MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
The weaker than expected earnings out from Morgan Stanley this morning have not helped to bolster investor sentiment with negative carry benefiting on the elevated risk aversion. Aussie, Kiwi and Sterling have been the weakest performers on the day with the latest IMF forecasts for the respective economies seen adding to the offered tone in these currencies. The IMF has aggressively slashed growth projections in the respective economies, while also calling for additional rate cuts out from the antipodeans. Despite the commitment from Chancellor Darling to UK job growth going forward, and despite the fact that the budget cuts were in line with expectation, comments that the lower Sterling rate would help exporters to regain competitiveness could not be ignored by traders, with the Sterling the weakest performer on the day as a result. Elsewhere, Treasury Secretary Geithner was in front of the Economic Club of Washington to provide a review of the current economic conditions. Meanwhile, on the data front, US mortgage applications showed an improvement while the house price index also came in well above consensus. In Canada, leading indicators were released and were much weaker than expected, showing a pickup in contraction in the manufacturing sector. US equities have responded quite well to any negative earnings with the market trading higher into the London fix.
ANALYSIS OF SELECTED RATES
Eur/Gbp: Today’s parabolic moves on the cross present a compelling opportunity to establish a short trade back into the overriding downtrend that has defined price action over the past several days. The daily average true range (ATR) has already been well exceeded and as such we like the idea of selling on a test of 0.9000 over the coming hours. Strategy: SELL @0.9000 FOR A 0.8800 OBJECTIVE, STOP @0.9110. Stops to be trailed to cost on a break back below 0.8950. If trade triggers and 0.8950 not broken, position to be closed out at NY close (5pm ET) on Wednesday. Recommendation to be removed if not triggered by NY close on Wednesday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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Joel Kruger publishes 6 daily pieces:
“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)
“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
Monday-Friday (between 6:30am-7:30am EST)
“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)
“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
Monday-Friday (between 10:30am-11:30am EST)
“Scandi Daily” – A Specialized Daily Fundamental and Technical Overview of the Nordic Currencies. (This report is only distributed through email. Please contact Nordic@fxcm.com if you would like to be added to distribution.)
Monday-Friday (between 11:30am-12:30pm EST)
“Daily Classical” – A Daily Technical Overview of the Major Currencies.
Monday-Friday (published between 2:00pm-3:00pm EST)
