The EFSF, ZEW, UK CPI And BOC Acronym Fest
Walking in Tuesday we see the USD still taking a small beating as we continue with a bid tone on the risk crosses helped, in no small part, by an overall strong equity market.
With the US out last night and the market a little fidgety regarding what could possibly come out of the 2 day EU finance minister summit later today EURUSD and Cable look strong and the latter looks set to take out the 1.5980 resistance and stops ahead of this morning’s CPI data (which in itself could put pay to the rate hike rumors doing the rounds of late). One might choose to strategically fade this obvious rally and look for 1.6030 or close by to be the first entry, being prepared to lose more up at the 1.6080/6100 area, with stops going in above 1.6150.
EURUSD, however, is a slightly different story given there could be a disappointing round of comments regarding the EFSF. One could offer into the rally with stops above 1.3490/5 looking for a capitulation of the cross back into at least last night’s lows of 1.3250 and beyond. Good offers are lined up into the 1.3400 level with small stops above 1.3430 this morning.
Data on the day looks reasonable with ZEW index, UK CPI and the BOC rate decision. On the latter look for no change but, in all likelihood, a relatively hawkish statement which should put even more pressure on the USDCAD and with the 0.9850 level taken out last night, the downside remains open.
Headlines are going to be moving this market today and so I say keep your powder dry until such time as you feel compelled to finally pull the trigger.
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