Intraday Market Thoughts

Challengin some Beliefs, Aussie Sales Next

by Adam Button
Sep 3, 2014 22:58

Good traders develop themes and trade ideas then find ways to challenge with new developments. The day ahead is a wonderful opportunity with some top tier US data due along with the ECB rate decision. On Wednesday, the Australian dollar led the way while the pound lagged. Later this evening, 21:30 ET, 2:30 BST,  Aussie July retail sales are expected to have risen 0.4% from 0.6%. Our Premium long in AUDNZD hit its final 1.1220 target for 220 pips today, while our NZDCAD short neared its final target, with 140 pips in the green so far.

We wrote about the major themes in markets yesterday and there's a widespread believe that the US economy is improving and that the ECB will be forced to do more. Traders are positioned accordingly but the risks are extremely high in the day ahead.

The euro climbed for the second day on Wednesday as shorts pared bets in anticipation of Draghi's press conference tomorrow. The ECB may lower rates 10 bps or announce ABS purchases but they can get away with neither Draghi promises near-term action.

Officials believe in the TLTRO and with the euro falling they may want to see how the first round goes later this month before acting. There is an opportunity for a squeeze higher but it may be one of those days to tread carefully.

The dollar side of the trade could be equally volatile with ADP employment, ISM non-manufacturing and jobless claims all due. Traders confidence in the US economy is growing and a record high in factory orders along with a blockbuster vehicle sales report Wednesday underscored the optimism.

But all beliefs are subject to change and positions are at the most one-sided levels of the year. One spot to ride out the storm could be the Australian dollar, it posted an outside bullish reversal Tuesday and has quietly hung with the surging US dollar over the last 7 weeks.

All the trades and charts are found in our Premium Insights.
Act Exp Prev GMT
Eurozone ECB Interest Rate Decision (SEP 4)
0.15% 0.15% Sep 04 11:45
Retail Sales (JUL) (m/m)
0.4% 0.6% Sep 04 1:30
Eurozone Retail Sales (m/m)
-0.4% -0.4% 0.3% Sep 03 9:00
Eurozone Retail Sales (y/y)
0.8% 0.9% 1.9% Sep 03 9:00
FOMC's Powell Speech
Sep 04 4:00
FOMC's Mester speech
Sep 04 16:30
Eurozone ECB Monetary policy statement and press conference
Sep 04 12:30
ADP Employment Change (AUG)
220K 218K Sep 04 12:15
Factory Orders (JUL) (m/m)
10.5% 11.0% 1.5% Sep 03 14:00
Domestic Vehicle Sales (AUG)
13.87M 13.20M 12.95M Sep 03 19:12
Challenger Job Cuts (AUG) (y/y)
46.887K Sep 04 11:30
Continuing Jobless Claims (AUG 22)
2.510M 2.527M Sep 04 12:30
Initial Jobless Claims (AUG 29)
300K 298K Sep 04 12:30

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