Intraday Market Thoughts

Elections in Focus, EUR Shorts Climb

by Adam Button
May 25, 2014 23:03

The results of Ukrainian and European elections of Sunday will be the focus of the early week. Russian president Putin has repeatedly stated Russia will not intervene in Ukraine's elections, but reports of disruptions in polling centers by Russian separatist groups are on the rise. The news will be hitting a dicey market with the US and UK closed for holidays on Monday. New Zealand trade balance is the only item on the economic calendar.

Volatile news in a thin market is a recipe for whipsaws so play it safe out there on Monday. Look for hints from Russia, the west and separatists after the election. In Europe, protest votes are largely priced in and will be more of a longer-term story than Monday's trade.

The early event on the calendar is at 2245 GMT when New Zealand releases April trade balance. A $634m surplus is expected but the key to watch is exports. The consensus is $4.64B and anything less could show how the strong NZD is weighing on the economy. If they happen to be strong, NZD could jump as worries are dismissed.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR -9K vs -2K prior JPY -54K vs -65K prior GBP +33K vs +32K prior AUD +19K vs +17K prior CAD -27K vs -26K prior CHF +5K vs +7K prior NZD +18K vs +19K prior

Over the past few years speculators have been burned so many times betting against the euro but ahead of the June 5 ECB decision, they're taking another shot. Friday's break of the 200dma adds some conviction but the inability to continue lower afterwards raises some questions. The momentum early in the week will be key. Last week's resilience of yen shorts surprised us but the bounce from 100.85 to 102.00 justifies some of the optimism. The Nikkei is also showing signs of a bottom. Net yen shorts have been halved from their peak so there might be room for specs to push USD/JPY higher.

Our Premium Insights subscribers are watching our trades in USDCHF, USDJPY, GBPUSD and USDCAD, as well as AUDUSD.
Act Exp Prev GMT
Trade Balance (APR) (m/m)
$667B $920M May 25 22:45
Trade Balance (APR) (y/y)
$1.3B $0.8B May 25 22:45
Exports (APR)
$4.64B $5.08B May 25 22:45

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