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Market Wrap

Today we had one of those markets where you had to be on the right side of the trend or very nimble with your execution and trade management. Intraday traders in the equity futures markets would have had it especially tough as the price went through the levels both ways several times. The good news for the day could be put down to the US Initial Jobless Claims, at last, coming in under 700k, though a pinch of salt may be required with that one, as last week’s figure was revised higher. US GDP final reading also beat expectations coming in at 4.3%, though the sales part to the figure was down for Q4.

The USDJPY has responded bullishly to the news out of the USA and the rising US dollar and the US 10-year yields. The USDJPY should it break out of this range could test the June 2020 swing high quite swiftly and I would expect that the price would accelerate through that level up towards 110.00-111.00. In doing so I would hope that the Risk-On nature signalled by a higher USDJPY would allow the US equities to complete this corrective move lower they have been in since last week's FOMC. Retail traders on the ActivTrader platform are still bearish the pair, so when they flip bullish, that may be the time to look to close out USDJPY long trades.

The choppy nature to the last weeks’ worth of trading can be largely put down to the number of central bankers talking, it would be nice if we could condense this jawboning down to a few days and ideally not at the end of the quarter as it really makes it hard trading these markets. Tonight, we have the final Central Bank Interest Rate decision from the Bank of Mexico (Banxico), where they are expected to keep everything on hold. This morning I wrote a piece saying they may have one last chance to sneak a rate cut in, so the end-of-day trading may be exciting for the Lat-Am currencies.

The bad news came from a report out of Jerusalem that an Iranian rocket had been fired upon an Israeli container ship in the Arabian Sea as it made its way from Tanzania to India. It was reported earlier this month that an Iranian government spokesman had implied that they (Iran) were seeking to ‘Secure the open seas”. The ship itself in today’s altercation is continuing on to India.

Crude continues to print a bearish weekly candle as it unwinds yesterday’s price action. It looks like the daily support of $58 is likely to give way to maybe the $51-$52 structural support zone and a rising trend line.

Analysts were expected to deduce from this week’s Treasury auctions whether the Feds decision not to extend the Supplementary Leverage Ratio would result in a change to the bank's demand or lack of for US Treasuries. Last month’s 7-year auction was a cause for concern due to the lack of demand by foreign buyers, and it is these same foreign buyers who have been blamed for the overnight selling of Treasuries which is bringing the yields up for the 10 and 30 paper. Today’s auction at 5 pm GMT of the 7-year notes saw a bid-to-cover ratio above last month’s x2.04 but failed to meet the 6-month average of x2.28. The outcome was bullish for the Treasury yields and equities got a bit of a pop too. Gold and the Gold Miners continued their US session falls and if anything accelerated to the downside. The US dollar also put a pause to its exponential rise today having printed $92.90 for the high of the day.

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