Chinese shares sharply higher overnight, with investors looking to the Aussie statement as a proxy for bullishness on the mainland economy.
Article / 01 July 2014 at 10:27 GMT

USD: Turning point or window dressing?

Director / Accumen Management
United Kingdom
• RBA leaves rates unchanged
• EURUSD and Cable march higher
• USD Index on the move


The Reserve Bank of Australia left rates unchanged overnight and the moderately anticipated doveish tone in the accompanying statement seemed to be lacking, for the most part. No real material change to the rhetoric was noted and thus those sitting waiting for just that moment were caught off guard. The Aussie took a pop to the upside trading into highs for the year, just surpassing the previous, at 0.9461, and printing 0.9463. We are sitting today just off those levels, and capitulation seems almost imminent but how far this extends is, of course, key. I would wager that those currently short will be happy to see their bids filled under the 0.9430 area and probably won’t be chancing their arm too much more. No real notable sellers are being seen for the time-being.

Yesterday's month/quarter/half year-end shenanigans saw one-way traffic and that was all against the USD. Sellers of the Greenback were all over the street and thus caused the likes of the EURUSD and the Cable to march ever higher. The EURUSD surpassed seemingly rock hard resistance at 1.3680 but failed to climb too much higher as talk of a Double No Touch option barrier at 1.3700 kept the pair contained. We are walking in to similar levels today and even the mixed (mostly slightly better) bag of PMI prints has done little to really move the cross. Below 1.3670, I would expect some capitulation of yesterday's exuberance, however, with a return to the 1.3650 area possible.

On the Cable, well it’s an entirely different matter as the PMI print here was nothing short of stellar and once again gave cause for punters to buy the Sterling. Hitting highs in the Cable unseen since 2008, the proud pound took off and still retains its bid tone, at the time of writing. Those that got on the GBPCAD I mentioned last week should be somewhat more cheerful now as the pair has had quite the move.

Later this afternoon we’ve got US PMI and construction prints to look forward to and the fear here is that they will simply confirm the poor state of play the US economy continues to languish in. The USD index has had quite the move in the past 18 hours and while, yes I’m a USD bear and have been for quite some time, even I would expect some sort of consolidation in the near term ahead of Thursday's key risk events.

All in all though, it should remain a relatively quiet day today as markets get ready for the tail end of this week and thus will be likely to try to keep what little powder they have left dry.

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

Ken Veksler is director of Accumen Management. Read more of his articles here.

5y
Kalman Kalman
Dear Ken, could you shed some light why the CHF is strengthening so much?
5y
Ann Smith Ann Smith
The rates rise everywhere. It’s not that time to take long-term loans. First of all the rates are unstable and they can change all the time. Secondly, you should realize how much time you have to take pay this long term loan. If you need money the only decision is taking short term loan. Usually I take loan on this web-site: http://installmentcredits.com/ . It’s very simple and convenient to use online payday loans. And the biggest benefit is low rates.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail