Asian Session Morning: Unconvinced by the Euro Rally

Asia:
Overnight saw some of the biggest moves we’ve had for a while, right across the board. The Aussie kicked it all off with a less than dovish Monetary Policy Statement from the RBA, but it was Greece and USD driven flows that really gave markets the kick that traders had been waiting for.

In the Technical Analysis section of the Vantage FX News Centre, I spoke yesterday about how we would look to position ourselves heading into the RBA decision. I spoke about the biggest risk heading into the release was being short, no matter the outcome and then how to go about managing your risk from that point. The RBA didn’t play ball with market expectations and AUD/USD shot up from lows as spoken about.

AUD/USD Daily:

This was the start of the big moves and I hope that this blog helped a little with the risk management side of things.

Europe:
It was during Europe where things really kicked off, with traders sensing the prospect of a deal between Greece and its creditors being announced as early as Wednesday. Eurozone CPI was also higher than expected, but Greek optimism in the market was what pushed EUR/USD up before USD traders started to get squeezed and by then, the move had exploded.

The story was that the Eurogroup and the IMF look to have come to an initial agreement that would allow Greece access to the additional bailout funds that are needed to keep their head above water. The USD side of this EUR/USD move is a key part, but I’m not convinced as to why the market viewed this agreement as a lock. The document needs to be reviewed on Wednesday followed by the final sign off from Greece who we know won’t be happy with the austerity measures that are being forced upon them.

There is no deal. Stay on your toes.

US:
USDX Daily:

All you need to do is take a look at the technicals on the USDX chart that we have been playing with on Twitter over the last few months. Simple parallel lines tell the above fundamental story with a lot less subjectivity.

On the Calendar Today:
The data releases just keep flowing all the way through today highlighted by the Australian GDP release during Asia and the polarising ADP Employment number during the US session.

Wednesday:
AUD GDP
CNY HSBC Services PMI

EUR Services PMI’s
GBP Services PMI
EUR Minimum Bid Rate

USD ADP Non-Farm Employment Change
CAD Trade Balance
EUR ECB Press Conference
USD Trade Balance
USD ISM Non-Manufacturing PMI

Chart of the Day:
In Yesterday’s Asian Session Morning blog, I posted a EUR/USD hourly chart after negotiations seemingly had come to another road block. I said that the the market had become de-sensitised to failure and that I was looking for a resumption of the down trend.

EUR/USD Hourly:

1 day and a 200 pip straight line rally later, I wasn’t quite on with that one for reasons we went through above.

EUR/USD Daily:

If we take a look on the daily chart, the short setup is still on the cards with price below it’s major trend line and still tucked neatly inside that flag.

Trying to get on board the train just before it leaves gives you massive potential to catch major moves. You just have to make sure you have your risk clearly defined and identify when you are wrong.