Macro Morning

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marketmorning

by Chris Becker

My normal routine, if you can call trading 16 hours a day normal, around monthly FOMC (and NFP print) meetings is to get up a bit earlier with trigger fingers ready awaiting the press conference.

Since I needed more sleep last night (blogging takes a harsher toll!) I set some limit orders and went to bed – and what a nice surprise to wake up to this beautiful volatility!

Here it is in a nutshell:

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  • The Fed decided to taper again, $10 billion less purchases per month, plans to exit QE by end of year, no rush to raise rates though
  • Growth forecasts were reduced, but Fed reckons recovery is on track, unemployment getting better
  • New Fed President Janet Yellen at the press conference confirmed market perception of her: dovish
  • The arse fell out of the USD – everything else by proxy, rose: Aussie, Kiwi, Sterling, Yen, Euro
  • US stocks to the moon – (European markets were closed but futures rallied)
  • Bonds moved up, but like precious metals it was anemic (gold only up $6 or so)

Here’s the damage in greater detail:

AUDUSD blasts up through its funk and hits the 94 handle:

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The trend for Aussie on the dailies returns to a tight range between 92 and 94.5, but break of resistance yet – this might be a good time to load up on structural shorts.

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Kiwi, Sterling blast through, although I think the trend for the former is more supportive than the latter as resistance at 1.70 beckons:

nzdusd-h4-vantagefx-pty-ltd gbpusd-h4-vantagefx-pty-ltd

G0ld had a solid move on the hourlies, but wasn’t really a big mover in relative terms, neither was oil which drifted downwards from its 5 day high:

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The S&P500 was up almost 1% on the day, almost all of it of course in the hours surrounding the press conference, to a new record high, alongside the other US bourses – chart courtesy of ZH:

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Here’s the daily chart of the S&P showing the very ominous rising trend lines – or fans – as this “non-bubble” accelerates, on its way to 2000?

SPX

Lastly, the CBOE VIX, the fear gauge, tumbled to record lows

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The Asian session this morning is going to rock as traders wake up and digest the news, as they always do following the lead from the US.

Amid all this there’s not much solid economic data to be released today except the New Zealand Q1 GDP print at 8.45 which could wobble the Kiwi’s rise against, well, everything.

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Later tonight it will get more interesting for the UK economy watchers as retail sales for May will be released, then US initial jobless claims later on in the session.

The takeaway for Australian investors is your short term rate of return is more determined in New York, than say Qingdao port or the price of houses in Sydney. Don’t fight the Fed!