RECAP LAST WEEK
It was a full week of data but most of it in-line. A few desks (including me) thought weak PCE personal spending would have seen the USD sell off however it took it on the chin. That resilience lasted just over a day then USD decided to give in – EURUSD and CABLE the main recipients of this weakness. The former closed at 6 monthly highs of 1.0998 all primed and ready for a Macron victory Sunday night. If you’re trading Asia be careful as it’s not for the inexperienced. We are set to open 1.1020
NZDUSD and AUDUSD followed Iron ore and gold due south. Even the broad USD sell off gave them little respite. Look for higher lows to see if we have a bottom yet but please be careful as the selling has been relentless.
On Friday NFP headline was ok but Wages ruined many a good P+L <.2 is not a great figure
- EURUSD after the Macron win. Like most things political I expect the “buy the rumour sell the fact” could work for traders who like a fade. Let’s see what Asia closes with. Fundamentals in EU are mixed and Core CPI not out of the woods yet. The jury is still out.
- QT is the new QE but in reverse. June could be when FOMC raises the balloon to see market temperament. The 2013 Taper Tantrum still fresh in the markets minds.
- June hike priced in FFF at 97% which means there could be 4 hikes this year. However, this goes against the DOTS which point to 3 hikes. Some think a lower projection for the current NAIRU at 4.7% should help ensure this. July is more likely.
- In other words The FOMC is behind the curve. If data disappoints June will be priced out and EURUSD will fly.
- BOE Thursday should be dull as no change to votes expected but US CPI will be eyed
That’s it my friends. Trade safe and please see charts as usual. Any questions please contact Patrick or Adam