Intraday Market Thoughts Archives

Displaying results for week of Apr 23, 2017

Trump Tax & ECB Hint

Apr 25, 2017 23:50 | by Adam Button

We've spent the past six months getting to know Donald Trump and a playbook is beginning to emerge. It was evident in the trade as USD/CAD hit a 14-month high on Tuesday. Euro soared ahead on chatter that the ECB may hint at tapering in June. Australian CPI is due up next. The stocks rally stopped out the DOW30 short and USDCAD long Premium trades, while the EURUSD long from Friday hit its final target. 8 of the last 10 EURUSD trades in the Premium Insights since the Dec Fed hike have hit all targets. A new JPY had been issued.

Actions from Trump follow a three-part arc. First is the hint, the act itself and then damage control by his staff. The latest example was his spat with Canada over dairy.

He first mentioned Canada last week on a trip to Wisconsin when he said dairy farmers were being treated unfairly. On Tuesday, he slapped tariffs on Canadian lumber as part of the response. Afterwards, Commerce Sec Wilbur Ross downplayed the move and said Canada was a good neighbour.

In terms of trading, the time to sell CAD was on the first mention, even though it didn't include a specific threat. Trump appears to speak off-the-cuff but he's repeatedly show that it's part of an agenda and that was the case with Canada. The time to buy back CAD was shortly after the act itself. The tariffs sent USD/CAD up through 1.36 on Tuesday to the highest since last year when oil was bottoming. The loonie staged a small recovery back to 1.3560 on Ross' comments.

Along with that arc, the pattern has been that the first move from Trump is the strongest. When he bombed Syria, the fear was that it was the start of a campaign, but it's gone quiet since. Expect Trump to move on from Canada now.

As for USD/CAD, Trump isn't the only factor. Oil climbed a half-cent Tuesday but it remains in a downtrend. Meanwhile, the French election result and hopes for a Trump tax cut are the driving force in broader markets.

But if you apply our arc to the tax story, you had the hint on Friday. That was the time to buy risk assets. The 'plan' itself has largely been leaked so that may mark the top. In the aftermath his staff will play down parts of the plan that are unrealistic.

Aside from Trump, Australian and New Zealand traders returned from holiday today and that Aussie Q1 CPI report is on the agenda at 0130 GMT. The consensus is for a 2.2% y/y rise with the trimmed mean up 1.8%. Expect a big AUD move on any miss.

Act Exp Prev GMT
CPI (q/q)
0.6% 0.5% Apr 26 1:30

The Trade After the Fear Trade

Apr 24, 2017 23:56 | by Adam Button

The euro peaked early and faded as we anticipated in yesterday's IMT; we look at what's next. The euro was the top performer Monday while the Japanese yen lagged. Australia and New Zealand are on holiday Tuesday.There are currently 8 Premium Trades in progress; 4 in FX, 2 in indices and 2 in commodities.

Click To Enlarge
The Trade After the Fear Trade - Gold Euro 24 April 2017 (Chart 1)

The question we're asking ourselves now is whether the French election result was a one-day event or the start of something more durable. The close in EUR/USD was 1.0866, that's the best since November.

What's worrisome is that all the euro charts have eaten into the opening gaps. That's a technical red flag. It suggests a quick squeeze or a fast money trade rather than a sea change in sentiment. At the same time, some consolidation is normal.

Ultimately, the market is more political than it's been in a generation. At the moment, the political temperature is cooling off but it can shift quickly. Ignoring politics, the eurozone economy is showing some bright spots and EUR/USD is at a deeply depressed level. Like sterling, it won't take much to get it moving to the upside. Will the ECB and Eurozone CPI later magnify or break momentum?

The election is also a reminder of the factor that fear plays in trading. Markets are an amazing method of price discovery but add a bit of fear into the equation and prices quickly disconnect from reality. The current era of political shifts will lead to many bouts of fear and not all of them will be unjustified but if we look back at Brexit, Trump and the French election, the fears have been exaggerated at times in each case.

The Trade After the Fear Trade

Apr 24, 2017 23:31 | by Ashraf Laidi

The euro peaked early and faded as we anticipated in yesterday's IMT; we look at what's next. The euro was the top performer Monday while the Japanese yen lagged. Australia and New Zealand are on holiday Tuesday.There are currently 8 Premium Trades in progress; 4 in FX, 2 in indices and 2 in commodities.

