Intraday Market Thoughts

Ukraine Is Falling Off the Trading Map

by Adam Button
May 11, 2014 23:05

Separatist votes in eastern Ukraine had little effect on early FX action with markets largely unchanged from Friday's close in the early hours. Last week the Australian dollar was the top performer while the Swiss franc lagged. The week begins with Japanese trade balance and Australian business confidence. In the Premium Insights,  our AUDUSD long is in 110 pips in the money, nearing its final target while USDJPY short is 70 pips in the money and also nearing the final objective.  GBPUSD,  USDCAD, AUDNZD and gold are also in progress. For the full Premium trades, they can be found the Premium Insights.

Despite the urging of Russian President Putin to postpone votes for separation from Ukraine, several regions held loosely organized referendums. There were wide-ranging allegations of vote rigging and turmoil in Ukraine has continued but the conflict is a progressively lower priority for traders.

Part of the reason is that traders have other events to focus on, like the potential for ECB action in June. The euro finished the week near the lows as buyers abandon the single currency. The weak finish is a bad omen.

On the weekend, the UK press carried a report that the BOE will raise growth forecasts for 2014 by a tenth or more and could signal that rate hikes are coming before the next election. Cable slumped back from 1.70 last week but it's difficult to hold shorts when the headline risk is so often positive.

Early-week data includes the Japanese current accounts at 2350 GMT at Australian NAB business confidence at 0130 GMT. The latter is at the post-election lows and could be a sign that all is not as well as it seems Down Under.

Commitments of Traders

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

  • EUR +33K vs +26K prior
  • JPY -61K vs -70K prior
  • GBP +41K vs +44K prior
  • AUD +9K vs +11K prior
  • CAD -32K vs -30K prior
  • CHF +13K vs +14K prior
  • NZD +21K vs +20K prior
It has been an absolute brutal stretch for euro traders over the past year. Once again they were buying just as Draghi clobbered them. The late-coming bulls help explain the one-way fall in EUR/USD on Thurs/Fri.

Act Exp Prev GMT
Trade Balance - BOP Basis (MAR)
¥-553.4B May 11 23:50
Current Account n.s.a. (MAR)
¥612.7B May 11 23:50
NAB's Business Confidence (APR)
4 May 12 1:30

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