• Intraday Market Thought: Dollar Breaking Out?

  by Adam Button | Oct 6, 2016 23:55
  The USD dollar march continued on Thursday as it broke critical levels as....USD was the top performer while the pound sterling lagged yet again...Japanese labor cash earnings are due up later...Has it really broken?  Or is this Dec 2015, Jan 2016 or Jul 2016?  A....The good news kept coming for the US dollar on Thursday as initial jobless....The four-week moving average is now at the lowest since 1973 in what will look....The buck climbed on all fronts with USD/JPY breaking above the 100-day moving....16 at the high...It was the eighth day of gains for the pair...Similarly, cable continues to get beat up as it extended the break below the....2601...The big figure is holding the line so far but it's basically unchartered....Technically, the US dollar is making some serious strides...It took out the 200-day moving average against the Swiss franc and Canadian....The New Zealand dollar also fell below the 100-dma...Gold fell below the 200-dma and is battling support in the 1250 zone which....2% retracement of the rally since December...What's keeping the dollar bid? One is a growing sense that no matter who....The data is also solid and Friday's non-farm payrolls report may raise the....Finally, the euro slid after the ECB's Constancio categorically denied this....The euro fell a half and is now near the Sept lows...Watch for comments from Draghi on the weekend...On the upcoming calendar are releases from Australia and Japan...Up first at 2230 GMT, it's the Australian AiG performance of....The prior reading was 46...6...It's unlikely to be a market mover but we keep a close eye on the sensitive....At 0000 GMT, the focus shifts to Japan and the August labor cash earnings....The consensus is for a +0...4% y/y rise following the +1...4% y/y climb in July...The drop in the pace is another sign of the seemingly impossible challenges....Looking to next week, note that China returns after Golden Week celebrations...Perhaps that will spark a bid in gold as it flirts with key support near $1250.

• Intraday Market Thought: 4 Spots to Watch in China-US Relationship

  by Adam Button | Nov 21, 2016 0:39
  We look at the different ways China and the United States are poised to drift....CAD was the best performer last week while AUD lagged...CFTC data showed traders squaring up and cutting exposure...A new GBP Premium trade was issued on Friday, which will be discussed in....The relationship between two largest and most-power economies may define Trump&....Here are the potential fault lines...1) Free Trade....The APEC summit in Peru wrapped up on Sunday and China is clearly pursuing....At the moment, it's clear that the US won't sign the TPP but what could....This could be the strongest indication he isn't truly setting out to....2) Economic Allies....Asian power appears to be gearing up for a future where the US pulls away from....Abe and Xi met on Sunday and Japan's leader said he wanted comprehensively....China may also build closer ties with Russia, Middle Eastern countries and....3) Currencies....Trump probably won't name China as a currency manipulator but record lows in....4) Bonds....China is the second-largest holder of Treasuries after Japan but at the moment....Perhaps it's one of the Asian powers? We won't find out for months but....Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR -119K vs -129K prior...JPY +21K vs +32K prior...GBP -80K vs -90K prior...CHF -22K vs -23K prior...AUD +42K vs +41K prior...CAD -18K vs -21K prior...NZD +2K vs +2K prior....The euro shorts have been paid off since the US election and they've used....Overall, the theme was to pare back exposure but not in a big way...We're a bit surprised that yen longs have pared even with bond yields moving....That's a correlation that can't last.

• Intraday Market Thought: The Five Great Debates

  by Adam Button | May 31, 2017 23:48
  No single theme is dominating markets right now so today we take a look at....In May, the New Zealand dollar was the top performer while AUD lagged in a....2 new Premium trades have been added; 1 in FX and 1 in a major European index...الإسترليني و رقصة استطلاعات الرأي (للمشتركين فقط)....The UK election debate scheduled for today is a dud...While the polls continue to drive GBP, we look at five bigger debates elsewhere...1) The Fed debate....The market is juggling with three options: Here they are with the....It would take a string of weak data between then and now; A hike with....Fed officials have begun to worry about the data; A hike with a dovish bias (55%....The market is shifting towards this option and that's what is weighing....It would be signaled by something in the statement indicating that the Fed will....2) The great inflation debate....This feeds into the first theme...Eurozone inflation at 1...4% y/y compared to 1...5% on Wednesday missed expectations...Central banks are divided on whether slightly better growth and a tighter....The latest buzz phrase in economics circles is 'global overcapacity'....The Fed is holding on tight to models that show a tight domestic economy will....3) The China mystery....Yesterday's PMIs were both slightly stronger than expected but the opacity....The latest move is rapid yuan strengthening...Skeptics say it's a government-orchestrated squeeze on shorts designed....We're watching closely...4) The ECB shift debate....A leak on Tuesday indicated the ECB could move to a neutral stance and take....That was followed by today's disappointing eurozone data slate...In the bigger picture, the suspicions is that Draghi wants to setup a September....5) Oil's toils....More Libyan production sent oil sharply lower Wednesday but it bounced on....Every oil authority talks about a great inventory balancing that's coming....Russia's deputy finance minister might have tipped his hand Wednesday,....We're left with the question: Who or what could boost crude right now?..

