Stocks and the Aussie dollar lower. Can the Euro break higher

Quick Recap

A bad night for stocks across the globe as a combination of profit taking in Europe and weak US data saw traders do a little bit of selling. The US dollar was stronger than it should have been given the weak durable goods release and perhaps that’s a sign that a sign that the weak US dollar longs are now out of the market. Gold is stronger as a result of all of this reflecting that a little uncertainty is creeping into traders minds about the outlook form here.

On that front, perhaps the most interesting piece of market reconnaissance comes from the performance of the US long bonds last night. Even though stocks sold off and the data was weak US 10’s finished the day up 5 points at 1.93%. That was 7 points off the low of the day after the Durable goods were released.

Apparently the reason is the worst bid to cover ratio on a US Treasury 5 year note auction since 2009. That suggests that traders are ‘full’ on bonds at these levels. Now it may be that the data weakens enough for them to get bullish again. But with the Fed still warning of higher rates this is a sign that traders are in a state of flux.

On that durable goods data the print overnight showed a big fall of 1.4% against expectations of a rise of 0.4%. Of course there were mitigants like weather and the Port dispute but the pundits knew that when they made their guesstimates.

On the day

On the data front today, there is nothing out here in Australia but tonight in Germany we get the Gfk consumer confidence, French GDP and UK retail sales which will be huge. In the US, it’s services and composite PMI data.

And here’s the overnight Scoreboard (8.07 am AEDT):

• Dow Jones down 1.62% to 17,718 for a fall of 292 points
• Nasdaq down 2.37% to 4,876
• S&P down 28 points, 1.35% to 2,063
• London (FTSE 100) down 0.41% to 6,990
• Frankfurt (DAX) down 1.17% to 11,865
• Paris (CAC) down 1.32% to 5,020
• Tokyo (Nikkei) up 0.17% to 19,746
• Shanghai (Composite) down 0.79% to 3,662
• Hong Kong (Hang Seng) up 0.53% to 24,528
• ASX Futures (SPI June) down 44 points to 5,927
• AUDUSD: 0.7842
• EURUSD: 1.0952
• USDJPY: 119.51
• GBPUSD: 1.4879
• USDCAD: 1.2516
• Crude: $48.99
• Gold: $1,195

CHART OF THE DAY:

EURUSD: So close – the 1.1030/50 region is the key. 

We only have 50% of the position left and I’m waiting to see how this plays out. It’s starting to look much more positive. Another weekly close up or near here, even a break, would be great.

Gold: Yesterday I said “It’s breaking higher – there could be $30 in this now both the trendline and my slow ma have broken.”  This is one of the most uncomfortable rallies I’ve been on but its still rallying.