Here’s The Good News…
FX volume was half the
average on Tuesday, volatilities in FX options continue to sink
lower, no clear technical trends. That is the story and there is not a darn
thing we can do about it. The good news is that the ranges will be broken, but
unlikely ahead of June 30th. Range trading dominates, but that is a tough task
at present.
The USD/JPY was the most interesting in Tuesday
in terms of movement. Despite the Dollar firming and most other Dollar based
currencies hardly reacting, the Yen sold off pretty well as support at 108.50
held and comments from the BoJ regarding intervention likely triggered the
closing of some of the speculative positions established last week. Comments
regarding intervention from the BoJ have been non-existent in recent months, so
Tuesday’s comments reminded traders of the massive interventions seen in the
first quarter of this year.
“Mizoguchi:Â “We don’t comment
on short-term currency market moves, but we are always watching the market.”Â
Tanigaki:Â “We are watching
daily FX rate moves closely, but currency rates seem to be moving in a stable
manner on a whole. Our basic stance remains unchanged in that we are watching
out for rapid currency moves deviating from economic fundamentals.”
There was some pretty decent movement overnight,
albeit the “knee-jerk” type which is typically not obvious until after the fact.
Nonetheless, some technical levels were tested and are worth noting.
The DXC broke through recent consolidation lows at the 89 level, only to shoot
back higher to 89.55 moments later. This took the EUR and GBP down rather
sharply. The GBP continues to be the laggard in here with critical support at
1.8150 and 1.8100.
The economic data from Japan continues to support my longer term view that the
USD/JPY will push towards 105 in the days and weeks to come. The Tankan Survey
due out later today (4:50 PM PDT) should reinforce this view. For now, the
activity in the markets is not allowing any sustainable moves up or down, if
this number exceeds consensus, it may be the catalyst we need. If not, as next
week unfolds we can re-initiate this trade.
So, until next week comes around, I intend to waste very little time trying to
outguess this market. When I glance back at my sheets for both FX and stocks
for the month of June, I am pleasantly surprised to see positive return, albeit
small. This tells me I have cherry picked this market, and expected nothing
more.
On a bright note, my golf game has improved as
the afternoons have been spent on the golf course and finishing up our house.Â
Frankly, I have never felt more clear and settled. It is because of one of two
(perhaps both) reasons: either central Oregon living is far healthier, or the
market is simply in a position where I do not give a damn.Â
I will be starting a series of audio/video
presentations next week (tentatively) regarding the FX markets. I intend to
hold them on Wednesday afternoons after the NYSE close and discuss a whole
variety of topics ranging from FX basics, to reviewing current and closed
trades. The format will be dictated by your questions and comments although
there will be some themes and topics I will present. I will provide more
information as it becomes available. If you want to be
alerted when this is ready to launch, drop me an email with your name and I will
add you to the database.
As always, feel free to send me your comments and
questions.