Tuesday update..Morning glory for the USD
- It started with the AUD and it finished with the EUR as the USD started the last day of the month with a buying spree. While the AUD slumped to a 0.7590 low on speculation the RBA will cut rates next week there didn’t seem much of a reason behind EUR/USD taking out everything to lows of 1.0717 this morning.
- It was mixed news for EZ data. Inflation at –0.1 from – 0.4 but unemployment disappointed at 11.3 when 11.2% was expected. Of course Greece is still hovering and weighing on the EUR no doubt. Some find of fudged compromise is still expected by and large but then again its difficult to see where the compromise comes from. If there is a plan to bring in Capital controls in Greece then an Easter weekend might be as good a time as any.
- Looking at the USD it may have helped that US stocks rallying helped but there was no real move in bond yields and possibly this is just the sort of volatility we are going to get ahead of Fridays NFP number. As I said at the weekend one thing can certainly expect is volatility and with liquidity draining ahead of Easter we have potential for some big percentage moves.
- Forex.. AUD and then EUR l take a hit this morning. AUD/USD 0.7602 as speculation of a rate cut mounts and expect an assault on 0.7550/60 support any time. EUR/USD took out supports from 1.08 down to 1.0717 now 1.0722. It’s a difficult call from here with Greece and US NFP giving potential for a big move either way. Its short or square for me though. GBP/USD at 1.4770 but GBP has improved to EUR/GBP 0.7260 from 0.7335 yesterday. I still favour shorts there. USD/JPY climbed over 120.00 yesterday but has not followed on today despite USD strength. I’m standing clear on that pair for the moment.
- Equities..US stock indices a very good bounce yesterday up 1.5% or thereabouts. Asia took heart but Europe is mixed and as I type US futures are giving some back. No view really short term
- Bonds..Nothing of note US 10 YR. at 1.95% and I wouldn’t expect too much before Fridays NFP