Whilst most media headlines are focused on MH370 the Crimean fiasco is still moving the financial markets around. The volatility in stocks is quiet pronounced with the Euro and US markets spiking higher and VIX retracing and I bought into the S&P500 yesterday morning. Safe haven flows came off the boil as the Euro/US sanctions against Russia came out as rather weak and seen as no real threat to markets, so Gold and oil fell from the highs and Swiss & ¥ weakened. It seems that Russia will get what it wants and at very little cost, the West doesn’t know how to fight the democratic fight when the majority of Crimean’s want Russia. Unless Russia tries to take all of Ukraine I think the influence of this geo-political flashpoint will dissipate now.
The next big headline or market moving moment is the FOMC on Thursday. AGSP3 will look to taper another 10B of their current spending. She did voice the threat that she would taper the taper if economic data was weak, however we haven’t seen any weak data since the last FOMC so I expect it them to move on it. The markets will pause and slow in the run up to the release though so be aware of this if trading in greenbacks.
DATA HIGHLIGHTS TODAY – AU Monetary Policy minutes. German Economic Sentiment. Canadian Manufacturing. US Building permits & CPI. BOE Carney speaks.
AUDUSD – I am still on the fence for the Aussie (although I am long the AUDCAD) as it continues to flirt with the Head & Shoulder neck line. I must see a break higher and on the retest will take it long for the 800pip run. Until then though I will remain on the sidelines. Some of this buying strength lies in safe haven flows and whilst the jobs data was good last week I am yet to be convinced of our underlying economic performance to warrant mid to high 90¢’s. Resistance: 9085/9167/9300 Support: 8900/8654/8550/8300
EURUSD – Slowly inching higher and I am looking for that moment of exhaustion to take the pullback, although there is no real resistance until 1.42 area. Resistance: 14050/14260/14320 Support: 13488/13420/13266
GBPUSD – I have taken this trade from the lower time frame as it turns on 1.66 to rotate higher. The daily is a doji bar, but it is also a HHHL so the buying momentum is visible if only just. Resistance: 16785/1.69/1.70 Support: 16300/15950/15830
NZDUSD – Has held onto the trend whilst momentum is in exhaustion zone, like the Euro I would be looking at trading the pullback once we get the signal. Resistance: 8585/8600/8676 Support: 8090/7925/7714
USDCAD – Has recently had two runs up and off the 50ema, each time producing a lower high and forming a triangle with the higher lows. That in itself is contradictory as the triangle would indicate a move higher, whilst the weaker highs indicate a move lower. Like the Aussie, I will be on the fence for the time being. Resistance: 11170/11233 Support: 10859/10715
USDJPY – One could draw trend lines all over this pair….if one was so inclined. That however would not give you a clear picture of what is going on in the yen. The battle at the moment, and why no clear trend is appearing, is between the BOJ peddling a weaker yen policy and the safe haven flows from Crimea and to a certain extent from the Chinese. With the Crimean news abating this should look to test 105.57 in coming weeks. Resistance: 105.57/108.35/110.50 Support: 100.62/100/99.80
GOLD – A large engulfing seller bar, not exactly the ideal trade setup and I might miss the opportunity but better to walk away then get caught short (sic). Resistance: 1427/1480 Support: 1,265/1,180/1,040