Trades and comments 25 May – 1 June 2017
Below is a log trades and comments from 25 May to 1 June 2017, in newest to oldest (reverse chronological order).
Thu 6/1/2017 1:56 PM
Real Time AmpGFX – Bought half unit EUR/CAD
Bought half unit EUR/CAD at 1.5156; s/l 1.5073
Positions
Short AUD/USD half unit
Long EUR/CAD half unit
Will update comments later today
1 June 2017 at 9:53 AM
Real Time AmpGFX – closed EUR long
Sold half unit of EUR at 1.1210 to close long position
Position
Short half unit AUD/USD at 0.7455; s/l 0.7533; 0.7183
Comment
The ADP employment report was very strong. While the correlation with this data and the payrolls report has been weak this year, the ADP has been consistently above the NFP, and if the average is a better guide to NFP, then it points to upside risk for the payrolls report.
Wages are the key to the payrolls report, and these data have been volatile and may bounce.
As such we see upside response risk for the USD on the payrolls report.
Wed 5/31/2017 7:04 AM
Real Time AmpGFX – EUR and AUD comment
Positions
Long half unit EUR/USD at 1.1220; s/l 1.1087; 1.1478
Short half unit AUD/USD at 0.7455; s/l 0.7533; 0.7183
Comment
EUR has rallied despite the softer CPI figure. After the weaker German CPI the day earlier, this was probably not a big surprise.
End-month demand may indicate stronger allocations to Euro-equity market.
ECB meeting next week, speculation is that they will remove references to potentially easing further (implying their outlook is shifting to balanced risks).
The USD continues to struggle more generally with a rate hike in June largely priced in and the market doubting the need to tighten much further. Dove Lael Brainard voicing these doubts this week.
Some return of political uncertainty for the EUR this week with speculation about an early Italian election, but Merkel is looking more firmly in control of the German poll after displaying controlled defiance in her comments after Trump’s recent visit.
Eurozone politics continues to look more stable since the Macron victory.
US politics continues with high uncertainty, and thoughts that it may intensify as the debt ceiling issue and new spending needed from September potentially coalescing. WSJ has reported that the Fed may go back into a holding pattern after June if these issues appear to linger in Q3.
The EUR technically looks more solid, rising after the correction this week.
The key hurdle is the payrolls data on Friday. US labor market has continued to tighten this year, even more rapidly in recent months. So far this has not shown up in higher wages growth that has stalled for the last six months.
However, we again have a neutral USD position, considering we are long EUR, but short AUD
AUD has been weak on crosses with iron ore prices weaker and house price data softer. Retail sales and capex data may play a part on Thursday.
Wed 5/31/2017 5:41 AM
Real Time AmpGFX – bought EUR/USD
Bought half unit of EUR/USD at 1.1220.
Positions
Long half unit EUR/USD at 1.1220
Short half unit AUD/USD at 0.7455; s/l 0.7533; 0.7183
Thu 5/25/2017 5:49 PM Mountain Daylight Time
Real Time AmpGFX – sold half unit of AUD/USD, EUR/USD s/l raised
Sold half unit AUD/USD at 0.7455
Comment
Iron ore prices are hovering near lows. China corporate bond yields continue to creep up (Moodys downgrade may still be impacting).
China is moving into the June a period where liquidity often gets tight and Chinese rates rise. Given the pressure in China to curtail excessive lending in recent months, we may see financial risk/fear increase in coming weeks. AUD continues to trade as an a proxy for financial stress in China.
US unemployment claims remain near lows heading into the payrolls data next week, and employment data have been consistently strong in the USA.
If oil price fall sticks it would add to potential AUD downside, although a rebound is a risk.
Positions
Long half unit EUR/USD at 1.1087; s/l 1.1143; t/p 1.1355 (s/l has been raised)
Short half unit AUD/USD at 0.7455; s/l 0.7533; 0.7183