We're All Bund Traders Now

Market Commentary

Bund yields went above 1% yesterday and we saw a sharp rally in the EURUSD into the upper part of the 1.13 handle. It is hard to say what is driving the moves although bonds continue to remain under sustained pressure amid the turmoil in Europe but clearly the high correlation between bond spreads and FX is driving the headline pair in the short term. This has made moves very erratic and directionless making trading more of a coin toss no matter which side you are looking to trade. On the dollar side, data continues to pick up and the market in favour of a September hike over December now but this has also reduced the impact of US economic surprises on the dollar because of current expectations. A better than expected US retail sales number today will probably further cement a September trajectory.

USDJPY moved lower more than 200 pips after Kuroda’s comment on weak JPY. Kuroda is the key person to decide on the next monetary policy and he didn’t talk on FX, too much like Amari and Aso. On the other hand, some people pointed out that his comment is about real effective rate

USD weakness and strong UK IP drove GBP higher overnight.With the Mansion House speeches by Carney and Osborne passing without any of the fireworks witnessed last year there is not much in the way of data until CPI next week so we are left with trading the dollar in the meantime. Strong US retail sales will probably see GBPUSD back to 1.5370/80 levels.

Technical Commentary

EURUSD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish

Once again seller emerge as price test the primary descending trendline, while 1.14 contains the advance focus shifts to bids at 1.12 a failure here opens 1.1050. A break of 1.14 opens 1.15 next

Daily Order Flow bullish ; OBV sideways to down, Linear Regression pierces midpoint from below, Psychology pierces midpoint from above

Monitoring intraday price and Order Flow indicators on a test of 1.15 or 1.1050

GBPUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

1.5550 sees sellers engage on the first test, while this area contains the upside advance bears require an erosion of 1.5450 support to target 1.5350 next, while 1.5450 supports expect retest of 1.5550

Daily Order Flow bullish; OBV sideways to down , Linear Regression and Psychology bearish but attempting midpoint test from below

Monitoring intraday price action and Order Flow indicators on a test of 1.5050 or 1.54/5550

USDJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish

Testing pivotal 122, while this area supports expect a retest of 124 from below, failure at 122 opens 119.50

Daily Order Flow bullish ; OBV sideways to up, Linear Regression and Psychology rolling over to pierce midpoints from above

Monitoring intraday price action and Order Flow indicators on a test of 128 or 122

EURJPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

Retesting last weeks highs en route to a symmetry target of 141.75 while this area caps the advance look for a retest of 137

Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish

Monitoring intraday price action and Order Flow indicators at 141.75 or 137