Quick Take
We certainty had a high flurry of activity in the currency market, with weakness in the US Dollar at the epicenter of the wild moves as the Fed unleashed yet again another monster-size lending program.
Quick Take
We certainty had a high flurry of activity in the currency market, with weakness in the US Dollar at the epicenter of the wild moves as the Fed unleashed yet again another monster-size lending program.
Quick Take
It’s been a one-way street for the US Dollar since the technical inflection point back on April 7th. Clients following the daily video analysis I make available every day can attest the directional calls have been accurate and it does not look like the tide will turn yet.
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Equities keep roaring ahead, with the calls made to keep buying the S&P 500 on weakness coming to fruition. The USD vulnerabilities keep flaring up left and right too as the Goldilocks scenario for sellers stays the course…
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What have we learned in the last 24h? Firstly, while some are busy looking for all types of narratives to justify the turnaround in the equity market, those following my daily updates would know how crucial it was the level of resistance reached in the S&P 500. The 2,700.00 holds now they key. A breakout is a key pre-conditions to keep calling for higher levels in the USD index.
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What does this push up in equities mean for the USD? After a promising run to the upside since mid-week, there is real danger that the flows in the Dollar start to revert in a more meaningful way the higher equities go as the intimate strong negative correlation between the SP500 & USD index continues to play out like a charm.
Quick Take
The equity market in the US continues to display bullish dynamics but the way the run-up in the S&P 500 is playing out, in volatility terms, makes me think the bullish days might be numbered. In Forex, the predominant theme is the establishment of ranges in the 4h charts…
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What just happened to the price of Oil? The unthinkable became a reality in the front-month May contract as the price of WTI got slaughtered to levels as low as -$40.00. Producers are at a point where they no longer have sufficient capacity to store all the surplus…
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At the epicenter of the dial back in risk sentiment, as a major influence to push the S&P 500 over the cliff and roll over (~-3%) we find the ongoing high vol rout in the Oil market. The renewed sell-side pressure in equities as Oil keeps imploding has had immediate spillover effects in the outperform of the USD, JPY, but also a stubborn EUR and CHF…
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Amid a positive session for Oil, the S&P 500, which is at the epicenter to gauge risk sentiment, printed a +2.3% rise, In Forex, the story is one of positioning for USD long-sided bias at discounts as expressed by the topside auction that failed in EUR/USD.
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Traders had to digest a plethora of negative news such as absolutely catastrophic global flash PMIs across Europe and the US or another incredible spike in US jobless claims just to name a few. In Forex, the EUR was the weakest link, manifesting fragility across the G8 FX complex…
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I must say that the technical stance in the S&P 500 last Friday left us with a fairly constructive picture. As I shift gears into the FX market, the first thing that jumped out is the cheap levels advertised in the EUR/USD around the 1.0735/40.
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Let’s get started… Scan Of The Markets Insights Into Market Flows (Video) Recent Economic Indicators Educational Material Scan Of The Markets The indices show the performance of a particular currency vs G8 FX.
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The lay of the land in the Forex terrain is not looking precisely encouraging for the USD outlook in my book. Amid overall buoyancy in equity valuations as the world rolls back containment measures, the backdrop for the world’s reserve currency looks negative near term.
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Bulls are pushing equity valuations with flying colors as the S&P 500 finally broke into fresh daily trend highs. In the Forex market, the script playing out so far is one characterized by USD weakness with high-beta currencies exploiting this backdrop the most.
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The Euro and the Pound were the major beneficiaries of re-balancing flows, which happens by month end as global portfolio managers have the need to readjust their benchmarks for currency hedge ratios amid value variations during the month.
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With the selling action seen in stocks, and just coming off the heels of a lively month-end balancing flows period, where does this leave us in the currency market? For a starter, in today’s video I point out a rather attractive sell-side level playing out in EUR/USD as an evident USD prop index divergence converged at a 100% measured move.
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In the Forex market, with subdued activity in stocks, no fundamental catalysts to account for, and the typical slow vol from Monday, the end result has been rather quiet range-bound conditions settling in.
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The Euro was at the epicenter of the daily volatility that hit the currency market in the last 24h as German judges, in a process that has been dragging on for over 5 years, challenged the ECB on its QE activity, giving now three months to justify bond buying program.
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The Japanese Yen has been the star performer in a move that surprisingly didn’t get fueled by that much weakness in the S&P 500 (-0.7%). Even the US long-dated Treasury yields soared, which tends to be associated with Yen weakness rather than strength.
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In today’s outlook, I argue that at last, there is communion between the 4h and the daily to the bullish side in the S&P 500. The market where I see the USD most punished out of the G4 FX I focus in today’s video is against the Australian Dollar.