Markets have moved lower and volatility has stepped up across fx and rest of world equities but alas not the US indexes as yet. US longs are not panicking as yet and so another micro bounce attempt at the recent resistance does appear likely again for US indexes. Currencies wise the US$ spiking down on the carry unwind. Initially supportive of commodities and commodity fx as the long term correlation suggests before the asset classes and their fx turning lower reflecting risk off alongside a falling US$. It only makes sense for the carry unwind due to risk off in my view.
Here the Swiss team’s latest report:
There is clear confusion among commentators on the US$ issue. For now im in the carry unwind camp which therefore fits with deleveraging and not US$ liquidity.
Here GS
Note the knock outs and failed conviction on the eurostoxx50. They are between trades and looking for direction.
And here CB sticking to his 1998 guns.
A big week so far for copper and commodity fx. Jury is still out as oil clings on to recent gains. Check the usdnok. A big move yesterday and threatened the downward channel. A move to breakout and retrace today. AudUsd a very similar issue with Fitzpatrick’s key support area around the 0.74 level audusd. We are at 0.745 now. Price will provide the answers soon enough.
And here FNB tech
A nice report not a high conviction either way but on the bull side for now. Seasonal strength US$.
Here MS’s FX tech
Interesting comments. Lacking direction as above, some confusion also, in my view. Eurgbp very close to their stop loss. Whip saw action in the usdcad. I wonder if they got their entry. I did and still running for now.
On the macro front note the US trade numbers today. Deficit narrowed but how? By imports declining more rapidly than their exports declined. Ie overall demand contraction.
Final comments until we see more volatility i would keep your entries and exists tight. I would not press the case and get stubborn at all here. We have the initial signs of a top but its not confirmed by the US and so instruments can bounce in sympathy.
A few more reports coming as a v2..
All the best
Rich