Forex Market Commentary
The US Jobs report (NFP) today Friday was the lowest jobs growth in the last 6yrs with a meager increment of 38k. Unemployment ha snow changed from previous 4.9% up to 5%. That fed into all markets across the board. The USD dropped 200 pips on the day and the USDX is now back at the 93 level and gold shot up some 30 plus points. But overall traders are missing the point that economies and data move in time lags and really we are observing the worst of the winter season 2016. We have to also consider that on Tuesday this week the US ISM Manufacturing Index saw a positive expansion in May 29016 for the 3rd consecutive month. Another beneficial point to consider was the failure of OPEC to agree to a quota cut system in Vienna this Thursday which almost guarantees the continued free for all pumping of crude oil which for the moment keeps crude oil prices stable.
Concerning Brexit we are now entering a period of uncertainty in the run up to the UK vote and large traders are starting to take OTC short positions on the GBP and EUR/USD. We shall now start monitoring volatility in these 2 currency markets.
Concerning Brexit we are now entering a period of uncertainty in the run up to the UK vote and large traders are starting to take OTC short positions on the GBP and EUR/USD. We shall now start monitoring volatility in these 2 currency markets.
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 93.904 -1.641 -2.11%
This was a correction and a sell-off but not indicative of the beginning of a downward trend. it is not a key reversal. The USD is set to for further appreciation with a possible US interest rate hike 25 basis points at some point as Spring data starts to come out. Longs are now in play.
EUR/USD 1.13660 +0.02095 +1.88%
EUR had a good day due to losses in USD but outlook is short. We are now approaching June and the ECB is going to face increasing pressure around the UK vote later in June. Hedge funds will be looking to capitalize on this pressure. Shorts are in play and a Brexit could plunge the EUR.
GBP/USD 1.451600 +0.009550 +0.66%
The global investment community is now starting to get nervous about the potential of Brexit. Shorts are now in play in June as hedge funds will seek to pressure Sterling and then switch to long on the assumption that a Yes vote appears. However a 'leave' vote could spell a disaster for the GBP and EUR.
10 yr US T-Notes 131.015625 +1.140625 +0.88%
Bonds had a good day due to dollar uncertainty but overall in the longer term the bond markets especially the 10 and 30 year look vulnerable once the US economy expands in the Summer.
Crude Oil 48.84 -0.33 -0.67%
Oil production will continue to keep up its record highs which keeps a lid on prices. were now looking at a channel of 45-55. Neutral at the moment.
Gold 1244.47 +33.04 +2.73%
Gold clawed back some of its losses over the last 2 weeks due to dollar weakness. However this is not a key reversal and shorts will come back into play ahead.
SP500 2099.13 -6.13 -0.29%
Well we haven't really gone anywhere considering last Friday the SP500 closed at 2099. What is evident is an underlying strength on the back of weak data so a sell off is not on thee cards. We did see the 2100 test this week but the time is not right to go outright long.
Dow 17807.06 -31.50 -0.18%
It hasn't been a good week on mixed data but the Dow has held it's ground. The recent dip has shown some good entry points for global funds to enter the US stock markets.
VIX 14.75 - 0.07 -0.51%
ViX has reduced from from 15.40 to 14.75 over the week. Options volatility in the equities markets is very important to understand; the lower the VIX the higher the potential for underlying price growth.
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 93.904 -1.641 -2.11%
This was a correction and a sell-off but not indicative of the beginning of a downward trend. it is not a key reversal. The USD is set to for further appreciation with a possible US interest rate hike 25 basis points at some point as Spring data starts to come out. Longs are now in play.
EUR/USD 1.13660 +0.02095 +1.88%
EUR had a good day due to losses in USD but outlook is short. We are now approaching June and the ECB is going to face increasing pressure around the UK vote later in June. Hedge funds will be looking to capitalize on this pressure. Shorts are in play and a Brexit could plunge the EUR.
GBP/USD 1.451600 +0.009550 +0.66%
The global investment community is now starting to get nervous about the potential of Brexit. Shorts are now in play in June as hedge funds will seek to pressure Sterling and then switch to long on the assumption that a Yes vote appears. However a 'leave' vote could spell a disaster for the GBP and EUR.
10 yr US T-Notes 131.015625 +1.140625 +0.88%
Bonds had a good day due to dollar uncertainty but overall in the longer term the bond markets especially the 10 and 30 year look vulnerable once the US economy expands in the Summer.
Crude Oil 48.84 -0.33 -0.67%
Oil production will continue to keep up its record highs which keeps a lid on prices. were now looking at a channel of 45-55. Neutral at the moment.
Gold 1244.47 +33.04 +2.73%
Gold clawed back some of its losses over the last 2 weeks due to dollar weakness. However this is not a key reversal and shorts will come back into play ahead.
SP500 2099.13 -6.13 -0.29%
Well we haven't really gone anywhere considering last Friday the SP500 closed at 2099. What is evident is an underlying strength on the back of weak data so a sell off is not on thee cards. We did see the 2100 test this week but the time is not right to go outright long.
Dow 17807.06 -31.50 -0.18%
It hasn't been a good week on mixed data but the Dow has held it's ground. The recent dip has shown some good entry points for global funds to enter the US stock markets.
VIX 14.75 - 0.07 -0.51%
ViX has reduced from from 15.40 to 14.75 over the week. Options volatility in the equities markets is very important to understand; the lower the VIX the higher the potential for underlying price growth.
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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