What Happened Yesterday
Well yesterday didn’t start off so well for me with a major internet blackout which lasted several hours. Not only did I miss updating the site but I also missed some of the biggest moves in Asia for awhile. Damn frustrating!
Now’s let have a look at what caused all the moves yesterday.
First up was the NZ CPI which came in really weak below expectations. This saw the Kiwi drop from 0.7320 to 0.7260 in quick time. The move reflects the CPI data mis-match with the RBNZ expectations and probably winds back some of their short term future expectations for rate hikes.
Out of nowhere came the rejection of the US Healthcare bill, which shows further reduction in confidence in US President Donald Trump’s agenda. It doesn’t look like the Donald is going to get much of his broader economic/tax strategies through and that’s a negative for the USD. Remember after the election we saw a huge surge in the USD following Donald’s promises of reform and change….well that’s what they are in-part unwinding.
The impact on the majors was immediate with most jumping 40-50 points before slowly grinding higher throughout the day. It was an exodus of long USD short term positions that’s for sure!
The RBA then chimed with a ‘slightly upbeat’ tone in the today’s minutes which seemed to have a more positive tone overall, with the RBA acknowledging recent strength in the labour market and the generally positive flow of data. The futures market thought there was something in it for sure with interbank futures implying there’s a 20% chance of a rate hike in Australia by December.
So the USD is already on the back foot from Trump and the rumblings from offshore Central Banks (who are all starting to talk about raising rates too) is giving it another quick in the loins. Let’s not forget the weak CPI data last week that has the FED almost moving from hawkish to neutral stance on future moves.
Today’s Fundamental Drivers
There’s not a lot on offer so the market should be reasonably quiet today…well especially compared to yesterday anyway.
If anything it’s worth keeping an eye on the US Oil stocks data as it’s been known to throw the price of Oil around and consequently USDCAD.
Technical Set Up – What’s Happening with the Majors
The USD sell-off had a uniform impact across all major currency pairs.
The AUD and NZD both rallied with the Kiwi dragging the chain after the earlier weaker CPI data. Plus the Aussie had the extra benefit of a positive tone from the RBA minutes.
The Aussie had the biggest move of the day rallying 158 points from the time of the US announcement on the failed Healthcare bill.
The Euro had a pretty good day rallying 113 points against the USD hitting a high of 1.1585, before pulling back to settle around 1.1550. There was a bunch of short EURUSD positions stopped out on the move above 1.1490.
This move in EURUSD also caused USDCHF to have a major melt down on the downside as long positions were stopped out below 0.9600 and it didn’t slow down until it hit 0.9520. That’s a pretty big move in the Swissie!
Sterling struggled to gain much ground on the USD only rallying 70 odd pips to hit a high of 1.3090. But that was nothing compared to the sell off after weaker than expected UK CPI data was released which saw it drop 123 points in quick time back down to 1.3000 support.
USDCAD & USDYEN had very orderly activity slowly drifting lower with the overall bearish USD.
All in all I’d call that a pretty decent day albeit from a ‘left-field’ event that triggered the whole thing.
Today’s Focus – Major Currencies in Play
It’s back to the drawing board with a lot of the majors as there were a lot of trendlines broken yesterday. The main thing is we have weak USD sentiment to work with and that helps isolate the best trading pairs.
Technical Set Up: The USDCAD has a gorgeous downtrend in play with multiple levels to work with on the topside.
Fundamental Driver: US Crude Oil stocks change data
Potential Strategy: The trend is your friend so a weaker Oil stocks number should see Oil rally and that means a lower USDCAD. If the data comes out strong then we may get a chance to sell on rallies higher back towards 1.2810.
Technical Set Up: The USDJPY is back in the groove but this time it’s trending lower. Resistance is at 112.45.
Fundamental Driver: US Housing Starts & Building Permits
Potential Strategy: Trade with the market, not against it! I feel very comfortable getting short USDJPY back towards resistance or if the USD data is weak!
Next Best Trade Update
OK team now the new site is up and I have the internet back online we’ll be cranking up the Next Best Trades once again.
Elite Members you’ll receive email updates as soon as we place the orders in the market so you can check them out before they go live.
The idea is…if you like what you see and you agree with the set up, then maybe there’s a trade in it for you!
Now if you missed yesterday’s moves don’t beat yourself up and get all anxious. There are loads more good trades just around the corner so take your time finding the next best trade.
Tune up your charts and get ready to trade… that’s the most important thing.