RECAP LAST WEEK
*****Please note this was taken prior to French Elections. See Patrick Reid updates on Linked In for more*******
It was all about CABLE with UK’s Theresa May and the snap election decision. The leak on Tuesday had sellers emerging but when the official announcement came CABLE soared nearly 4 big figures. We bought the dip around 1.25 but should have held it. Harry hindsight is a wonderful friend.
So from Wednesday to Friday we have ranged between 1.2750 and 1.2860 (the high around 1.2900 was quickly sold into) Many big clearing houses are saying there are lot of CORPS selling at 1.2850 but this will not last. Also, please consider the recent CFTC Commitment of Traders placing shorts at 96k versus 106k last week. This is still significant so if prices go higher a new squeeze could get triggered. For me current price action looks toppy and a new leg up above 1.2860 is needed for bulls to take it beyond 1.2900 Since Wednesday we’ve had lower highs and the key level at 1.2775 has been broken. Watch out for the Trump tax plan to move things forward but don’t expect much because the market isn’t.
EURUSD followed a firm path but not quite as prolific as CABLE as it failed to get above 1.0777 and our old friend 1.0830 is very strong also – keep these two levels in mind for the week ahead.
Oil softened and Canadian CPI was a miss helping USDCAD test 1.3500. To be honest I expected more from this pair – especially as Trump announced a new “Tax Plan” next week. At the moment the market is not impressed. USDJPY along with equities got slightly lifted on the news only to hand it back. Trumpflation fatigue sets new levels.
The French Election should provide EURUSD with a gap up to around 1.0830 Sunday night if Le Pen fails but don’t expect fireworks – do expect a slight relief. Look out for EURGBP and .8310 area because if this breaks it will help CABLE move higher.
Trump Tax plan needs to be big, “yuge” and deliverable otherwise the market will brush it aside. Keep an eye out for USDJPY to break as it is currently hugging 3 moving averages. 100/200HMA and 200DMA. This usually means a break is on the cards. Be aware.
Data: BOJ and ECB statements. EU CPI, and Canadian Retail Sales, UK GDP in focus
Please find charts and as usual Patrick Reid will be posting on Linked in.
Enjoy and discuss.
Patrick and Adam