Intraday Market Thoughts

Time for the Pre-Santa Selloff

by Adam Button
Dec 3, 2019 12:55

Equity indices extend Monday's selloff after pres Trump widened his verbal tariff attacks on France and weighed the possibility of delaying a China deal til after the US elections. AUD is the strongest of the day after the RBA left rates unchanged and headed to a long holiday break with an opportunity to wait and see vis-a-vis the trade war. GBP hit $1.30, now up 1.9% on the year as the 2nd best performing currency behind CAD, which is up 2.4% vs USD. USDJPY extended its downfall, after failing a major quadruple confluence. (more below). CFTC positioning highlights the large net-negative position in NZD. A 2nd Premium trade has been issued earlier today after 2 key indicators used in the Premium Insights maintained their functionality during last week's run-up.

فيديو المشتركين و التفسير وراء آخر الصفقات

The RBA retained a dovish bias in its statement but took out any urgency in regards to easing while holding its key rate at 0.75%. Two parts of the statement helped to lift the Australian dollar. The first was a nod to falling risks in the global economy due to an improvement in trade talks. That's a variable factor and could change in a big way by the time of the next RBA decision on Feb 4. The other notable change was the addition to the final paragraph of a nod towards the lagged effects of prior easing. That's a hint that policymakers would rather be on the sidelines and may view the 55% implied odds of a Feb hike (and 85% through March) as too high.

AUD/USD rose a quarter cent after the decision but the bigger move in FX came earlier in the day as the US dollar slumped across the board. That came after a surprisingly soft ISM manufacturing index at 48.1 compared to 49.2 expected.

Another High Profile Failure

Ashraf pointed out to USDJPY's recurring failure at 110. The pair dropped back below its 200-DMA, eyeing 108.40 after another high profile failed attempt to break/reach 110, coinciding with the 55WMA, 100WMA, 200WMA, and Oct 2018 trendline resistance. VIX jumps above its 100 and 200 DMAs after posting yesterday its biggest daiky % gain in 4 months. SPX is at risk of breaking the next crucial support of 3075/76. Here is a chart below that Ashraf posted yesterday after that manuf ISM miss.

Click To Enlarge
Time for the Pre-Santa Selloff - Isms Dec 2 2019 (Chart 2)

Trump took to twitter to blame the Fed and a strong dollar but manufacturing malaise is global and remains the major trouble spot. Lately there have been signs of an upturn or at least stabilization but this number is a dent in that theory.

CFTC Commitments of Traders

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

EUR -61K vs -63K prior GBP -37K vs -32K prior JPY -40K vs -35K prior CHF -21K vs -16K prior CAD +20K vs +29K prior AUD -45K vs -47K prior NZD -36K vs -35K prior

The data was delayed because of the US holiday and the surprise is the persistently large short in NZD. The turn in the kiwi continued on Monday and even with the round of risk aversion to start the week, NZD surged. That should have the shorts sweating.


Latest IMTs