Calendar Week 49-2022

 

Mixed US Employment results saw the good news equal bad for markets, but they then took a closer look and did not like what they saw, so the good news ended up being bad and VIX fell, stocks rose and US interest rates and Dollar fell.

 

Elsewhere, Chinese relaxation, amidst population protests, of covid restrictions saw industrial metals make big upswings, particularly in Iron Ore, Coal and Copper.

 

The week ahead brings little news from the big boys but we do have the RBA and BOC due to raise rates and the Aussie GDP numbers. Bank of Canada is about 75% chance of a 75 basis point move but it will be driven more from the OPEC outcome as oil and energy prices remain subdued. Whilst the Aussie has held up thanks to weaker Greenback, it should be reasonably supported with the Chinese news and impact that has on mineral exports. The RBA is a 54% chance of 25bps move tomorrow.

 

After that it is a waiting game until a very full week of news next week with the highlights being US inflation and the final FOMC for the year.

 

Currency Guidance

 

USD – Still a sellers market and look to fade any strength. Does seem a little overcooked here and perhaps we will see minor bounces as the market tries to position itself for the next week waterfall of information. My advice is to trade with care and do not run open positions into CPI or FOMC.

 

AUD – Finding some resistance at the 68 handle, expect a minor pull back to 6750 before it has another crack at pushing above 68.

 

EUR – No major news schedule for this week but the Euro looks to be peaking and I see little more upside to be had. Happy to buy dips still.

 

GBP – Pretty much ditto for the Cable and Euro.

 

JPY – A standout of oversold. Trick to be a buyer here and prefer to fade any rally that appears this week.