Daily Market Insight

The big mover yesterday was the AUDUSD, the Asian session showed strong economic data in Australia and I have no doubt this resulted in a little bit of short covering. There is event risk in the form of RBA delivering their interest rate verdict which will undoubtedly stay put for now. The current levels are the strongest level in 8 weeks and as such this level may prove to be a good entry for sellers to enter the market again.
The FX markets are starting to show some nice divergence – although they have been showing divergence for the last 2 weeks. Once would expect to see a relief rally against the dollar at some point, the problem is that it has been showing these signs for some time. The dollar is rampant, and as a result I continue to focus my attention on pairs like the DAX.
The financial markets have a way of dealing with these things in their stride, and the lack of movement in the equity markets suggest that they are starting to ignore this story. The currency markets are still feeling the flow though as currency moves into safe havens like JPY and CHF. The current geopolitical landscape scares me somewhat but there are a lot of technical trades setting up in the currency market – all of which we cover in the FX market.
The comments from Trump last week surrounding the strength of the dollar led to a little bit of dollar selling last week. Yesterday though the greenback started fighting back, there was not much on the economic calendar to move the markets and as a result the day was slow, there were some comments from the BOE which had an effect on the GBP but otherwise than that it was what I like to call a flush out day.
Yesterday was the least eventful day we have had in the last week, either the market has settled and will now look to fade last weeks over reaction, or we continue the trend. My opinion is that we see the former. The USD was also choppy and looks to be consolidating after the ground it lost. The only mover were the CAD pairs, the catalyst was the BOC survey, it showed that there was some strong investment intentions. The USDCAD rose to 1.3050 before the release but eventually traded lower to 1.2955 before bouncing. My intention is to look at fading those CAD moves a little later this morning.
It was a bank holiday in both the US and Canada yesterday, usually this leads to a very quiet day but it didn’t really materialize that way. There were some pretty negative tweets from you know who yesterday surrounding the Canada – he even issued a warning to Congress not to interfere with his NAFTA negotiations. This meant that the USDCAD traded to as high as 1.3110 but couldn’t get higher than the August higher and was soon trading around 1.3090, this will become the key level to watch this morning as more market players enter the fray.