Intraday Market Thoughts

The 200-Day Dance

by Adam Button
May 28, 2014 22:55

Some days are about news but Wednesday was about price action. JPY was the best performer Wednesday while NZD lagged but tests of technical levels were the story. Japanese retail sales are on the schedule next. 

News flow was nearly non-existent. The only headlines that trickled out showed French jobseekers rising to a record in a worse-than-expected reading along with a better tone from Ukraine, but only marginally.

The market moves stemmed from bonds where US 10-year yield sank 8 basis points to 2.43%, knocking out the October lows from when the Fed held off on the taper.

You would expect that kind of move to spark some broad US dollar weakness but other than 30 pip hiccup in USD/JPY down to 101.64 that was mostly erased, the broader market didn't follow any particular correlations, when correlations break down markets can get very volatile.

Some levels that were tested:

-          EUR/JPY touched the 200dma after successfully bouncing from it last week.

-          USD/CHF briefly rose above the 200dma for the first time in 9 months

-          EUR/USD finally closed definitively below the 200dma

-          Cable broke the 55dma and the May low

Japanese economic data is in focus in the hours ahead especially the retail trade report at 2350 GMT. This is the first direct look at the consumption tax hike and it's expected to curb sales by 11.7% m/m in April and 3.3% y/y. A better number could make the BOJ reluctant to add to easing and weigh on yen crosses.

The other number to watch comes at 0130 GMT with Australia Q1 private capital expenditures. It's always tough to get a reading on Australian investment and even though this is a laggy number, it's one to watch. The consensus is for a 1.9% decline.

In this week's Premium Insights, we affirmed our EURAUD and AUDUSD trades by issuing 3 new charts. We hold fire on EURUSD, while seeing USDJPY short of May 15 reentering the green. Our May 13 NZDUSD short hit its final 0.8500 target from the 0.8640 entry, while gold has been stopped out. GBPUSD trades remain in progress. All details are in the Premium Insights.
Act Exp Prev GMT
Retail Trade s.a (APR) (m/m)
6.3% May 28 23:50
Retail Trade (APR) (y/y)
-3.3% 11.0% May 28 23:50
Private Capital Expenditure (Q1)
-1.4% -5.2% May 29 1:30

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