Macro Morning: Shorty

By Chris Becker

Risk markets continued to focus on the Greek debt crisis, with talks last night at the Eurogroup meeting breaking up on plain speaking by the Greeks. Coupled with a holiday in the US, markets provided little opportunity apart from positioning.

The DAX retraced around 0.4% off its new record high, setting up a short term short swing, but the longs are still in control here:

Chart DAX30, H4, 2015.02.16 21:45 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

The FTSE acted similarly, off 0.2% in a mixed session with other European bourses down, the broad Eurostoxx index down 0.4% and futures a little lower this morning.

S&P500 futures have followed in lockstep, down around 0.3% on very light trading in the last hour or so, but still on track for new highs:

Chart SP500, H4, 2015.02.16 21:48 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

SPI futures are actually up a little this morning, but these are weak leads for the ASX200 on the open, although ANZ has just reported and reaction to the RBA minutes before the Asian lunch session will be interesting.

Overall, stocks remain in flux until the Greek debt crisis is resolved and the leads will come from the DAX in the main, which is way over-optimistic in my view. There is a great shorting opportunity shaping up here, and I note the huge correlation with Australian banks/financial sector to the DAX still remains….

In the FX world the US Dollar Index (DXY) finished up slightly, mainly due to the Euro, which weakened against pretty much everything out there. If we look at the longer term 4 hourly chart of the EURUSD, the descending triangle pattern forming since the Greek election rebound is bearish with significant resistance at the 1.15 handle and support at 1.126 the target in the current swing down. The Euro is poised at its point of control at 1.135 and I expect some volatility in the days ahead here:

Chart EURUSD, H4, 2015.02.16 21:55 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

After breaking free of the 1.54 handle, Pound Sterling has swung down in sympathy with the Euro and in typical Monday daily behaviour, and I would suggest this is short term as it stalled at support at 1.5350:

Chart GBPUSD, H4, 2015.02.16 21:58 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

The Australian dollar frustratingly moved nowhere overnight, given lack of commodity trading and remains at 77.70 against the USD, although I note it continues to fall to parity with the Kiwi (maybe just in time for my overdue holiday next month? Huzzah.)

After gapping down slightly on the Monday morning open, USDJPY has slipped further into its support/former resistance and previous breakout level area at 118.45 or so. I still maintain the deceleration pattern has largely finished and further strengthening of the USD is likely from there:

Chart USDJPY, H4, 2015.02.16 22:02 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

In commodities, the big technical moves in iron ore and indeed coal are being overlooked compared to the natural volatility of the oil markets. This could translate into larger upside in the weeks ahead as the “dumb” money looks in, but I would contend such a push needs to be confirmed by a breakout in WTI above resistance at $54USD per barrel, or this remains in short squeeze territory.

Both cash markers in oil were closed overnight with WTI futures oscillating around the Friday close at just below $53USD per barrel.

The data today in Asia starts with ANZ weekly consumer confidence this morning and then RBA minutes just before lunch alongside Chinese house prices. In Europe apart from the Greek shenanigans its all about the UK CPI print which should put a rocket under Pound if positive and the very closely watched German ZEW survey.


Comments are hidden for Membership Subscribers only.