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Intraday Market Thought: Saudi-Canada Split Sours

by Adam Button | Aug 9, 2018 10:51
The spat between Saudi Arabia and Canada turned into an economic battle with....The yen was the top performer Wednesday but lost ground in Thursday Asia trade,....A new Premium trade will be posted ahead of the start of the US session...هل فاتك وقت بيع الإسترليني؟....Saudi Arabian officials ordered the divestiture of all Canadian financial....That helps to explain Tuesday's unusual drop in CAD and Canadian markets...The selling continued after the report and USD/CAD rose to 1...3118...It's not entirely clear that everything will be sold and the....Considering Canada's usual weightings, we would expect something in....In terms of CAD, it's the kind of flow that can easily be absorbed at the....Saudi Arabia plans to remove 17,000 students from Canada including hundreds....The nations also have an arms deal worth $15 billion that was the genesis of....It hasn't yet been cancelled but it likely will be...It's grown into an international incident at this point and the US has....There are plenty of reasons for both sides to back down but no sign of any....What's the impact for the Canadian dollar? Ultimately, it's a small....One key is the US unwillingness to come to Canada's side, reflecting the....Don't forget Friday's Canada jobs report, expected to show employment....9% from 6...0%....Friday will also release UK Q2 GDP and US CPI.
Intraday Market Thought: Careful this week

by Adam Button | Jan 28, 2019 12:31
A busy week lies ahead: Brexit amendment vote on Tuesday, US Q4 revised GDP, Fed....USD/CNY drops to key technical support (see more below)....The pound starts the week on a lacklustre tone but holds to the bulk of....It helps to continue a run that made the pound the top performer last week...Carney and Draghi speak around 14:00-14:30 GMT/London...4 out of our 6 open Premium trades are currently in the green, with the 2....GBP dynamics are all about limiting Theresa May's options...The Brexit amendment vote is due Tuesday, which may limit her ability to leave....That exposes her other frank where many members of her party believe she can'....The 2...5% jump in cable in the past week shows a market less fearful of a no-deal....Any of those would be a near-term tailwind for sterling...One risk is that uncertainty could begin to show up in the data but the risks....Consumers may retrench but businesses may be stockpiling...The Bank of England may have some insights on Monday when Carney,....Carney's latest Brexit-related insights highlighted that the sterling&....Meanwhile the US dollar came under substantial selling pressure on Friday....Even the end to the shutdown brought only minor and temporary relief...A few factors may have weighted...The WSJ reported that the Fed is considering keeping a bigger balance....It's framed as a technical decision but the timing appears dovish...The arrest of Roger Stone was a reminder that Mueller's probe is nearing a....The PBOC tweaked rules to add an extra 250 billion yuan in lending...USD/CNY reaches a 6-month low, touching its 200-DMA as the topic of CNY acquires....Here's what we said on Friday about the CNY and USD...The slump in the dollar led to a one-month high in NZD/USD, an 11-day high in....Gold's best months over the past 15 years have proven to be January and....Goldilocks inflation is especially postv when Fed moves from hawksh to neutral..
Intraday Market Thought: China Acts, Powell Next

by Adam Button | Aug 23, 2019 14:40
Less than two hours before Powell's speech at Jackson Hole, China....A handful of comments emerged from Mester and Bullard indicating their....The pound was the star mover yesterday after markets misinterpreted Merkel'....2 out of the 3 Premium trades are firmly in the green...Powell up next at the top of the hour...No Q&A after the speech...nbsp;....The market is trying to figure out what the Fed is going to do next...A quarter point cut is fully priced in at the Sept 18 meeting with the odds of....0%....That sense of confidence from markets was not confirmed by Fed talk on....KC Fed President George will again likely dissent against a rate cut to....On the other side was Dallas Fed President Kaplan who said risks were to....At the same time, he said that he doesn't want to cut rates unless they....Finally, Philly Fed President Harker said he doesn't see the case for....Harker and Kaplan are currently non-voters but will vote in 2020...Mester (non-voter) and Bullard (voter) will both speak Friday before Powell'....The comments from the Fed chairman will be critical...The market is expecting a strong signal or at the very least something akin to....If Powell's speech fits more the frame of Harker, expect a dive in risk....It's extremely unlikely that Powell would close the door on a Sept cut but....After Sept, an Oct move is already 63% priced in and yet another move in Dec is....That's aggressive but it may be counting on kicking and screaming in....In other news, cable leaped to the highs of the month after Merkel cracked open....She had sent mixed signals after first talking about a 30 day deadline, then....None of it was game-changing and the price action may have said more about..
Intraday Market Thought: Clashing Politics with Quarter-End

