• Intraday Market Thought: Emerging Worries

  by Adam Button | May 2, 2018 22:56
  The Fed was the focus on Wednesday, at least for a short period, but underlying....AUD edged out USD as the top performer on the day while the euro lagged...Australian trade balance is due up next...Our DAX30 short was stopped by 15 pips (before the index headed lower) for 300....The DOW30 short was closed for 450-pt gain...The FOMC decision was a one-hour event in the sense that it moved markets for a....The initial move was lower in the dollar and then it rebounded completely...The statement added two nods to the symmetric 2% inflation target and....The symmetric reference is a subtle warning that the Fed will see 2...5% inflation in much the same was as 1...5% inflation in that it won't immediately react...It's a signal that 2% isn't the ceiling of tolerable inflation...At the same time, that's something many FOMC members have emphasized....It didn't change the markets 96% implied probability of a June hike...From there it will continue to be all about economic data, which is in heavy....So why the US dollar rally? Aside from the themes about rate differentials,....Big flows at the moment are emanating from emerging markets where trouble is....Argentina's peso fell 3% Wednesday despite a panicky 3 percentage point....The Turkish lira fell 2% and the Russian ruble continues to struggle...Emerging market money tends not to be overly discriminating and problems in....Higher US rates have changed the equation for many investors and trickle....In developed markets, the Australian dollar continues to struggle but has so....It could get some help at 0130 GMT in the March trade balance report...The consensus is for a healty $865 million surplus.

• Intraday Market Thought: CAD Swings as Trump Quits Iran Deal

  by Adam Button | May 9, 2018 1:11
  Donald Trump fulfilled a campaign promise by announcing the US departure....The Swiss franc was the top performer while the commodity currencies lagged...The latest Premium Video signals which trades Ashraf will be taking on....More importantly, he tackles the importance of figuring out how much of....After weeks of speculation and international lobbying, Trump opted to....Throughout the day Tuesday, rumors and denials bounced WTI crude oil prices....From as high as $70...40 to as low as $67...63 before ultimately finishing close to unchanged and near $70...Monday's high of $70...76 will be a key level to watch in the days ahead...Other markets also fluctuated out of genuine fear or elation...One reason for the largely-muted market reaction suggested there is still room....The sanctions have mandatory 90-day and 180-day notice periods to give companies....In his announcement, Trump invited Iran back to the negotiating table at any....Another interesting move was in USD/CAD as the pair rallied to 1...2998 as oil dropped to the lows of the day...The inability to break above followed by a slide down to 1...2948 suggests firm resistance ahead of the big figure...The pair rallied after hitting its H&S target of 1...25...Does the current rally comprise an inverse H&S? Ashraf answers this in..

• Intraday Market Thought: If Theresay May Can Survive This…

  by Adam Button | Jul 9, 2018 23:29
  It was the worst news day for the UK government since last year's....UK Foreign Secretary Boris Johnson quits his post, hours after Brexit Secretary....The Australian dollar was the top performer on the day while the yen....Chinese CPI is due up next...The video on existing and future traders is made available for Premium....On Friday, Boris Johnson delivered an impassioned speech in favor of May's....For a time, that looked like it could be the beginning of the end for Theresa....Yet reports say she received a standing ovation after a party meeting...We have long argued that PM May us safe in her job because no one else wants the....Instead, Davis, Johnson and others are likely angling to replace her after the....If that's correct, then this might be as bad as it gets for May...If anything, the pound's resilience is impressive...Had PM May suffered these resignations at a different point, the losses for....3200 from 1...3350...The bounce to 1...3260 late also demonstrated that buyers are lurking...We are eager to see how the day ahead unfolds but if the bad news is out of....At the same time, broad sentiment improved Monday as trade tensions ebbed,....Chinese shares finally bounced in a 2...5% climb and that stoked a better tone elsewhere, including a rise in USD/JPY....80 from 110...40...In the hours ahead, risks will remain elevated with China June PPI and CPI due....Inflation is forecast to rise 1...9% y/y.

• Intraday Market Thought: Powell’s Puzzle

  by Adam Button | Jul 13, 2018 12:54
  The US dollar loses grip on the main currencies, while the yen descends in....Fed chair Powell reiterated it will only be a matter of time until inflation....GBP recovers from the day's lows even as Trump said there would be no....Yen extends losses despite yields' decline and CADJPY was stopped out...Thursday's US CPI report stalled the US dollar's advance...Prices rose 0...1% m/m compared to 0...2% expected leading to a 30 pip dip across the board in the dollar...In year-over-year terms, prices rose 2...9% to match expectations...Notably, yearly rise may be the high-water mark for the months ahead because....In the bigger picture, the Fed's Powell talked about the puzzle of....He said the Fed doesn't understand why it's failed to pick up despite a....But consider this, year-over-year inflation has rarely risen above 4% in....Core inflation hasn't touched above 3% since 1996...The early 1990s were when globalization truly took hold...Since then, no developed market has experienced runaway inflation...Perhaps Powell is right that wage inflation is about to pick up but one....If so, that would imply a lower terminal rate for all the central banks and....More clues on inflation will be obtained next week when Powell delivers the..

