The Pound Sterling is ripping higher today after traders decided overnight that they think that the Scottish referendum will vote no to separation from the rest of the UK. The buying has been so strong that GBP has moved up and through a two month down trend line but so far this morning it has NOT been able to get through the 200 day moving average.
In normal circumstances I would buy that break but there is too much event risk around this vote and move that I have taken a pass in this instance.
I know I know you are supposed to take all your signals come what may but the risk of a gap which renders my stop redundant if the vote is Yes means that I am uncomfortable with the ability to properly risk manage this trade. So I’ll pass.
Looking elsewhere on FX markets and the Aussie is higher this morning as well and after a little bit of strength early in the US day there has been a solid reversal and rethink of the Fed interest rate path. That meant that the Aussie has rallied from below 0.8950 to sit at 0.8990 this morning.
Is that a bottom being formed for the moment?
Elsewhere USDJPY is stills strong however at 108.75 and Euro is up a little at 1.2920.
Looking at stocks it was an interesting night’s trade overnight and trade which once again proved how resilient this rally is as the Dow and S&P hit fresh all time highs. I must say though as much as I am 100% cash in my super account and feeling like a dope this market feels like the mid 90′s and not the late 90′s which means it could still have serious legs – time will tell.
At issue is no longer if the fed will raise rates and the dot chart suggests that the rises will come next year in 2015 but the path of rate remains uncertain because US data continues to show signs of strength but equally not too much strength. Take last night’s releases as an example, jobless claims fell to 280,000 which was lower than the 305,000 expected but balancing this out was the big fall in housing starts, -14.4% and the lower than expected Philly Fed index which printed 22.5 from 28 last.
So at the close the Dow was up 109 points to 17,266 for a gain of 0.64%. The Nasdaq rose 0.68% to 4,593 and the S&P rose another 9 points or 0.47% to 2011.
European traders were also in an ebullient mood as traders in the UK voted with their buy orders on the FTSE (0.56% to 6,819)and GBP at 1.6427 from a low in the 1.60 region when the fears were the Scots would vote Yes. On the continent the DAX ripped 1.41% higher to 9,798, the CAC rose 0.76% to 4,465 and stocks in Madrid rose 0.77% while those in Milan were quiet.
It stacks up as a solid reversal overnight with the December SPI 200 contract up 27 points to 5,430 and likely to have solid momentum this morning although the miners will weigh again.
In Asia yesterday the Nikkei ripped up 1.13 back above 16,000 to 16,068. The Hang Seng fell 0.85% to 24,169 and Shanghai is up 0.35% 2,316.
On commodity markets iron ore sold off again with the December contract down $1.23 a tonne to $82.52 close to recent lows and a worrying sign that this week’s rally was just noise in the overall down trend. Newcastle coal for December rose 20 cents a tonne to $67.05 a tonne.
Nymex crude fell 1.53% to $92.98, gold rallied a little to $1,225 after yesterday’s weakness. Silver is at $18.52 and copper closed at $3.09. Wheat fell 2.24%, corn dipped 0.88% and soybeans fell 1.23%.
On the data front German PPI and Canadian CPI might be important but everything pales in comparison to the Scottish referendum results
Greg McKenna
NB: Please note all references to rates above are approximate
To learn more about Greg McKenna, read on here.
In normal circumstances I would buy that break but there is too much event risk around this vote and move that I have taken a pass in this instance.
I know I know you are supposed to take all your signals come what may but the risk of a gap which renders my stop redundant if the vote is Yes means that I am uncomfortable with the ability to properly risk manage this trade. So I’ll pass.
Looking elsewhere on FX markets and the Aussie is higher this morning as well and after a little bit of strength early in the US day there has been a solid reversal and rethink of the Fed interest rate path. That meant that the Aussie has rallied from below 0.8950 to sit at 0.8990 this morning.
Is that a bottom being formed for the moment?
Elsewhere USDJPY is stills strong however at 108.75 and Euro is up a little at 1.2920.
Looking at stocks it was an interesting night’s trade overnight and trade which once again proved how resilient this rally is as the Dow and S&P hit fresh all time highs. I must say though as much as I am 100% cash in my super account and feeling like a dope this market feels like the mid 90′s and not the late 90′s which means it could still have serious legs – time will tell.
At issue is no longer if the fed will raise rates and the dot chart suggests that the rises will come next year in 2015 but the path of rate remains uncertain because US data continues to show signs of strength but equally not too much strength. Take last night’s releases as an example, jobless claims fell to 280,000 which was lower than the 305,000 expected but balancing this out was the big fall in housing starts, -14.4% and the lower than expected Philly Fed index which printed 22.5 from 28 last.
So at the close the Dow was up 109 points to 17,266 for a gain of 0.64%. The Nasdaq rose 0.68% to 4,593 and the S&P rose another 9 points or 0.47% to 2011.
European traders were also in an ebullient mood as traders in the UK voted with their buy orders on the FTSE (0.56% to 6,819)and GBP at 1.6427 from a low in the 1.60 region when the fears were the Scots would vote Yes. On the continent the DAX ripped 1.41% higher to 9,798, the CAC rose 0.76% to 4,465 and stocks in Madrid rose 0.77% while those in Milan were quiet.
It stacks up as a solid reversal overnight with the December SPI 200 contract up 27 points to 5,430 and likely to have solid momentum this morning although the miners will weigh again.
In Asia yesterday the Nikkei ripped up 1.13 back above 16,000 to 16,068. The Hang Seng fell 0.85% to 24,169 and Shanghai is up 0.35% 2,316.
On commodity markets iron ore sold off again with the December contract down $1.23 a tonne to $82.52 close to recent lows and a worrying sign that this week’s rally was just noise in the overall down trend. Newcastle coal for December rose 20 cents a tonne to $67.05 a tonne.
Nymex crude fell 1.53% to $92.98, gold rallied a little to $1,225 after yesterday’s weakness. Silver is at $18.52 and copper closed at $3.09. Wheat fell 2.24%, corn dipped 0.88% and soybeans fell 1.23%.
On the data front German PPI and Canadian CPI might be important but everything pales in comparison to the Scottish referendum results
Greg McKenna
NB: Please note all references to rates above are approximate
To learn more about Greg McKenna, read on here.
In addition to the website disclaimer below, the material on this page prepared by Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently, any person acting on it does so entirely at their own risk. The expert writers express their personal opinions and will not assume any responsibility whatsoever for the forex trading account of the reader. We always aim for maximum accuracy and timeliness, and Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.sary.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.