by Adam Button | Sep 26, 2019 22:18
The overwhelming influence of politics in markets continued Wednesday as the US....Stocks opened higher on a trade deal between US and Japan, but fell anew on....The US dollar was the top performer while the pound lagged...A 4th Premium trade was released ahead of the NY close, supported by 4 charts....The next 2 trading days (Friday and Monday) will prove highly volatile and....The chart below is among the 4 charts of today's Premium trade...A 6% decline in Micron on disappointing earnings could sway the technology....Trump is being investigated on whether he asked Ukraine's President to....With that, the market concluded it wasn't a smoking gun that could force....The whistleblower's account spelled out that Trump attempted to pressure the....But the formal report on whether the Whistleblower account had enough to get....Wednesday's market reaction was to unwind Tuesday's trade: The dollar....On Thursday, stocks ended in the red again, but well off their lows...Watching Huwawei again....Stocks earlier had made a fresh move lower on reports the US is unlikely to....Although USDJPY pushed back up to as high as 107...96, inflection points can emerge anywhere on any new twist in the US-....Wednesday comments from the Fed's Evans were a further – albeit....He indicated reluctance to cut rates further this year unless the outlook....He said was open to the idea but he's a consistent dove and his lack of....Finally, US housing continues to show signs of surprising strength as August....Lower rates are clearly having a simulative effect...In such an uncertain, headline-driven market, technicals become increasingly....EURUSD 1...09 is key...Euro Retests 1...0900....EUR/USD resumes its selloff, one day after notable hawk ECB Executive Board....She was an ardent opponent against further ECB easing...Her departure is the strongest message yet that caution has been thrown to the....The euro is in a well-defined downtrend, feel below 1...0920, threatening the double bottom into the end of the week/month...Next key level stands at 1...0770.
Intraday Market Thought: Geopolitics Join Trade Talks

by Adam Button | Oct 9, 2019 15:01
Tuesday's speech from Fed Chair Powell is currently being displaced by....This means more swings in indices and no clear trends in FX...US crude oil remains well below the 54...00 cap ahead of inventories...nbsp; far frBut it's worth mentioning Powell's speech ahead of....The Fed put may finally be reversing on markets as Powell showed some reluctance....The yen and franc are the weakest currencies of the day as indices find a....The pound remeains weak as the message from the EU-UK noise is increasingly....نشاط المؤشرات و هدوء العملات فيديو للمشتركين...Fed chair Powell mentioned 'data dependence' seven times in his....One major factor that the Chairman highlighted was geopolitical risk and he&....Should there be some kind of positive conclusion, or even a face-saving punt....On the flipside, if talks break down, risk trades will certainly be hit hard...That leaves a negative skew ahead of an event that's largely binary, with....The market sensed that on Tuesday and it reacted to more signs of unease between....The S&P 500 fell 43 points and commodity currencies softened...Powell also touched on balance sheet expansion and unambiguously highlighted....That may be debatable but the important point is that the Fed doesn't....We may hear more about what's coming in the FOMC minutes due at 1800 GMT.
Intraday Market Thought: GBP Breaks out, USD Hurt

