Intraday Market Thoughts ArchivesDisplaying results for week of Jun 03, 2018
As we head into next week's busy set of event-risks: G7 meeting outcome on trade (early next week), Trump-Kim meeting (Tuesday), Fed hike & press conference (Wednesday), ECB forecasts & press conference (Thursday), is it wise to stay off USD trades? Only if your trades cannot handle wide swings. There are ways to overcome the situation by adopting trade sizes smaller than usual and/or multiple trade entries to spread the risk. This would be helped if you have a specific direction in mind and would like to trade around it.
But for those not wanting to take the risk of USD trading, you could consider the “crosses alternative” to take a position on USD. For example: Long EURJPY + Short USDJPY = Long EURUSD. Or if you happen to be bullish USD, then one way would be to Short GBPUSD and Short EURGBP would produce short EURUSD. These trades would make sense if you are convinced with the technical argument of each individual cross trade. As you do that, try to not force your analysis on the chart. Bear in mind it takes some time for the sum of two currency pairs to be realized into the 3rd pair. Here's another example: Short NZDUSD + Long AUDUSD, = Long AUDNZD. Yet, if you open a trade in each of the first two pairs, do not expect AUDNZD to rally immediately (just as you won't expect any pair to move the way you've traded it immediately. Also, in the case of two pairs, you have an additional pair, which means even more time. Out of the 7 Premium trades, there's an example of a cross-pair combination ready for next week. I will discuss all of this in Tuesday's webinar.
EURUSD posts its biggest weekly gain in five months despite ongoing uncertainty in Italy and fresh declines in Italian bonds and equity indices? The main reason comments from several ECB policy makers, including the not-so hawkish chief economist and policy maker Peter Praet, who said on Tuesday the June 14 meeting will contain the first formal discussion on winding down the remainder of the quantitative easing program, which began in 2015. Is this all overdone? Full analysis.
سجلت العملة الأوروبية أكبر ارتفاع أسبوعي لها منذ خمسة أشهر على الرغم من استمرار حالة عدم اليقين في إيطاليا وتراجع جديد في مؤشرات الأسهم والسندات الإيطالية، ما هو السبب؟ تفيد تعليقات من مسؤولي البنك المركزي الأوروبي بأن اجتماع 14 يونيو سيكون اجتماعًا “حيّاً”. ماذا يعني ذلك؟ ماذا يمكن أن يفعلوا أو يقولوا يوم الخميس القادم؟ (التحليل الكامل)
Many Premium subscribers have rightly complained about the frequency of trades being stopped out as of the last 3 weeks. Here are some of those recent trades (Pls scroll below)
- May 11: SHORT USDCAD at 1.2740 with the stop lifted to 1.3060 from the original 1.3000. 3 weeks later USDCAD rallies and peaks at 1.3067 (7 pips above our stop) before dropping 200 pips.
- May 15: SHORT DOW30 at 24750 with stop at 25050. One week later DOW30 rallies and peaks at 25086 (36 pts above our stop) before dropping 800 pts.
- May 23: LONG EURUSD at 1.1650 with a stop at 1.1530. One week later EURUSD bottoms at 1.1520 (10 pips below our stop) before rallying nearly 200 pips.
This is not a conspiracy by the market or your broker, but a combination of bad luck and impatient risk-reward approach of my part. In general, the bulk of our trades being stopped out end up moving towards the intended path almost immediately following the stop. I repeatedly indicate throughout the analysis part of each trades that stops are used for reference purposes and that subscribers are encouraged to find some leeway in following them. Some clients do not use stops or employ their own variation. Others send me emails to ask about certain trades.
Getting the trade idea and rationale is as important as executing the proper reward-risk management. Since the Premium Insights focus largely on the trade idea, I urge you to use a combination of prudent risk management (relatively modest sizes and multiple contracts and flexibility in moving stops).
Thanks for your patience and let's aim for a successful end of quarter.
A hint about less ECB bond buying gave the euro a quick lift on Tuesday. GBP led the way after a strong services PMI while the Japanese yen lagged. Australian GDP is due up next. Our USDCAD short was stopped out at 1.3060 before the market peaked at 1.3070 and dropped nearly 100 pips. The other CAD trade is open and approaching the green.
It was a back-and-forth day throughout FX on Tuesday as the dollar climbed early on the heels of the service sector data. The ISM non-manufacturing index rose to 58.6 compared to 57.6 expected with rises in prices paid as well. Similarly-strong data came from the Markit service sector PMI. The combo pushed EUR/USD as low as 1.1653 and drove the dollar to the best levels of the day.
But the tone changed in the subsequent hours in part because of a rally in the euro that was sparked by an ECB sources story that said officials will discuss signaling an end to QE at the June 14 meeting. That lifted EUR/USD to 1.1730 in a quick move.
