yesterday I said "The EUR/USD remains somewhat on the edge here where much more strength will turn things short term bullish, but recent advances have been anemic enough to make it look more like topping action than a rally in the works. Usually things look tough before a turn though, so we'll continue to maintain our short bias and position trade short on EUR/USD as long as 1.4450 stays intact." Our patience and diligence has proven fruitful and now that stocks have confirmed a more major turn, that gives the EUR/USD and GBP/USD a lot more fuel to complete their turns into a downtrend that started back in early August when I called those trades here. Like stocks though, their short term declines may hit a bit of a speedbump and some consolidation or short term bounciness may occur. Similar to stocks, I like the idea of a swing trade sell at higher prices on the EUR/USD around 1.4300 with a 50-100 pip SL. The idea on EU and GU now is to get short on good bounces to get in line with the larger trend.
Silver and gold are still holding up decently well, but as stocks start rolling over further, and the USD picks up even more steam, the metals will see some extensive downside. The key levels from the weekly signal remain unchanged and both are great sells at their current levels.
In news Tuesday, we saw a lot of positive news just get slammed... from German Retail Sales, to US ISM and Pending Home Sales... good news could only manage a meager spike up and subsequently got hammered on a reversal down. Fortunately, given the low liquidity right now, I kind of saw this potential coming and recommended skipping these trades. The one I did want to trade, AU GDP actually did pretty decent all things considered and managed 44 pips up over 25 minutes after hitting our buy trigger. In news Wednesday:
0815 US ADP Employment Change (-250K expected) - This one is usually good for a modest move on USD/JPY, and if the surprise is very large, it could get a bit of a short term trend going.
If it comes out at -100K or higher, USD/JPY should rally 40-50 pips
If it comes out at -180K or higher, USD/JPY should rally 30 pips
If it comes out at -320K or lower, USD/JPY should fall 30 pips
If it comes otu at -400K or lower, USD/JPY should fall 40-50 pips
1400 US FOMC Minutes - Not much we can forecast here from an economic number standpoint, but obviously the market will be looking for insight into the FOMC's thinking and rationale in terms of when they're going to unwind their special programs, and why they slowed their rate of Treasury purchases. If there's some clear desire present to move forward (albeit slowly) with their exit strategy, and their slowing of Treasury purchases is a first step in that direction, it would be a USD positive.
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