by Adam Button | Dec 4, 2019 14:38
Broadening USD selloff after the US ADP survey on pvt sector payrolls posted its....Broad GBP strength exploited USD selling to hit the 1...31 for the 1st time in 7 months...The latest swings in economic data highlight the opacity in the global....As USDX breaks below its 100 DMA, Aussie slides after GDP...The BOC decision and ISM non-manufacturing are due up next (see more....nbsp; The English Premium video is posted below, recoding during the....A clear narrative has developed in markets: Global economies were slipping....In addition, hopes for a US-China trade truce have set the stage for a pickup in....What undermines the narrative is how spotty the data is on all of it...It's clear there was a slowdown that accelerated in Q2 but it's....It makes sense that it's tied to the trade war but China has also kept....In China and the US household spending and other parts of the economy have held....On Wednesday, China's November Caixin services PMI rose to 53...5 from 51...1...Unlike manufacturing, it never fell below 50...At about the same time, Australia reported that Q3 GDP was up 0...4% q/q...That was softer than +0...5% expected but Q2 was revised a tick higher so it essentially netted out...Within the data trade was robust and added 0...2 pp which is not what you would expect in a global industrial slowdown...At the same time, household spending slowed and that was a probably related....Ultimately, we're stuck with the incomplete picture and trying to sort....It's natural for businesses to pullback with all the trade war....Markets are also still struggling to adapt to a world where bonds yield....In the short-term we will continue to focus on incoming economic data along....Up next is the Bank of Canada decision and ISM non-manufacturing reports...USD bulls need services ISM to come in within expecations of 54-54...7 after today's poor ADP print and Monday's release of manuf ISM....Look for the BOC to take a page out of the RBA's book by retaining a dovish..
Intraday Market Thought: Why the Euro Broke Higher

by Adam Button | May 28, 2020 22:27
EUR/USD finally cut through resistance in the 1...1000/20 zone on Thursday as the euro led G10 FX...USDX is on course for its biggest monthly fall of the year...The Canadian and US dollars were the laggards as risk trades dipped late on....The April US PCE report and comments from Powell are due on Friday along with....The Premium Dow30 short was stopped out at 25700, while the EURUSD long is a few....Today's Premium FX trade is currently 130 pips in the green...Below are screenshots from Ashraf's WhatsApp Broadcast Group, whose members....nbsp;....The thinking in the market at the moment is that economies are opening up and....There are reasons to doubt that and to fear a second wave but that's....And let's not forget the bigger than expected EUR 750 bn loan package from....US markets staged a remarkable rally, but EU has more upside ahead...Italy's MIB is just testing the 38...2% retracement of the pandemic fall and that comes after a week of strong gains...If everyone is going to open up and recover, then the catch-up trade is....Needless to say there are undoubtedly differences because the eurozone doesn&....On net, European stock markets are better value right now than US markets....Again, it would be easy to make arguments against that statement but....10...The pair rose as highs as 1...1093 before a sag late in the day...Risk trades were hit and stock markets reversed into negative territory when....All evidence points to some ineffectual sanctions against individuals and....There's no set time yet for the press conference and there's a high....The day will also feature the April US PCE report and the focus will be on....7%....Fed Chair Powell will also speak at 1500 GMT...This is his last opportunity to send a message ahead of the blackout period and..
Intraday Market Thought: As if There was no Virus

