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AUDUSD - Volatility Contracting Ahead of RBAThe AUD has seen a very tight range last week, across the board. Tomorrow we will get the RBA's decision and that will likely be the catalyst for a pickup in volatility. We believe the odds are for a dovish hold...which might disappoint the markets. Last week RBA Governor Lowe noted the difficult external environment, but he also repeated three times that the Australian economy was at a "gentle turning point", suggesting he was not going to rush into further easing after the June and July rate cuts. So despite some worse employment figures, it seems like a cut is by no means a done deal. Look to buy AUDUSD on a disappointment of the market's rate cut expectations.
by Sam_Eder
1
AUDCHF- Shorts Favoured after SNB keeps rates on hold!While other central banks are easing, the SNB keepT rates on hold, reiterating Swiss Franc remains overvalued, Adjusting the basis for calculating negative interest. The reaction has been a consolidated push higher for the CHF and we like selling AUDCHF on the back of this news since all big banks in Australia are now expecting the RBA to cut rates at the next meeting. We like short position in AUDCHF looking for 6660 initially.
Short
by Sam_Eder
1
EURUSD - Remain Flat Ahead of ECB, then Act AccordinglyThe ECB is expected to do 4 things: cut rates by 0.1% to -0.5% (1), with the mitigating measure of tiering (2). Furthermore, the market expects and extension of forward guidance (‘at present or lower…well past the horizon of net asset purchases’) (3); the market expects the reintroduction of QE for 12 months at a pace of 30-40 bln per month (4). The market is expecting a bazooka…but the Shadow ECB council suggested that Draghi will not be able to deliver the full package. Since the market is expecting a bazooka, obviously the sensitive side is the hawkish surprize. DO NOT TRADE AHEAD OF THE DECISION. Wait for the evidence and then act. We will update this chart as appropriate, after the decision.
by Sam_Eder
Dow Jones - Trade the Data into NY! Eyes on Dow and risk appetite today into the NY session. It's going to be an important two days for U.S. stock investors. A slew of economic data from payrolls to services PMI figures to durable goods orders have taken on even more significance, after the unexpectedly poor reading from the ISM purchasing manager's index this week. With many investors pointing to a strong labor market as a reason for their preference for U.S. assets, traders will be particularly sensitive to the ADP employment data today and of course non-farm payrolls Friday. The ISM's gauge of factory employment fell to the lowest since March 2016, which suggests there could be pressure on manufacturing payrolls. Data-driven moves are the key today.
CBOT_MINI:YM1!
by Sam_Eder
EURCAD - Sell Small Position at Market after BOC!Despite the rally in risk assets, the negatives that sent the EUR lower have not changed. The economic gloom in Europe remains and, despite the north-south divide on the ECB board, many still expect policy easing, if not in September than before year-end as Christine Lagarde ascends to the presidency. Thus EUR/CAD is likely to continue to trend lower. Larger option expiries above current spot should help to cap too. At the same time, the Bank of Canada came out with a less dovish statement yesterday, which should boost the Loonie in the near-term. Sell a small position at market as we are breaking through the previous support zones from August.
Short
by Sam_Eder
GBPUSD - Stay Cautious, Pound at the Mercy of HeadlinesGBP in the spotlight. The Pound bounced from sub-1.2000 levels to end higher on the day after PM Johnson lost his working majority in the House of Commons (following a defection) and after the opposition defeated the government 328-301 and seized parliament. The coming hours will be crucial for the pound - watch for headlines surrounding a vote to call for a further Brexit delay, and potentially, PM Johnson calling for a snap election.
by Sam_Eder