Pundits make more of it than what it really is

I read some FX commentaries from time to time – not often – as most of it is crap.

Yesterday the EURUSD made a pullback from recent gains by a decent stretch of 200 pips and what did they explain it from? Lockhart, jobless claims numbers and strong Services PMI.

Yes – those factors added to the move - but not to that extent. I credit them for 60 pips – that is all - and combined.

Lockhart like to talk in big words and sound important. The emphasis on the economy “being in solid shape” and “June, July or September as a high probability” and “once we get started, I want to be able to move deliberately” sounds more like a cowboy drawing from the hips. 
 
The weekly initial jobless claim number was down but not to any new low level. 280-310K now looks more like a level for stabilization – for sure not a lower one.
And that a 1.5 point improvement in the Markit Services PMI from February to March had an impact more visible than any of the ISM Non-Manufacturing releases over the last year, doesn’t really make sense.

Combined – yes - they added to USD strength but in terms of magnitude – come on guys…..

Here is the story.

From Durable Goods Orders Wednesday and really for the rest of the week there were no scheduled events that would have any major impact – even with a surprise element or several of them pointing the same way. The surprise elements would have to be substantial. Neither of yesterday’s news or releases had anything like it. Nor will the ones today – and then I include the final revision of US GDP and Core PCE. If they represents a surprise, they are too old. Focus is not on 4th quarter US GDP any more.

When you have 2-3 trading sessions with so little on in terms of releases as we have from Wednesday to Friday this week – following a few weeks of substantial volatility – then you have market makers going a bit restless – not knowing what to do.

A few chart levels are pointed out – 1.1050 and 1.0780 visible as the obvious ones and a couple of smaller ones tucked in between.

It is spring and market makers have new track shoes. It is all about making some runs. Three times failure this week to take out the high from Wednesday a week ago and they all turn around and look for the weaker leg south. Three events all sounding a bit USD positive and you get the punters moving south.

Off we go and as bulls are absent - as they have been for months - and as troubled shorts were cleared out last week, there are some limits left to increase short positions again.
It is a rather easy route to make and it proved to be. No one resisted and that is why you get the 200 pips out of it. That Lockhart, jobless claims numbers and Services PMI made the job easier I will not object to. That they carried a value of 200 pips – well – let’s say I have my doubts.

I think a need to continue making runs and renewed energy from a bit lighter short set up was enough to get us going. Do I think there is more into it? It might be – but not from what is scheduled for this week. But then – Friday runs are always the unpredictable ones – especially when the US is on their own.