Intraday Market Thoughts

Between a Rock and a Cliff

by Adam Button
Nov 19, 2012 0:55

The fiscal cliff is the dominant theme in markets but signs are beginning to emerge of a compromise. Last week, the Swiss franc was the top performer while the yen lagged badly. CFTC weekly positioning data showed a fresh wave of euro shorts. The 2 Premium charts on cable explain the reason why 2 longs are in progress, 1 of which is nearing the final target. 1 of 2 USDJPY Premium Insights and the remaining CADJPY hit all targets. The 3 charts on USDJPY cover more ground on the pair. See more below.

On Friday, a WSJ story suggested the White House was in talks to replace the year-end spending sequester. Later, Republican leaders put tax hikes on the table as part of a deal, or at least a short-term deal.

The reports boosted sentiment, sparking turnarounds in the commodity currencies. USD/CAD hit a three-month high at 1.0056 before reversing

back to parity. AUD/USD tripped stops below 1.03 and then climbed to 1.0350. The S&P 500 gained 0.5%

USD/JPY was the focus of the week as it rallied despite the risk off tone. Japanese elections were the trigger for the move but market participants have been waiting for opportunities to buy USD/JPY for months. They have been burned many times before so the patient money may wait for definitive signs.

One of those signs could come on a break above 81.50. That level capped trading on Thursday and Friday and is also the 61.8% retracement of the March-Sept selloff. A break points to an eventual re-test of 84.00.

CFTC Commitments of Traders

The weekly data on speculative positioning showed a renewed emphasis on euro shorts. The June cycle low was -211K so there is still plenty of room on the downside. Yen shorts covered but likely jumped back in late in the week.

EUR -84K vs -67K prior

JPY -30K vs -40K prior

GBP +8K vs +19K prior

AUD +68K vs +60K prior

CAD +66K vs +75K prior

NZD +19K vs +19K prior

The data is collected at the close on Tuesday.

Gold survived one of the 2 stop and is nearing the 1700 figure. The 2 Premium charts on cable explain the reason why 2 longs are in progress, 1 of which is nearing the final target. 5 new charts were added to last nights Premium Insights, including quarterly chart of USDJPY. Timing the new and existing EURUSD insights as well as new GBPUSD ideas. Direct Access to today's Premium Insights is found here: Non- subscribers can have a free trial here:



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