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Euro Drops On Draghi Comments, All Eyes On Friday's NFP

By Dec 06, 2012 10:09PM GMT Add a Comment
 
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Well we did say we expected some risk off and shorts in December, and Draghi seriously helped us out with that one.

So lets recap on what's been a pretty weird day for the markets.

Morning started with better-than-expected Aussie unemployment over night, which provided a nice base for risk currencies and, obviously, the Aussie.

Then we start to stagnate before the BoE and ECB decision.
However as we stagnated, rumours of Mario Monti stepping down hit the wires.

As always, the BoE was a rather nonevent. I like the BoE, decisions seem logical and don't tend to come out with many surprises.

Onto Draghi, rates kept as is but a rather down beat press conference; very little new but nothing that positive. Questions although interesting provided little additional cover.

I said last night that it looked like people were looking for an excuse to short, as the press conference ended and participants reflected on Draghi's comments the markets started to fall.

December volumes can often lead to some big moves and this was no exception breaking support in the Euro and falling to the 1.2950 level. This played well for our EURCAD and EURSEK shorts.

I mentioned Monti earlier, well as the day progressed this moved from a rumour to more substantiated...he now goes to see the Italian president tomorrow to discuss the future...more event risk.

Markets then died during US lunch as news of the US senate voting on whether Obama has the power to raise the debt ceiling.

Eventful day, but played well for our positions.
We are now set up for another big day tomorrow with UK industrial production and NFP scheduled releases but also watch for further US fiscal cliff, Italian Prime Minister and Debt ceiling comments.

So how am I looking to position myself into tomorrow. Well firstly, locking in some of the profit on the various positions however the strategy remains the same, we could see a bounce after such an aggressive move lower but I still like the idea of December shorts.

As For Tomorrow, Here's My Position
Markets really don't like Political uncertainty. With Italy such a key factor in Europe, the Monti situation could be a major driver for the Euro. Markets will want to see this resolved.
Analyst views on NFP are extremely wide ranging from a high of 145k to a low of 15k with the average around 86k, this could easily provide some serious chop.

EUR/USD
Euro dropped like a stone today thanks to Draghi's comments. Potential for a small bounce tomorrow but I like this for a move lower. Be careful with the NFP tomorrow.

EUR/USD Daily
EUR/USD Daily

With my theme of showing the EUR/USD weekly this week, I thought I would continue. This pair has a large amount of room for a further move lower, if we can hold these sorts of levels we would put in a nice short entry signal on the weekly as well.
EUR/USD Weekly
EUR/USD Weekly

GBP/USD
Like the majority of markets the pound pushed lower today, although held ground slightly better. We broke slightly below a support level but not significantly, if we push lower again tomorrow we open the door for a larger move towards the 1.5900 level.
GBP/USD Daily
GBP/USD Daily

AUD/USD
Aussie pushed higher on good unemployment data then retraced. This pair continues to defy gravity, I continue to stand aside on this pair.
AUD/USD Daily
AUD/USD Daily

USD/JPY
Dollar yen remained slightly static today, we look to be putting in another test of the upper resistance. I still like this pair for a move lower, but don't believe the short offers good risk reward and therefore will be looking for long entries towards the 81 handle.
USD/JPY Daily
USD/JPY Daily

GBP/JPY
Yen weakness continued to shine through even given the rather large down day, thus this pair still maintained relative strength. Like a few of the other pairs I still like this lower but its continuation to hold above support reduces the probability of this trade.
GBP/JPY Daily
GBP/JPY Daily

EUR/SEK
Pair continued to move lower today, not quite with the gumption of the other Euro pairs but is still moving in the right direction.
EUR/SEK Daily
EUR/SEK Daily

EUR/CAD
Moved significantly lower today hitting our T3 target, profit has now been locked in and I will let this one run to see how far it can get.
EUR/CAD Daily
EUR/CAD Daily

Weekly chart also looks interesting
EUR/CAD Weekly
EUR/CAD Weekly

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