Forex Market Commentary
Brexit has the potential to unwind the European Union and that cannot be an understatement and in this manner markets are becoming very nervous. looking at the US Fed Fund markets there is now only a 5% chance of a rate hike in June. Although the NFP data was not encouraging a conflicting JOLTS report showed that job openings have increased last month to 5.788m job vacancies increasing form a previous 5.6m. Hence the reluctance of traders to take short positions against the USD.
The International Monetary Market (IMM) at the end of this week shows that the flow of money between currencies with large financial institutions is increasingly becoming net short in open positions in the EURO and GBP.
The International Monetary Market (IMM) at the end of this week shows that the flow of money between currencies with large financial institutions is increasingly becoming net short in open positions in the EURO and GBP.
Please turn to Bloomberg for global bond yields:
http://www.bloomberg.com/markets/rates-bonds
In my global macro analysis the major barometers I am look at for 2016 are as follows:
USDX 94.648 +0.582 +0.75%
Nerves are starting to rattle and the USDX fell more than 2 points last week only to hit a wall of supporting reality. This was not a correction and a sell-off but only indicative of the huge strength waiting for an upward momentum. though the jobs report was very weak a hike of 25 basis points at some point will come into play. Longs are now in play.
EUR/USD 1273.815 +5.890 +0.46%
EUR had show some strength due to Dollar weakness and briefly hit the 1.14 but came under pressure. Shorts are in play and a Brexit could plunge the EUR right down to the 1.05.
GBP/USD 1.425500 -0.019180 -1.33%
300 pips down on the week and the global investment community is getting very nervous about the potential of a Brexit. Shorts are now in play in June as hedge funds will seek to pressure Sterling all this coming week and then switch to long on the assumption that a Yes vote appears. But a 'leave' vote could spell absolute disaster for the GBP and EUR.
10 yr US T-Notes 131.500000 +0.406250 +0.31%
Bond gains last week have eroded as USD support came in strong. In the longer term the bond markets especially the 10 and 30 year look vulnerable once the US economy expands in the Summer. Exploratory Shorts now in play.
Crude Oil 48.90 -1.66 -3.29%
problems in Nigerian production saw WTI spike to 50 at one point. A channel of 45-55. Neutral at the moment.
Gold 1275.9 +4.0
Gold was the big mover of the week coming up some 30 point on the cash futures. Outlook is neutral and the bounce is expected to run out of steam with lack of supporting fundamental data.
SP500 2096.07 -19.41 -0.92%
Once again a narrow trading week with the market unwilling to break out above 2100 and consolidate and unwilling to ease back down. Outlook neutral
Dow 17865.34 -119.85 -0.67%
No breakout above the 18,000 doesn't mean that the market has run it's course and there will be a sell off. Large traders are scouring equities for serious market entry points so there are a lot of buy opportunities in play. Outlook neutral.
VIX 14.75 17.50 +2.03 +13.09
ViX has increased from 14.75 to 17.50 with uncertainty creeping in to equities options reflecting a nervousness to hold at the current level shy of the 2100 we need to watch this closely because any increases in the VIX could lead to an equities sell off again.
Always use your own better judgment and try to build a picture of trade logic combining both technical and fundamental understanding.
http://www.bloomberg.com/markets/rates-bonds
In my global macro analysis the major barometers I am look at for 2016 are as follows:
USDX 94.648 +0.582 +0.75%
Nerves are starting to rattle and the USDX fell more than 2 points last week only to hit a wall of supporting reality. This was not a correction and a sell-off but only indicative of the huge strength waiting for an upward momentum. though the jobs report was very weak a hike of 25 basis points at some point will come into play. Longs are now in play.
EUR/USD 1273.815 +5.890 +0.46%
EUR had show some strength due to Dollar weakness and briefly hit the 1.14 but came under pressure. Shorts are in play and a Brexit could plunge the EUR right down to the 1.05.
GBP/USD 1.425500 -0.019180 -1.33%
300 pips down on the week and the global investment community is getting very nervous about the potential of a Brexit. Shorts are now in play in June as hedge funds will seek to pressure Sterling all this coming week and then switch to long on the assumption that a Yes vote appears. But a 'leave' vote could spell absolute disaster for the GBP and EUR.
10 yr US T-Notes 131.500000 +0.406250 +0.31%
Bond gains last week have eroded as USD support came in strong. In the longer term the bond markets especially the 10 and 30 year look vulnerable once the US economy expands in the Summer. Exploratory Shorts now in play.
Crude Oil 48.90 -1.66 -3.29%
problems in Nigerian production saw WTI spike to 50 at one point. A channel of 45-55. Neutral at the moment.
Gold 1275.9 +4.0
Gold was the big mover of the week coming up some 30 point on the cash futures. Outlook is neutral and the bounce is expected to run out of steam with lack of supporting fundamental data.
SP500 2096.07 -19.41 -0.92%
Once again a narrow trading week with the market unwilling to break out above 2100 and consolidate and unwilling to ease back down. Outlook neutral
Dow 17865.34 -119.85 -0.67%
No breakout above the 18,000 doesn't mean that the market has run it's course and there will be a sell off. Large traders are scouring equities for serious market entry points so there are a lot of buy opportunities in play. Outlook neutral.
VIX 14.75 17.50 +2.03 +13.09
ViX has increased from 14.75 to 17.50 with uncertainty creeping in to equities options reflecting a nervousness to hold at the current level shy of the 2100 we need to watch this closely because any increases in the VIX could lead to an equities sell off again.
Always use your own better judgment and try to build a picture of trade logic combining both technical and fundamental understanding.
Pieter Bergli - Trader X16
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