USD Leads May Despite Last 3 Days

by Adam Button

Jun 3, 2013 0:21

A strong official PMI from China contrasted a weak reading on the sector from HSBC. Despite a three day slump to end the month, the US dollar was easily the best performer in May while the Australian dollar lagged badly. Weekly CFTC positioning data show growing AUD and CHF shorts. We reintroduced USDCHF after a long absence from the Premium Insights with 2 new trades and monthly and weekly charts. 1 EURUSD remain in progress as well as 3 USDJPY, 2 EURJPY, 2 USDCAD and 1 silver. For full detail, see latest Premium Insights.

The official manufacutring sentiment survey from China rose to 50.8 compared to 50.0 expected and 50.6 in April. The number could give the Australian dollar some respite to start the week but traders may be skeptical. The PMI earlier in the week from HSBC slipped to 49.6 from 50.4 in April.

There is also uncertainty about the US manufacturing. Signs were pointing to a worsening slump until Fridaywhen the Chicago PMI soared to 58.7 compared to 50.0 expected. In the span of a month, the index when from the lowest since 2009 to the highest since early 2012.

We caution that it's only one month and one data point but renewed strength from US factories would be another reason to buy the US dollar. The other data point on Friday was the PCE report, which showed core inflation up 1.1% compared to 1.0% y/y expected. Rising inflation could give the Fed an incentive to taper QE, which could be a major boost for the US dollar. One negative part of the report was personal spending, which fell 0.2% in April.   Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -85K vs -81K prior JPY -100K vs -95K prior GBP -75K vs -77K prior AUD -42K vs -32K prior CAD -33K vs -34K prior NZD +14K vs +18K prior CHF -29K vs -20K prior US Dollar Index longs at 46K vs 43K prior

The market has quietly built up the largest short position in CHF in 11 months. There are always rumors about hiking the EUR/CHF floor but it's mostly a trade on dollar strength and improving fundamentals in Europe.

Meanwhile, euro shorts are showing no sign of quitting even though more than half of the short position was initiate in the past two weeks – all of which are underwater. It's also interesting to note the lack of movement in NZD despite the rush in Australian dollar shorts. The carry is better in New Zealand but it's difficult to imagine the divergence continuing.

 

Get Adobe Flash player

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us www.deryworldscorp.web.id Visit Us www.deryworldscorp.asia

AJAX Financial : Awaiting Bernanke

JPY weakens further; Eurozone industrial production disappointed; EURCHF rose. The only item for the US session is chairman Bernanke's speech. 2 The latest on those Jan 7-8 trades: 8 trades hit all targets, 3 were unfilled, 4 remain in progress & 2 stopped out. All 2 EURUSD longs hit all targets , 2 USDJPY hit all targets, 2 GBPUSD hit all targets, 1 EURGBP hit all targets, both Gold in progress, one of which missing the final 1679 target by 1 point. Both Silver longs in progress, 1 of 2 AUDUSD hit all targets, the other missing the highest entry of 1.0450 by 2 pips. Both CADJPY unfilled, 1 of which missed highest entry of 87.90 by 8 pips, Both EURJPY stopped out.

Despite the fact that Tokyo was closed for holidays, JPY continued to weaken. USDJPY rose to 89.62 as traders expect the PM Abe to choose a head for the central bank that shares his belief in easing efforts. The BOJ is expected to review the inflation target and possibly raise it from 1% to 2%. USDJPY fell slightly and trades around 89.30.

EURUSD initially rose to a new 11 month high at 1.3403 but now trades around 1.3360 after Eurozone industrial production fell 0.3% in November while analysts expected 0.2% rise. On a positive note, October's result was revised higher to -1.0% from -1.4%.

Other data showed that Italian industrial production fell 1.0% in November, marginally less than prior decline 1.1% and German WPI was flat in December after declining 0.7% in November.

EURCHF showed an unusual volatility and rose to 1.2276 which is a level last seen in December 2011. The key resistance is 1.2472 which is a high from October 2011 that was reached in reaction to the SNB announcement of the 1.20 floor.

According to MNI calculations, EZ sovereign t-bill issuance this week is seen around  EUR 15 bln, lower than last week's EUR 30.5 bln. Bond issuance is estimated at EUR 18.7 bln vs. 26.6 bln last week.

There are no US reports due today. Market volatility could heighten at 10:30 am ET when the BOC releases its business outlook survey and also by the end of the session at 4:00 pm when the FED chairman Bernanke speaks on monetary policy.

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us www.deryworldscorp.web.id