Intraday Market Thoughts

The Trend Until the End

by Adam Button
Nov 10, 2014 23:19

The same US traders who took profits on dollar longs on Friday took a look at the market on Monday morning and decided the US dollar was the still the best bet. USD was the top performer as the underlying trend resumed while the loonie lagged on an oil price decline. Japan's current account/trade balance is out later.  We opened 2 new trades in GBPCAD with 3 charts ahead of this week's crucial UK jobs figures & BoE inflation report. Full trades & charts in the Premium Insights.

The US dollar rally restarted after a hiccup on Friday. The jobs report was hit and miss but if you want to sell the dollar, you have to buy something else and the alternatives were lacking Monday in a trend that was underscored as New York entered the fray.

USD/JPY steadily climbed to 114.90 from 114.10 in a gentle move. The largest intraday correction was just 15 pips high-to-low and it was the same sort of shape in other dollar pairs. The steady dollar bid on the day underscores the steady bid that seems to be there every day except when there's a distinct reason to sell dollars.

Newsflow was negligible and the dollar's ability to rally in a quiet market is a positive sign. It was confirmed by similar moves that erased the squeezes in gold and bonds on Friday.

EUR/USD briefly touched above 1.25 in European trading and then slid down to 1.2420. The ECB's Mersch was on the wires saying sovereign QE is an option if the outlook deteriorates but markets shrugged off the comment.

The focus now shifts to Japan where two separate reports on Monday highlighted the split at the BOJ on the effectiveness of QE in boosting inflation expectations. The headlines did little to stop the climb in USD/JPY strength which is a sign of the strength of the pair.

In terms of data, Japan's current balance is due at 2350 GMT and expected to show a 537B yen surplus. The trade deficit is expected at 782B.

Act Exp Prev GMT
Current Account n.s.a. (SEP)
¥534.2B ¥287.1B Nov 10 23:50
Trade Balance - BOP Basis (SEP)
¥-831.8B Nov 10 23:50

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