Intraday Market Thoughts Archives

القدرة على دمج التحليل الأساسي ليتوافق مع التحليل الفني و مخططات الرسم البياني سيكون محور ندوتنا الإلكترونية القادمة قبل أسبوعين من موعد صدور قرارات الاحتياطي الفيدرالي و المركزي الاوروبي احجز مقعدك

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The main catalyst for US dollar bulls over the past 2 months has been tax reform, but that could also be the catalyst for the bears as Ashraf indicated here and here.  The yen was the top performer Wednesday while the US dollar lagged. New Zealand retail sales beat estimates in early Asia-Pacific trading. One of the two Premium trades in EURUSD took 90-pip gain. 6 of the existing 8 Premium trades are currently in the green.

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For months various markets have been pricing in changes to the US tax code. It's impossible to say exactly what's priced in but it's clear that passing something is more likely than ever. So why the US dollar weakness?

We've been writing this week about the divergence between stock markets and USD/JPY. In the past , there has been a solid correlation between the pair and equity prices. Recently, however, the S&P 500 and Nikkei have soared while USD/JPY has languished.

One theory is that traders are wary of 'selling the fact' and getting out of the way early. Perhaps that's true. Another is that the Fed is increasingly getting worried about low inflation. Today's release of the FOMC minutes showed some members want to hit the pause button after a December hike and wait for inflation to get closer to target. There is probably some truth in that as well.

Back to the tax story. The dollar is selling because of the tax plan. More specifically, the details of the plan. It's increasingly clear this isn't a broad-based tax cut. It's heavily skewed to corporations and the top earners, while offering little to the vast majority of Americans. See Ashraf's notes on the disappointing tax holiday for US multinationals and rising cost of debt in the aforementioned pieces.

Maybe the market is saying that this plan isn't going to boost incomes, wages, investment or growth. Instead it will add to the deficit and lead to spending cuts down the road. What it will do is boost corporate profits and that explains the rosy reaction in stocks.

Whatever the reason for the dollar selling, the USD/JPY chart sent a major signal Wednesday. It broke the 100-day and 200-day moving averages, along with the October low in a 125 pip drop. It was part of a broad dollar rout. It's tempting to brush aside because of the US holidays but this move is too big and long-lasting to ignore.

Looking ahead, the Asia-Pacific calendar is light. Early in trading the Q3 New Zealand retail sales report showed a 0.2% rise excluding inflation. That's better than the +0.1% expected and the kiwi caught a small bid on the release.

هل تم أختراق خط العنق في الرسم البياني لليورو ؟ هل تأكدت فرص الشراء على الزوج و ماهي احتمالات الارتداد و اعادة الاختبار ؟ الفيديو الكامل هنا

The march higher in equities continues after existing home sales numbers beat estimates but the reason that USD remains weak across the board is attributed to the fact that emerging markets are fuelling global indices, rather than US data. (see chart below). UK Chancellor Hammond announces a non-inspirting budget and GBP slips off its highs after 2017 and 2018 GDP growth estimates have been revised lower. The minutes of the Oct 31-Nov 1st FOMC meeting are out at 7 pm GMT/London.  Ashraf has laid out in today's Premium video that Emerging Markets funds are outperforming their US counterparts. The Premium video will be posted before the US stocks session.

The quiet-markets trade we wrote about earlier this week bore fruit as commodity currencies rallied and the S&P 500 jumped to a fresh record. The yen remains defiantly bid as it has all year.

AUD and CAD resilience against USD as oil climbed and iron ore hit a two-year high. The S&P 500 rose 17 points and touched 2600 for the first time.

In spite of the mammoth climbs in asset prices since the crisis, one area that remains relatively depressed is US housing. It's the area where the crisis began and many buyers and speculators continue to carry the scars.

That may change in the years ahead. October US existing home sales rose to 5.48m from 5.37m, a 2.0% m/m increase. The median house price is $247K. Compare that to neighbouring Canada where the average selling price is more than double, despite lower incomes. Signs of tightening continue to creep in with US inventories down 10.4% y/y to the lowest since 1999. If the US expansion is to maintain for its pace for a few more years, it will likely be on the heels of rising household spending due to climbing home prices, along with a healthy jump in construction.