• Article: Leaving Long Island

  by Ashraf Laidi | Mar 18, 2016 19:48
  What do the US dollar rally and a Donald Trump rally have in common? Scroll down....This week's Fed decision to tone down its FedFunds projections closer to....The US central bank finally realizes it is unable to isolate itself in an island....The Fed is set to leave that Island...One of the loudest messages (and reminders) from the currency markets is....It does not matter that the ECB main interest rate (refinancing rate) is at....50%....What matters instead is that negative deposit rates at the ECB are less likely....What also matters is that US interest rates/yields face greater downside....Inflation is the other detail...The Fed has demonstrated its willingness to await further evidence of....The ECB will not be in a rush to raise rates once CPI gets back above 0% from....2%, but trades will quickly push the euro back up as was the case last spring....3% from -0...6% in a matter of 4 months...nbsp;....I could also mention the current account surpluses in the Eurozone and Japan at....3% of GDP respectively compared to -2...7% of GDP for the US, which help explain risk aversion flows in the euro and the....But no need for that at this time...As it stands, FX markets are currently experiencing the Fed's long-awaited....Whether this lasts for 3 weeks or 3 months remains to be seen...When I said back in August that the peak in the US dollar had already occurred,....I was obviously referring to the 6-currency index, traded at the....6%) and the yen (13...6%....Those who disagreed with me protested that the 6-currency basket is an....The importance of of the ICE's USDX is underscored by its viavility as a....Indeed, EURUSD bottomed in March 2015 (the start of ECB's QE) and USDJPY....Those who prefer the Fed's trade-weighted index (measured against the....Economists and USD-bulls in need of a confirmation bias will most commonly use....nbsp;But if you trade FX with a focus on EUR and JPY, then USDX cannot be....The chart below highlights the outperformance of the Fed's TWI....The rise in the Fed's USD TWI / USDX ratio reflects the outperformance of....As long as the latter is unable to extend a meaningful recovery over EUR....Both of the USD rally and Donald Trump rally get overcrowded too quickly...Trouble occurs when that happens.

• Premium: GBP trades ahead of Referendum Thursday

  by Ashraf Laidi | Sep 16, 2014 19:54
  Update: Sep 18, 2014 18:43 GMT....Considering that our existing GBPCAD Premium shorts are under pressure due to....NZDUSD, USDCHF and NZDCAD have all hit their final targets...Full trades & trades...We return to shorting GBPCAD ahead of Wednesday's triple releases and....2 trades and charts are issued...We also remind of tonight's upcoming polls on the referendum, starting with....Latest trades & charts..

• Intraday Market Thought: Dax Overtakes Euro on Greece Optimism

  by Ashraf Laidi | Jun 23, 2015 16:00
  The euro-Dax-bunds relationship continues in full swing, led by a....The euro's initial rally to $1...1410 following yesterday's comments from EU's Juncker that Athens'....nbsp; Bourses continued to rally but the euro ignored strong June flash Eurozone....i) Further diminishing of Greece Risk supports European stocks and returns....ii) Continued ECB purchases of Eurozone bonds keep euro under pressure to the....10-year bund yields are modestly lower, but this is unlikely to last if Eurozone....Yet, the more pressing relation remains between stocks and the euro...As the DAX-30 and Eurostoxx break out of their April trendline resistance,....One exception to this assessment would be renewed gains in bund yields relative..