Cable is also showing signs of life after the services PMI climbed to 54.0 compared to 53.0 and sparked a glimmer of hope that the UK economy is turning the corner. The initial gains came early in European trading but after a hiccup on USD strength, the pair rose above 1.34 to a 10-day high.
USD/CAD also went on a wild ride as talk of splitting NAFTA into bilateral deals sent it higher, along with an early drop in oil because of reports that the US had asked OPEC to increase production. USD/CAD rose as high as 1.3067 – a two month high – before falling back to 1.2969.
Looking ahead, yesterday's RBA decision had a slight dovish tinge to it and that weighed on the Australian dollar. Perhaps the RBA had a sneak preview of GDP numbers due at 0130 GMT. The consensus is +0.9% q/q in a pickup from +0.4% in Q4. That would be the fastest growth since Q3 2016.
|54.0||52.9||52.8||Jun 05 8:30|
|Final Services PMI [F]|
|56.8||55.7||55.7||Jun 05 13:45|
|ISM Non-Manufacturing PMI|
|58.6||57.9||56.8||Jun 05 14:00|
|Eurozone Spanish Services PMI|
|56.4||56.4||55.6||Jun 05 7:15|
|Eurozone Final Services PMI [F]|
|53.8||53.9||53.9||Jun 05 8:00|
|Eurozone Retail PMI|
|48.6||Jun 06 8:10|
|0.9%||0.4%||Jun 06 1:30|
فيديو حول تطبيقات الرأس والكتفين في سيناريوهات التداول الحقيقية. الفيديو الكامل
The Australian dollar broke out to a five-week high and was the was the top performer Monday. The yen lagged as risk appetite generally improved. The RBA decision is up next. The Premium long in AUDUSD issued 2 weeks ago is currently 130 pips in the green so clients are cautioned to realise some gains ahead of the RBA announcement. On Monday, 2 new trades were issued.
AUD/USD climbed higher after rising above the May high of 0.7605 as the US dollar lost ground. An upbeat tone in equity markets helped AUD and other commodity currencies as the NASDAQ closed at a record high.
USD was slumping early Monday but a small bid appeared in early New York trade. The lone US data point was a 0.8% dip in April factory orders compared to -0.5% expected, led by a dip in transportation orders. It follows a 1.6% rise in March. Core capital goods orders weren't revised from the preliminary +0.9% reading.
Cable reversed early gains to finish lower at 1.3315. Theresa May relayed the details of a phone call with Trump where she expressed frustration with tariffs. Previously, she had positioned herself as more of a Trump ally but it's clear that the UK will side with other countries at this week's G7.
Up next is the RBA decision at 0430 GMT. The market isn't pricing in any chance of a hike or a cut and looking ahead, a long period of rates flat at 1.50% is forecast, with a 50% chance of a single rate rise by this time next year. The Aussie suddenly has a hint of wind at its back. If Lowe can stoke some optimism about growth, then it's blue skies above for AUD/USD.
|Factory Orders (m/m)|
|-0.8%||-0.4%||1.7%||Jun 04 14:00|
The week ahead begins with rising tensions between China and the US with a warning from Beijing that a deal to buy more US goods is off the table if Washington imposes metals tariffs. Friday's trifecta of beats in US jobs (NFP, earnings and unemp rate) failed to garner any considerable USD rally as the trade tensions weighed on USD sentiment. CFTC data show specs crowding into CHF shorts. A new JPY trade was posted to subscribers, supported by 3 charts and a quadruple confluence.
Risk trades rebounded on Friday as the market brushed off US tariffs against the EU, Mexico and Canada but the trade story isn't going away with China and the US in intense talks. Commerce Sec Ross left China after two days of without securing a deal but officials cited some positive progress.
Perhaps prophetically, Xinhua reported that all recent bilateral agreements won't take effect if the US adopts tariffs on China. The ebb and flow from discussions could set the tone in the week ahead along with the G7 meeting in Canada.
On Friday, non-farm payrolls were strong with beats on jobs, unemployment and wages securing a Fed hike on June 13. Comments from Williams and Brainard also suggested guidance will be tweaked to remove references to accommodative policy.
CFTC Commitments of TradersSpeculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.
EUR +93K vs +110K prior GBP +9K vs +6K prior JPY -8K vs -4K prior CAD -24K vs -28K prior CHF -43K vs -36K prior AUD -21K vs -23K prior NZD -1K vs +2K prior
Swiss Franc net shorts are the most-extreme since 2007 as the market bets on a rise in USD/CHF. That trade has been going in the other direction for the past month and June is a strong seasonal month for the franc. Other seasonal June trends include weakness in global equities, mild euro strength and modest USD softness.
|Eurozone Spanish Unemployment Change|
|-83.7K||-105.7K||-86.7K||Jun 04 7:00|