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Monday 22nd May 2017 – Plan

Fed Kashkari and Harker speech, JP balance of Trade report for April.

Overnight Review & Weekend catch up

Last week was a real rollercoaster, lots of ups and downs, new highs printed on most major European and US indices and also volatility picking up again off of recent record lows where the VIX moved back up to 16 from around 10.

Vix

The last time the VIX was this low was last seen December 2006. As market fears penetrated equity markets over the Trump Russia security disclosures saw a sizable sell off and an immediate flight to quality resulting in a strong bid in gold, yen and bonds. Weakness in the dollar saw a nice rise in the pound, yen and euro.

Things changed on Friday, with a return to risk on. Seeing a sizable move in Crude to close above 50 before the weeks close with OPEC extending output cuts with all voting members sticking to agreements and targets.

Asia stocks closed near record highs, Yen weekend with positive all round news on trumps arms deal closures and strengthening relations in the middle east. US indices retracing losses over the week on Friday, positive news all weekend aside from another medium range missile test out of North Korea maybe propping the Yen slightly from a stronger retracement, however the north Korean test didn’t see much response in the markets.

Todays Calendar

calendar

Today will be looking at: 3:00 pm FED Speeches, but nothing really on the data front to be overlay active on.

Trade Bias: Political risk in the US and Euro area fading, positive news over the weekend with a falling of the VIX down from 16 to 12, the close above 50 in Oil leads me to believe we will see a return towards risk assets over this coming week as larger funds and the levered money move back into riskier assets maybe taking advantage of lower prices due to last weeks political risk moving out of the headlines (however, the issues could return quickly, especially the Trump security saga).

With the fed funds rate hike probability still floating around the eighty percent mark at 78.5% as of today, I believe the dollar will start to retrace some of last weeks losses pared against the Euro and Yen.

fedfunds

Pound we have a general election coming up with the polling gap tightening I can see a weakening of the pound as the election draws nearer. Will keep an eye on how the FTSE 100 and Gilts price over the coming days.

Looking for Longs in commodity backed currencies such as CAD and AUD. Also, Long euro us equities supported by strong moves in Oil and a return to risk assets. Shorts on Pound, Euro, Yen, Gold and T-notes.

Short Term Biases:

  • Long – US equities, Euro Equities, Oil, AUD, CAD.
  • Short – Pound, Euro, Yen, T-notes, Gold
  • Neutral – Dollar (over the next day)

Cable – Short GBP @ 1.3000 level, looking for a stabilization of the dollar from last weeks fallout.

Short – 1.3011, stp 1.3020, t-one 1.2983, t-two 1.2908

GBP60 Short

Euro – Short at current high or break of pivot

Short – 1.12265, stp 1.12353, t-one pivot 1.11.883, t-two 1.11535 s1 (beware going against the current trend, will ask my mentor about this trade not overly confident about going against the trend)

EUR60short

 

 

 

 

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