USDX and Equities Recover Over EU Holiday May 4, 2015
USDX Recovers To Hold Above March Lows
It looks as though the BTFDippers came back late last week to hold the USDX from breaking below the March lows which also saw US Equities recover and bring the Dow positive for the year. The S&P has fared much better never going negative for the year. Having said that we do have NFP at the end of the week so that could change if for any reason they expect another massive failure in the US jobs market but with a few trading days ahead of the release it wouldn’t surprise me to see them push the USD and stocks higher to get more wiggle room just in case.
EUR/USD Shows Intraday Push Down
The intraday push down on the EUR/USD does leave me slightly bias for the short today but having no cooperation from Europe last Friday does make me cautious along with the fact that it was well short of the average daily range. It would be best to see the conviction during London today and take a backside trade short on the retest of 1.1173 or wait for a test up to 1.1277 even though the 1.1207 level is valid. If by chance I see conviction above 1.1216 then I will be open for the long and prefer an entry at the lows around 1.1173 but open for a backside long to the Asian highs with the right price action and set up.
GBP/USD Gets Beat Down After Big Mfg. PMI Disappointment
I have to admit the beat down the GBP/USD got last Friday seems a bit unwarranted even with the miss on the Manufacturing PMI release. Although it was big it still held above 50 which does still show expansion even if it would only take another large disappointment to crash below. Normally I would expect some sort of pullback before they run it south again but the efficiency of the move does lessen that somewhat. I will be more open on direction today looking to either short from a test to 1.5205 if I miss a long from either the Asian highs or lows after seeing some conviction above the Asian highs during the London session.
EUR/JPY Pushing Up On Yen Weakness
The EUR/JPY continued the extended push to the upside thanks to Yen weakness. The BOJ didnt decide on expanding the QE infinity but they are losing ground economically so it seems that they will even though it hasnt helped. They have thrown in the kitchen sink so there is nothing left but to appease the political elites until it all blows up in their face. Of which could be a long time considering how long they have held out so far.
Today I will be bias for the long here first looking at the Asian lows during London but if they can push it up decent during Asia then the 134.40 is valid. I will still be open for the short but will need conviction below the Asian lows before the probability rises enough to short for a test to 133.73. Otherwise a short from 135.11 is valid with the right set up showing they cant find buyers but I would prefer to be long and waiting for a break if it does run there.
Forex News Today
Todays calendar has Manufacturing PMI data from Spain, Italy, France, Germany and the Euro Zone as a whole. Expectations are flat for the most part but if the UK figures last week show any sign of how Europe as a whole is doing then a disappointment has better probabilities. I find it hard to believe that the UK can decouple from Europe regarding trade even if the EUR/GBP seems to think so for the time being. If EU or German figures do manage a surprise up the EG move will continue.
The US has Factory Orders expecting a substantial rise so in setting the bar that high a disappointment should have a larger USD move while it will need a bigger surprise to create USD strength that isnt baked in yet.
Asian session traders have a RBA rate decision tomorrow expecting a rate cut so any AUD short today could be held overnight to try and capitalize on that. Since they did surprise at two of the last three meetings they chance they do as expected this time is much better.
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