• Intraday Market Thought: Yield Curve Considerations

  by Adam Button | Jul 18, 2018 12:19
  The US yield curve fell to its flattest level since the crisis on Tuesday as Fed....All currencies are down against the USD...GBP is the biggest loser on weaker than expected UK inflation, but with the....4% 00 well over the BoE target, the case for an Aug 2nd rate hike remains...The Premium DAX short was stopped out...Not always recessionary but...There is a raging debate inside the Fed about the implications of an inverted....Over the past half-century every inversion has triggered an interest rate....On Tuesday, the difference between 10-year and 2-year yields fell to just 24....If the Fed hikes as anticipated, it will almost surely invert in the year ahead...Chapter 6 of Ashraf's book goes deeper in each of the yield curve....In it, Ashraf asserts that the inversion of 1998 did not lead to recession, but....For traders, it is more important to be able predict rate cuts, or changes in....So is it a signal? Powell doesn't think so...On Tuesday he weighed in to say that the only real signal from the yield curve....nbsp; Time will tell if that's true or not but in the short term, the....Like in quantum physics, since the market now knows Powell won't stop....nbsp; That's because 1) it's a sign Powell will be more aggressive 2)....In the short run, Powell's comments helpe boost the US dollar, but in the....Insurance....The crux of the problem continues to be that developed-market inflation remains....The Fed is hiking because it believes a tighter jobs market will inevitably lead....More importantly, the Fed intends to normalize interest rates as far as it....i...e...Fed funds rates will be high enough to be reduced.

• Intraday Market Thought: Month-End Flows won't Obstruct Clarity

  by Adam Button | Jul 30, 2018 22:47
  Month-end flows may have played a part in the recent USD decline and equity....The Swiss franc was the top performer on the day while the US dollar and yen....A heavy day of data awaits in Asia-Pacific trade...The Premium short in USDCAD was closed for 140-pip gain...A note has been issued after the close...Members' full video is found below...The US dollar was weak on Monday as July came to an en and CAD is the strongest....Overall FX moves were miniscule but the kiwi came out slightly ahead with the....Uncertainty about trade and central bank policy remain supreme in FX...In the 2nd half of the quarter, we expect more clarity and that should....Monday's data on US pending home sales underscored the dilemma...The economy and consumers are strong, yet housing has struggled all year...Pending home sales were down 4...0% year-over-year...Looking ahead, the calendar is busy with some final data for the BoE before....A BoE hike is 90% priced in so the GfK consumer confidence data at 2301 GMT is....The consensus is -9...Then it's onto the Japanese jobs report and industrial production at 2330....Afterwards Chinese manufacturing is due at 0100 GMT with Australian building....As for AUD/USD, it's struggled to get off the floor but a few rounds of....Don't forget the Bank of Japan....Then comes the Bank of Japan decision, which has no scheduled time but will....The longer it runs, the more likely a change in policy becomes...This is a complex announcement with the BOJ likely to lower its inflation....Everything is on the table including higher yield curve targets, wider....The underlying reason is to improve the sustainability of the programs because....Watch out for a messy market response.

• Intraday Market Thought: CAD Shrugs Trump Snub

  by Adam Button | Aug 28, 2018 13:23
  The Canadian dollar has broken a major triangle resistance vs USD despite....Does that mean a US-Canada deal is inevitable despite tough US talk? The....A new JPY trade has been issued to Premium subscribers with 2 charts &....USD selling is being led by EURUSD and AUDUSD, while USDCAD breaks below a 6-....US and Mexican leaders lauded a breakthrough in NAFTA talks...That's undoubtedly good news or the global economy and shows the Trump White....That was reflected in a 22 point jump in the S&P 500 to a fresh record...What's less certain is what this means for Canada...The US-Mexico talks were touted as a way for both countries to sort out....Instead, they cut out Canada and struck a deal on their own...Mexican president Nieto added some token lines aimed at including Canada but the....The Premium short in USDCAD is currently yielding 160 pips and remains open...That's likely the message the Canadian negotiator Freeland will....Some parts of the deal may be acceptable to Canada...The sunset provision is gone and replaced with a 16-year deal that doesn&....However there is no longer a dispute resolution system and it was that clause....US Congress insists that Canada be part of the final deal...All the large US labour unions insist that NAFTA should remain trilateral and....What's also unclear is what's included on dairy another other....From the outside, it looks as if Canada has been placed in a corner with few....Headline risks are high in the day ahead while we should not forget the 81% odds..

