Will we squeeze or reset this week?
- Dearth of data releases leaves market uninspired
- New Fed vice-chairman yet to offer fresh outlook
- Wednesday job figures anticipated
Another quiet weekend devoid of economic releases and a market uninspired by the latest geopolitical developments has seen us open at levels not far removed from those at which we closed on Friday. President Obama has confirmed that the US is bombing various ISIS sites and will continue to do so in an operation that won’t be weeks in the making but rather, months. More so, reports this morning have been about the US arming select Kurdish groups by way of preparing them for better self-defence. This can only end well. I say this only because this is surely the nth reincarnation of a scenario that has worked out so well so many times before.
Chinese data was in line over the weekend and little movement was seen on the back of it. More importantly, well at least for me, was hearing what Stanley Fischer had to say this morning in Stockholm during his first public appearance in his new role as vice chairman of the US Federal Reserve. In short, there was nothing earth-shatteringly new, important or market-moving. He’ll be very careful how he treads over the coming months. Fischer will certainly not wish to overplay his hand and, in doing so, will leave many in the market guessing whether he’ll retain his (potentially misplaced) popularly held title as a hawk or will he lean a little more to the accommodative side of doveishness. Either way, we’re none the wiser after his appearance this morning.
The day ahead holds little in store by way of data releases, and trading will no doubt take a Monday morning, mid-August type of direction. That is, entirely listless. As far as what to look out for, well squeezes in ensuing days is the word on the street. They will be driven not necessarily by data but rather positioning, which has found itself at extremes in various pairs and respective legs. All eyes are on the EURUSD and USDJPY mainly in this regard, as positioning in both has been regarded as stretched, mightily so, in fact. So, many are talking about squeezes in the respective pairs to even things out a little before resumption of the overriding trends. Perhaps. We’ll see.
The Cable will wait for Wednesday jobs data and then, furthermore the QIR slated for later that same morning. I like the idea of owning Sterling and with regard to the Cable, think 1.6750/30 offers a good risk/reward for a move higher back into 1.6850/80 before data sets the scene for the next leg, be it lower or higher.
A quiet one awaits us today folks and as such, helmets on and good luck out there.
-- Edited by Kevin McIndoe
Ken Veksler is director of Accumen Management