Looking ahead, US jobless claims, durable goods and FOMC minutes are out later. Expect thin trading volumes in the US ahead of Thursday's Thanksgiving Holiday.

Will there be another round of elections? Can Merkel resign? Full analysis.

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هناك المزيد من الثرثرة بأن ألمانيا قد تجرى انتخابات جديدة بعد شهرين من إجراء الانتخابات، وهى حالة لم يسبق لها مثيل فى تاريخ البلاد بعد الحرب التحليل الكامل  

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Everything else equal, what's the trade? That's the question we pose as markets drift in a holiday-shortened week. The pound was the top performer while the euro lagged. The RBA meeting minutes are up next. A 2nd EUR trade was issued today  with 3 charts & notes as part of the "EUR Tactical Set-up".

تدقيق اليورو، الاسترليني و الذهب (فيديو للمشتركين للصفقات القادمة والمستقبلية)

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German politics will likely remain the major headline-maker in a week with a light economic calendar and with US Congress on break. Merkel and her potential coalition partners have reached an impasse and are talking about a fresh election. The President is attempting to broker a deal and Merkel said she doesn't want to try to govern with a minority.

Expect some twists and turns but none of the potential scenarios are likely to leave a major mark on the euro. Initially, EUR/USD slumped 70 pips on the headlines but it recovered. Later in the day, EURUSD sagged again but that was part of a broader climb in the US dollar boosted by stronger than expected US LEI report.

And that brings us to the quiet trade. Risk assets have benefitted in nearly every environment over the past decade but the best backdrop has been the days with little-to-no news. That was the story on Monday and it's likely to be the same (especially in New York trading) for the rest of the week.That could help to underpin a minor rebound in the yen crosses and a creep higher in Treasury yields.

Expect higher volatility in Asia and Europe. The Aussie could be on the move when the RBA meeting minutes are released at 0030 GMT. Commentary about wages and financial stability is key along with insights about lower inflation projections.

Another event to watch is the 0430 GMT Japanese all industry activity index. It's forecast to fall 0.4% m/m.

Sterling and euro are in the news for different reasons with the former gaining on improved prospects of an agreement on the Brexit bill and the latter undergoing volatility in Asian trade after German coalition talks collapsed following the Free Democratic Party's walking out of the exploratory talks. More strikingly is the euro's recovery of all  its 70-pip decline in London trade amid the realisation that any delayed would fail to derail the economic recovery in Germany and rest of the Eurozone. A new Premium Insights trade/note on the euro will be issued later today.

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Futures positioning showed increasingly vulnerable bets against JPY. USD/JPY opened the week near a one-month low after a slide in Treasury yields and stock markets on Friday. What's troubling is that sentiment was bolstered a day earlier by a positive vote in the US House on tax reform. One way to look at it is that now the good news for tax reform is priced in. It faces a tougher battle in the Senate and it could be more than a month before anything is passed. The market may be reflecting that worry.

Cable also deserves a closer watch. A weekend report in the FT said Theresa May could give the greenlight to increasing the Brexit bill on Monday. That would help to break a deadlock and move the talks forward.

Ultimately, the market is far less concerned with the tab, and far more concerned with the post-Brexit trade deal. If paying €40B or even €60B is what it takes to get something like a free trade deal, then that would count as a major win for the pound. Watch for more headlines Monday.

CFTC Commitments of Traders

EUR +85K vs +85K prior GBP -4K vs -9K prior JPY -136K vs -128K prior CHF -28K vs -25K prior CAD +47K vs +51K prior AUD +44K vs +45K prior NZD -12K vs -11K prior

Yen shorts are at the most extreme since the end of 2014 but the market was caught offside by the rally Thursday. Despite all the bets on a climb in USD/JPY, the pair is close to the mid-point of the 2017 range. That's a sign of a vulnerable market.