• Intraday Market Thought: Stocks Rocked, Yen Wins

  by Adam Button | Jul 8, 2015 23:46
  The wall of worries finally sent stocks crumbling on Wednesday...The yen was the main beneficiary in FX while the pound was the laggard...China CPI is up next with all eyes on the short-selling ban...The latest deterioration in Canada data sent the Premium long in EURCAD to +130....nbsp; A new CAD pair has been added to today's Premium for the first time....The bounce in markets late Tuesday was quickly unwound...Greece remains in a difficult position and progress is slow but global growth....Chinese stocks fell 5...9% yesterday and commodities are under growing pressure...Confidence was further undermined by a 3 hour outage in the NYSE and the S&P....7% to close below its 200-day moving average for the first time since October...The Fed Minutes struck a dovish tone with most meeting participants still....The latest developments in China and Greece will no-doubt test their resolve....A final note on today's trading is the outperformance of the euro despite....It underscores the euro's role as a carry funding currency (like the yen)....That's a dynamic that's still in its infancy but could last for years...Later, the focus will continue to be on China where policymakers banned short-....The government and PBOC are increasingly likely to act, especially if a relief....The CPI report due at 0130 GMT is expected to rise 1...3%, which leaves officials with plenty of room to act.

• Intraday Market Thought: Gold Erases 50% of 12-year Cycle

  by Ashraf Laidi | Jul 20, 2015 18:56
  Gold's tumble to a 5-year low today is the latest manifestation of the....The reasons are not new: The recent 20% decline in oil will turn an already low-....The Fed's signalling of higher interest rates as early as this year....Chinese investors are busy dealing with massive losses in stocks, unable to....Technically, today's gold low coincided with $1,086, which is the 50%....Gold's 12-year run was based on a recovering world economy, brought about....Repeating Boom-bust Gold-Stocks Cycle....Comparing gold to equities, the gold/SP500 ratio has fallen 65% from its 2011....So far the pattern appears similar to the boom-bust cycle in the Gold/Stocks....Eventually, gold's damage from the late 1980s into the 1990s sent the gold/....If the $1,080 gives way to technical selling, then prolonged downside calls....nbsp;But can the Fed still raise rates if returning disinflation becomes..

• Intraday Market Thought: CAD Net Shorts Break Trendline

  by Ashraf Laidi | Aug 9, 2015 22:56
  CAD net shorts vs USD have risen to their highest since March 2014, breaking....Although net longs US crude oil saw their first increase in 5 weeks, CAD....This week's CAD sentiment figures will be closely watched following Friday&....Canada: Jobs vs growth....Canada's July jobs report narrowly escaped 2nd consecutive monthly....6K rise in employment, underlying the resilience of the labour market despite....But there's more inside the numbers...The dichotomy between services and manufacturing industries continues with....Although natural resources sectors lost only net 2k jobs, four times that amount....The bulk of service-sector employment occurred in professional jobs, while....Canada's technical recession has become the central national topic ahead....Whether it is GDP that is leading jobs or the inverse remains to be seen...Based on our anticipation for US crude to fall below $40, the Bank of Canada....The falling loonie may help damage control in exports, but the looming end..

• Intraday Market Thought: The Great Commodity Divide

  by Adam Button | Jan 14, 2016 23:39
  The global economy has been divided along emerging and developed market....Now there is a line and offers a clearer way to view what's underway in 2016...There are currently 5 trades open in the Premium Insights, 3 of which are GBP....More equity indices trades will be included next week, tactically leading....The inclination is to blame the United States, the Eurozone or China for any....Alternatively, 'emerging markets' often get the blame...The market driver at the moment is none of them, nor is it Japan...It's commodities...The four largest economies are facing various challenges and slowing growth....The divide that matters in the global economy right now is 'commodity....Any single commodity exporter is a small factor in the global economy...The largest is Brazil and its economy is just a quarter the size of China...Add in fellow exporters like Canada, Australia, Mexico, Indonesia and Saudi....Include other exporters in Africa, the Middle East and Latin America and they....The commodity crash is hitting all those countries hard along with the multitude....The sensitivity is high at the moment...The Canadian dollar was down for a record tenth consecutive day on Thursday...Even in a situation like an oil rout and a central bank that could surprise with....On Thursday sentiment staged a recovery and in a rare divergence, the Australian....The flipside of the commodity crash is that the commodity consuming countries....At the moment, the rapid change is causing dislocations but as it unfolds..