Intraday Market Thoughts

Talk and Technicals

by Adam Button
Jan 25, 2017 0:07

Fundamentals and central bankers matter less than ever in the day to day of the markets. They will dominate again in the future but for now, something else is driving markets. The Canadian dollar was the top performer on Tuesday while the yen lagged. Australian CPI is due up next.

كيفية اقتراب صفقات الدولار و اليورو، و الين و الاسترليني (فيديو للمشتركين فقط)

It's mostly about politics now. The ebb and flow of Trump and Brexit are driving the day-to-day and intraday moves. It's a tricky trade because it's not necessarily about the headlines like it was with Grexit. It's more about the sentiment and confidence.

Market currently are trying to figure out if Trump can govern effectively, or at least without any mishaps. The first weekend of the administration was a bit of a mess but the past two days have been gaffe free with some positive highlights. It shined through Tuesday with the S&P 500 hitting a record high and USD/JPY getting back on track.

In Britain, it's a different paradigm but the market wanted to see that May had a plan. Her speech last week showed she was willing to use taxes as leverage and today the Supreme Court didn't throw up any roadblocks.

That takes us back to trading. Alone, it's very tough to trade on political sentiment because it's not headline driven in the same way as data or central bank speeches. Instead it's an ebb and flow that shifts with perception and in more gradual market moves.

That's why combining it with technicals is critical at the moment. There is no data-driven confirmation, it's all in the charts, breakouts and consolidations.  Cable is showing some positive signs and the Australian dollar is in that sweet spot where it's not too hot or volatile. 

That said, we won't take our eye off of fundamentals either because, ultimately, that will guide markets in the longer term. Up next is the 0030 GMT report on Australian CPI. The market hasn't heard much from Australia so far this year as the southern hemisphere enjoys Summer. The weak jobs report was brushed off but inflation could have a more lasting impact. The consensus is for a 0.7% q/q rise and 1.6% y/y. Watch the trimmed mean, which is expected up 1.6% y/y.

Act Exp Prev GMT
CPI (q/q)
0.7% 0.7% Jan 25 0:30

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