Click To Enlarge
The Trade After the Fear Trade - Gold Euro 24 April 2017 (Chart 1)

The question we're asking ourselves now is whether the French election result was a one-day event or the start of something more durable. The close in EUR/USD was 1.0866, that's the best since November.

What's worrisome is that all the euro charts have eaten into the opening gaps. That's a technical red flag. It suggests a quick squeeze or a fast money trade rather than a sea change in sentiment. At the same time, some consolidation is normal.

Ultimately, the market is more political than it's been in a generation. At the moment, the political temperature is cooling off but it can shift quickly. Ignoring politics, the eurozone economy is showing some bright spots and EUR/USD is at a deeply depressed level. Like sterling, it won't take much to get it moving to the upside. Will the ECB and Eurozone CPI later magnify or break momentum?

The election is also a reminder of the factor that fear plays in trading. Markets are an amazing method of price discovery but add a bit of fear into the equation and prices quickly disconnect from reality. The current era of political shifts will lead to many bouts of fear and not all of them will be unjustified but if we look back at Brexit, Trump and the French election, the fears have been exaggerated at times in each case.

الحوار الأسبوعي مع أشرف العايدي وجورج البتروني

Apr 24, 2017 19:59 | by Ashraf Laidi

– نتائج الإنتخابات الفرنسية – إقتراحات لمراكز التداول وكيفية تأثير اليورو على المراكز المفتوحة؟ – إستراتيجيات التداول لليورو -الصراع بين ماكرون ولوبان – كيف يمكنكم التداول بالأسواق الأسبوعين القادمين– شد حبال بين معسكر ترامب والديمقراصين– الذهب والفضة      المقابلة الكاملة

ندوة مساء الثلاثاء مع اشرف العايدي

Apr 24, 2017 15:43 | by Ashraf Laidi

سيركز الاستاذ اشرف العايدي على قرار البنك المركزي الأوروبي الذي سيصدر  يومين بعد الندوة و الدور النهائي في الانتخابات الفرنسية.   -هل سيحاول ماريو دراغي إقناع الأسواق أنه سيمدد برنامج التحفيز النقدي؟   -هل بإمكان التركيز على التحليل الفني و غض النضر عن العوامل الأساسية؟   -كيف ستاثر موازنة التوقعات من الاحتياطي الفدرالي  و المركزي الأوروبي على زوج اليورو/دولار؟

Euro Jumps as Macron, LePen Advance

Apr 24, 2017 0:01 | by Adam Button

One thing we haven't heard often in the past year was “the polls were right” but that was exactly what unfolded on Sunday in France as Macron and Le Pen won the first round of the election. The euro opened nearly 200 pips higher at the open with yen tumbling. CFTC positioning data showed few GBP shorts getting cleared out despite last week's jump. The Premium EURAUD long was closed for 240-pip gain, EURUSD long remains 205 pips in the green and EURJPY was stopped out at 190-pip loss.

Click To Enlarge
Euro Jumps as Macron, LePen Advance - Eurusd Daily Apr 23 (Chart 1)

The final tally isn't yet in but Macron and Le Pen will be in the final round of the Presidential election on May 7. The final results show Macron at 23.8% and Le Pen at 21.6% as of 0:56 am France Time at 95.6% participation. As the earliest numbers rolled in, Fillion conceded and threw his support behind Macron. There had been a slight chance he would stay mum or support Le Pen. Other candidates also endorsed Macron for the final round.

This result was as much a win for pollsters as for Macron. Despite many surveys showing him and Le Pen ahead, the market was cautious after Brexit and Trump. The same pollsters show Macron with a 20-point lead in the final round.

We warned last week that fears in the market were overstating a black swan scenario and the jump in the euro at the open underscored that. It climbed to as high as 1.0937 – a jump of more than 200 pips. EUR/JPY climbed nearly 400 pips.

Expect to see profit taking in fairly short order. Those moves are too big and the same types of fears may start to infect the second round. We will be watching the European open very closely for another surge of volatility. Also note that a finish above 1.0864 would be the best since November.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -22K vs -19K prior JPY -30K vs -35K prior GBP -99K vs -106K prior CHF -14K vs -10K prior AUD +43K vs +45K prior CAD -33K vs -32K prior NZD -15K vs -15K prior

The squeeze after Theresa May called the election certainly caught a few people on the wrong side but it wasn't a full-scale rush to the exits.