- Greek headlines fail to shift FX markets
- USD sales not backed by underlying data
- USD/CAD still retains legs to the downside
Overnight saw a fairly lacklustre Asian market leave the European session with little to go on as we walked in this morning. Further noise about what Greece is likely to do (or not do) on the back of finance minister Yanis Varoufakis' interview did very little to change the landscape.
Persistent USD sales are what’s colouring the market presently and at the risk of repeating myself, I can’t see any justification for the pace and vehemence of recent trade in light of a complete absence of confirming data and/or policy signals.
Rather, consolidation persists and last minute speculators will provide the cannon fodder for a fast reversal of fortune tomorrow night.
But enough of that for now. This morning saw a poorer UK GDP print that was only good for a brief, 40-odd point move lower in the cable. This once again proved the point that there is a concerted, irrational) desire to rid coffers of USD in the near term. So much so, in fact, that not only was the poor data move reversed but further sterling upside has been seen since.
(In fact, only the whisper of Middle Eastern names sat on the offer into 1.5300 provided some brief respite.)
In line with the USD move everywhere, stops in the EUR/USD as well as AUD/USD have been taken out and the Little Battler trades surprisingly firmly. To the point, in fact, where the narrative is now shifting toward a more hawkish Reserve Bank of Australia, especially in light of the meeting to be held next week. It's genuinely laughable.
On the other hand, something like the USD/CAD still has legs to the downside irrespective of what the USD does more broadly. Trading at lows around 1.2050/60 as I type, there is a more than material risk of seeing the 1.1800 handle in coming days.
The justification in my mind here is oil, which has yet to put in a top for the current suckers rally. Also? Well there is a certain central bank governor who, when grilled about the state of the Canadian economy and future rate path, may just surprise positively with his rhetoric.
For the sake of transparency I’ve not got a great deal on the books presently outside of an "angry" long in Cable, which is only there for fear of missing out and spiting my own patience whilst waiting to fade this stupid move higher.
We (and the rest of the market) await tomorrow’s US GDP print and of course the FOMC statement to give us some near-term guidance.
In the interim and as always, helmets on and good luck out there today.
— Edited by Michael McKenna
Ken Veksler is director of Accumen Management