• Intraday Market Thought: Jobs Report Shuffles the Deck

  by Adam Button | Sep 10, 2018 13:13
  The odds of two more rate hikes from the Fed this year rose after better wage....The US dollar was the top performer last week while the New Zealand dollar....CFTC data showed flip in euro spec positioning...A 3rd trade in the US dollar has been posted to subscribers...A very busy week ahead, includes UK jobs (Tues), Australian jobs & US CPI....US non-farm payrolls were close to expectations but the market is entirely....4% m/m compared to 0...2% expected...What's more is that the gains were not limited to supervisory roles and....Markets responded by buying the US dollar in a move that sank the euro down....1550 and cable more than a full cent from the highs of the day...Ten-year Treasury yields rose 6...5 bps to 2...94% and the odds of a second hike in December rose to 67% with a hike later....It was a different story in Canada where employment fell 51...6K jobs compared to +5...0K expected, albeit all the losses were in Part-Time jobs...Hourly wages there also fell to 2...6% y/y compared to 3...0% previously and 3...5% two months ago...USD/CAD jumped to 1...3175 from 1...3110...NAFTA negotiations also appear to be stalled, although the tone remains....US-China tariffs remain the preoccupation of the market...Late Friday Trump said he could put an additional $267 billion in tariffs on....That's in addition to the $200B that's already under consideration and....On the weekend he once again railed against China in tweets and said tariffs....CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +8K vs -7K prior...GBP -70K vs -77K prior...JPY -52K vs -46K prior...CHF -40K vs -45K prior...CAD -26K vs -25K prior...AUD -44K vs -45K prior...NZD -25K vs -24K prior....The euro position flipped back to net but the timing on that one was poor with....The big net short on the franc is a bit of a puzzle...USD/CHF has taken a beating in the past three weeks and is at 5-month low so..

• Intraday Market Thought: CAD Leads Run vs USD

  by Adam Button | Sep 12, 2018 18:09
  What a difference 24 hours makes...Tuesday's broad rally in the USD gave way to an allround sell-off in the....Brent oil hitting $80 for the first time in  4 months is also helping to....A new index was issued earlier today ahead of Thursday's ECB decision/....A pair of indicators released Tuesday emphasized just how strong the US....But the Canadian dollar was the top performer on late signs of optimism in....The US economy has had so many false starts that it's easy to understand....On Tuesday two second-tier data points hit records...The NFIB small business sentiment survey and JOLTS job openings were both better....The NFIB survey is incredibly detailed and virtually every part of the survey....The JOLTS survey also showed a jump in quits, which is a sign that people are....Sentiment continued higher late in the day on a report that Canada is giving....That was coupled with somewhat positive comments from Trump on a deal as well as....USD/CAD droped to 1...2980 from 1...3150 on the headlines...The USDCAD Premium short remains open...Sterling had a late session jump on news that the EU is rethinking the protocol....Chatter that the ECB will revise down 2019 and 20120 GDP outlook tomorrow has....0% target.

• Intraday Market Thought: The Big Question for Dollar Bulls

  by Adam Button | Oct 9, 2018 13:48
  The big question for 2018 is how much the Federal Reserve will hike interest....The yen is the top performer, while the euro lags...nbsp; The Premium DAX short hit the final target for 300-pt gain (400 if....The Premium Video "Testing the Parameters", highlighting the state....The bond market and the yen have been sending opposing signals for the past....That's partly due to risk aversion but it raises many questions about the....The Fed is currently ebullient about the state of the economy but that's....2018 is likely to be the best year of growth in the US in years and economists....Consider today's announcement from Goldman Sachs that it is scaling down....What's worrisome is how interest-rate-sensitive areas of the US economy....Auto sales have been weak this year and a big reason why is tighter financing....Signs are also increasing that US housing is sluggish...The home builder ETF fell Monday for the 13th consecutive session and a US 30-....A big mystery of the post-crisis economy is how well consumers can handle higher....The answer is likely to be: not as well as before the crisis...That could ensure the Fed pauses in 2019 before many believe...Here's what Ashraf said 3 years ago about USD performance during Fed....Does the study still hold?..