Quick Take
The currencies most emboldened by the lingering ‘risk on’ conditions in the equity market include the usual suspects (AUD, NZD, CAD), making further strides at the expense of the USD and JPY. The latter two remain on the backfoot in light of the constructive risk sentiment.
Quick Take
We had an interesting shift in dynamics in the last 24h, where low vol in the S&P 500 has not been an impediment for the Aussie and Kiwi to see consistent follow through supply. A currency that is definitely recovering some of its lost mojo is the US Dollar.
Quick Take
An important update today. As I weigh in the preponderance of evidence through equities, bonds, currencies, it looks as though we might be nearing an inflection point in risk dynamics if my analysis of structures and momentum is anything to go by.
Quick Take
In the last 24h, the deterioration in risk sentiment has taken yet another hit as the S&P 500 averages nearly 2% losses back-to-back. This deleveraging in equity bets has led to the usual suspects (USD, JPY) to outperform the rest of the G8 FX complex…
Quick Take
The overall risk sentiment, taking the temperature via the S&P 500, is one characterized, as per the last 24h, by a marked improvement as reflected by the failure of the bottom-side delimitation of the index daily range.
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As I crack open and dissect the latest market flows, my attention goes to two markets finally coming to life such as the Pound or Gold. The re-emergence of USD bids could soon put on a compromising position other markets that so far have traded in quietest conditions such as the EUR/USD or the AUD/USD…
Quick Take
The combination of vaccine hopes as Moderna published promising results of its phase 1 trial, progress made to fund the rebuilding of the economic fabric in Europe, as well as the predisposition of Fed’s Powell to deploy more momentary ammunition if/when needed, were all contributing factors sending risk through the roof on Monday.
Quick Take
The groovy mood dominating the equity space failed to extend as the S&P 500 continues to struggle taking out a key decision point in the form of the upper bound of its daily range. This topside failure led to an intraday suppression of ‘risk on’ late on Tuesday, yet there are a number of currency charts off a 4-hour angle still supporting the idea that buyers will have more goes.
Quick Take
The buoyancy in risk appetite continues to be the name of the game. This is well expressed through an Aussie breaking higher against the US Dollar or Japanese Yen with further congruence found via the S&P 500 recording its highest close since March 6th, marginally breaking its multi-week range with the 3,000.00 mark just a whisker away. The price action in WTI, up in the tune of 5%, is also supporting this narrative.
Quick Take
The underlying risk appetite conditions won’t go away that easy. Even if a setback in the risk dynamics came about, it is still far from posing a serious technical threat in the overall daily bullish trends in those markets most sensitive to risk flows, namely the S&P 500 or Aussie.
Quick Take
In today’s video analysis, I note that the Forex market is set to ramp up its depressed levels of vol as normalcy in order flow returns. The first sign that opportunities will be coming back is the resolution of the current tight consolidations observed across the board.
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We are in the midst of an environment dominated by the appreciation of growth/commodity-linked currencies (AUD, NZD, CAD) while the ones associated most intimately with risk-off flows (JPY, USD) are taken to the woodshed.
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The last 24h of trading were characterized by springy market movements as the waxing and waning in order flows makes it a challenge to stick with one particular intraday direction.
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The bullish stance in US equities where the S&P 500 trades above 3,000.000, the recent breakout higher in a pair as risk-sensitive as the AUD/JPY or the resolutions into fresh bearish structures formed in USD-denominated pairs, all supports the notion that the prevailing dynamics are set to be a default view of buying risk.
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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.
Quik Take
The commodity-linked currencies are on fire, with one in particular (AUD) taking the spotlight as it hits 0.68 USD, the highest levels since early February before the whole COVID-19 crisis got out of hand.
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The demise of the USD and JPY, especially the latter, is a clear barometer of how hot risk appetite is running. Remember, if one wants to take the temperate of RORO (risk-on, risk-off) conditions, these two currencies, alongside the S&P 500, are your Go-To instruments. If one throws into the mix the sell-off seen in Gold or the Swiss Franc, it becomes blatantly evident that risk appetite is proliferating in a big way.
Quick Take
Those capitalizing on the abundance of prolific ‘risk on’ opportunities would probably don’t mind me sounding like a broken record. But the reality is that nothing has changed in financial markets, where equities and commodity-linked currencies continue to dominate proceedings.
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The story of the day and the week/s continues to be the relentless appreciation of the EUR/USD, which if excluding the last 24h, reflects the crumbing of the USD appeal across the board as risk trades fly.
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The way the week starts with the USD and JPY on the backfoot lays the ground to see follow through continuation of the ‘risk on’ dynamics prevalent for a number of weeks. It’s not rocket science that these conditions are a dream come true for trend traders.