Overnight US home sales came in less than expected but still double digit growth for 7th straight month. The market pretty much took it in its stride. Equities continue to power higher as some pundits are calling no stopping this train until at least 2016. Certainly 2013 will be a stellar year for the record books and those who are not in the stock market will look back ruefully. Don’t we all do that? FOMO.
It seems the market has taken Ben’s testimony to heart and do not fear the end of his bond buying spree. The point is that whilst he will at some point stop buying bonds (thereby effectively printing cash by keeping the short term bonds at low yielding prices) he is in no way in a hurry to raise rates. Ben wanted to distinguish to the market this difference. Subterfuge is not my strong suit so I would have just come out and said it plain and clear. Ben is a politician so calling a spade a spade is not in his psyche. However, I get the sense that the market has read between the lines. Half of US economists surveyed by Bloomberg think the bond buying will commence to slow in September FOMC meeting, yet the market is still selling the US dollar. The US dollar Index fell under recent support of 82.50 to close at 82.31. With the stocks stampeding higher and global economic conditions improving (apart from European debt issues) I see this trend continuing through to Christmas at least, with a few dips along the way of course.
Not much news out today, but a big day tomorrow for data, with manufacturing PMI figures coming in from across the globe.
DATA HIGHLIGHTS AHEAD (times are in AEST) – 1030pm Canadian Retail Sales
AUDUSD –A HH/HL so have cancelled my sell order. The little battler looks to have formed a base on top of the long term fib (2009 lows to 2011 highs) 38.2% retracement at 9138. Not yet suggesting to book your holiday but a minor rally above 95¢ would be welcome. No sign of an entry trade for that yet.
Resistance: 9390/9435/9590 Support: 9138/8985/8760
EURUSD –Ran up to test resistance at 13200 and triggered me into the trade along the way. Large resistance at 1.34 area and will keep a keen eye on sellers when we get there. Resistance: 13200/13400/13700 Support: 13040/13000/12750
GBPUSD – Still powering along and commentators are crying foul over it. Isn’t hindsight a bitch to those who lack courage. Oh, and btw, it’s a boy! Resistance: 15370/15405/15608 Support: 15270/15080/15000
NZDUSD – Now there is a bullish bar, yet resistance still held it down. An inside bar tho, and that is just dead set boring.
Resistance: 7965/8125/8170 Support: 7710/7658/7458
USDCAD – Has stopped me out at 10349 yesterday with a LHLL. Is sitting in the middle of the channel and floating around the 50ema so I am not prepared to call it yet, but I am leaning to the downside. Resistance: 10420/10597/10657/10706 Support: 10345/10287/10100
USDJPY – The market got bullish for a bit on the ¥ but the driver was the $. Abe has complete control of both houses now and affirmed his economic plan for Japan so expect the ¥ to remain above 95 for some years to come. Resistance: 102.53/104.10/105.60 Support: 9872/9497/9415
GOLD – The FOMO’s are pushing gold up and it touched the 50ema in the early hours of the morning. The doomsayers (and gold bugs) are suggesting that owning gold now is necessary as there is something big coming. Seriously, I was listening to some wowser on Bloomberg TV yesterday telling us to get long as there will be some economic and geopolitical blow up soon…right mate…ok…whatever. Resistance: 1354/1,425/1,489/ Support: 1307/1,226/1,160
David Long/ Proprietary Trading Manager