by Adam Button | Jun 2, 2020 22:53
A big question is to what extent the market will await the economic recovery....It's a heavy week for US economic data leading up to Friday's non-farm....5% unemployment...A new Premium trade was posted earlier before the NY close...Will the undervaluation in European indices relative to their US peers....The weekly Premium Video has been posted below, detailing the thinking behind....One way to grasp the divergence between economic data and market performance is....Tuesday was another huge day for risk assets with AUD leading and JPY lagging...The BOC decision will be closely followed with Macklem leading for the....The virus won't last forever...It continues to rage in parts of the world, but the market is acting like it&....Along those lines, there have been good signs...ICU numbers globally are falling even as infections continue...Some say it's a sign of a mutated virus or the effect of low viral loads...In any case, the market is looking to a future where the virus is gone and yet....As tough as it is to look past the virus, that's truly what the market is....There was chatter of Congress ready to hash out another stimulus spending bill....That speaks to the theme of elevated US government spending and that should....Meanwhile the real economy remain a deep concern despite the ongoing enthusiasm....The May ISM manufacturing index was at 43...1 compared to 43...7 expected; up from 41...5 in April...All the underlying metric showed only modest improvement...DAX and the Great Catch-up....In equity markets, Europe is playing catch-up to the US indices, with sharp....The spill-over to the euro is beginning to percolate...It's tempting to say it can't continue but it goes on day after day...Ashraf raised the question whether market recovery in Europe will intensify....nbsp; Markets await this week's ECB meeting and whether it will committ to....On Tuesday the moves were spectacular with yen crosses slammed lower and EM....Obviously the fear is that when everyone piles into the trade it will reverse...Certainly Wednesday's economic data will be another test with ADP employment,....Yesterday's RBA decision boosted AUD after Lowe said it's possible the....The BOC may strike the same tone on Wednesday at 1400 GMT but the main thing....He already slipped up with a garbled comment about negative rates in his..
Intraday Market Thought: The Protest Playbook

by Adam Button | Jun 1, 2020 12:46
The rapid escalation of social discord in the United States highlights another....The US dollar starts the month on a down note after May showed the biggest....Aussie, silver and CAD lead, while JPY and CHF lag...The USDX chart highlights the latest headfake from the US dollar, possibly....CFTC positioning data showed few notable changes...Our Premium Insights' trades long EURUSD and XAGUSD hit their final....There are currently 3 remaining open trades...The scope and spread of US protests is truly shocking with more cities....Markets were paying very little attention on Friday but to start the....The protests are also another reason to be skeptical about growth and wary of a....Without touching on the social causes of the protests (you can find plenty of....Historically, there are two ways governments deal with social unrest: By....Both are costly...Given that the virus has already extinguished fiscal discipline and that....What's interesting in early trade is that the US dollar is lagging,....That's an interesting potential paradigm...What's also notable is that the Australian dollar broke above resistance....6700...It's a country that's levered to global growth but it's also one....Less surprising is that gold and silver are higher again...At a time like this, there's no need to overthink the simple safe haven....CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +75K vs +72K prior...GBP -22K vs -19K prior...JPY +35K vs +28K prior...CHF +9K vs +9K prior...CAD -34K vs -35K prior...AUD -40K vs -39K prior...NZD -15K vs -16K..
Intraday Market Thought: Will S&P's China Downgrade Matter?

by Adam Button | Sep 21, 2017 23:06
The US dollar gave back some of its gains on Thursday but risks in China are....The pound was the top performer while the Australian dollar lagged...Japan is on holiday...British PM Theresa May's speech about the EU on Friday followed by....A new Premium video was posted following the post-Fed moves in FX, indices and....China undoubtedly has a debt problem but it's had one for years without....It's one of those looming problems that's impossible to ignore but....A rarely-talked-about driver of western growth in the past 30 years is credit...It's a magical wealth creator until exhausted and that's what happened....China has been endlessly extending credit to companies and individuals and....So far bumps in the road have been handled by central planners but....Whether that's next month or next decade is the impossible question to....Other catalysts are needed...When trouble erupts, it's not likely to be from a downgrade or even a shift....Like we saw two years ago, it's likely to come on some kind of change in....For every percentage point higher in growth or incremental rise in credit,....That's why we will be watching the once-every-five years Congress that....Murmurs from China are that a theme will be stability...That's something we've heard many times before and lends itself to....In other news, the USD rally failed to follow through Thursday...That was despite a fall in initial jobless claims to 259K from 302K in the....The Philly Fed also improved to 23...8 from 17...1...Perhaps the most-telling indicator was eurozone consumer confidence...It rose to -1...2 from -1...5 – that's the best since 2001...After falling as low as 1...1853 Wednesday, the euro slowly climbed to 1...1938...Expect a quiet wind down to the week in Asia with Japan on holiday.