5 Sep 2013
A technician’s observations and reads on Wednesday’s news and trading
FXstreet.com (Barcelona) - Technician Tim Thielen of Sea Change Capital weighs in on whether the “risk-on” action we saw Wednesday is the new trend or something to be viewed skeptically.
Fundamental notes from Wednesday’s session:
• On the bullish side of the ledger:
o Aussie GDP came out flat to mildly better than expectations – certainly nothing that would de-rail the short-term bull run AUD has been on;
o China Services PMI came out slightly ahead of estimates – adding fuel to the AUD’s upside fire and giving global risk bulls something to nibble on;
o Spain, France, Germany and England all came out ahead of expectations with their Services PMI numbers;
• On the bearish side of the ledger:
o Italy and the EuroZone missed on their Services PMI numbers;
o The EuroZone whiffed on their Composite PMI, GDP and Retail Sales numbers;
o Canadian International Trade numbers came out negative and below expectations;
o Minor US data all came out on the bearish side of the ledger early Wednesday in the US;
• Neutral – neither bullish or bearish:
o The Bank of Canada left interest rates unchanged and gave themselves flexibility to act if conditions deteriorate;
o The US Fed Beige Book Survey hinted at moderate growth, rising consumer spending, moderate manufacturing growth, steady hiring and little to no inflation pressure.
Summary of the Wednesday session
The Aussie Dollar was the big winner of the session – with the British Pound not far behind. Even the euro got in on some of this “risk-on” action. Meanwhile,the DXY used the tepid US data to consolidate some of its recent gains and the Yen simply went through a day of oscillations around the flat line (with the end result being a mild loss). So, net-net, we clearly saw a “risk-on” day in the global markets Wednesday.
The technician’s take on Wednesday’s action
Tim Thielen, CMT and the head of technical analysys at the Sea Change Report feels the bullish action in the Aussie Dollar, Canadian Dollar and the euro (in other words, the “risk currencies”) is all likely to be short-lived / capped off at their respective macro “correction resistance levels” (0.926 – 0.927 for the AUDUSD; 1.32 – 1.3241 for the EURUSD; 1.5623 for the GBPUSD; and, 1.0557 for the USDCAD).
On the other side of the ledger, Thielen says the DXY is the only one of the “safety” currencies that is sporting a unambiguously bullish chart – despite Wednesday’s correction. He does feel that the Yen is likely to catch a bid when the Syrian situation come to a head next week. “So…”, he says, “…enjoy the party while it lasts as another (final) down move is very likely lurking around the corner for risk assets before the macro correction in risk is completely over”. Thielen says that the tops for the risk currencies may very well correspond in terms of timing with the S&P 500 futures hitting his upside correction target of 1,690.
Fundamental notes from Wednesday’s session:
• On the bullish side of the ledger:
o Aussie GDP came out flat to mildly better than expectations – certainly nothing that would de-rail the short-term bull run AUD has been on;
o China Services PMI came out slightly ahead of estimates – adding fuel to the AUD’s upside fire and giving global risk bulls something to nibble on;
o Spain, France, Germany and England all came out ahead of expectations with their Services PMI numbers;
• On the bearish side of the ledger:
o Italy and the EuroZone missed on their Services PMI numbers;
o The EuroZone whiffed on their Composite PMI, GDP and Retail Sales numbers;
o Canadian International Trade numbers came out negative and below expectations;
o Minor US data all came out on the bearish side of the ledger early Wednesday in the US;
• Neutral – neither bullish or bearish:
o The Bank of Canada left interest rates unchanged and gave themselves flexibility to act if conditions deteriorate;
o The US Fed Beige Book Survey hinted at moderate growth, rising consumer spending, moderate manufacturing growth, steady hiring and little to no inflation pressure.
Summary of the Wednesday session
The Aussie Dollar was the big winner of the session – with the British Pound not far behind. Even the euro got in on some of this “risk-on” action. Meanwhile,the DXY used the tepid US data to consolidate some of its recent gains and the Yen simply went through a day of oscillations around the flat line (with the end result being a mild loss). So, net-net, we clearly saw a “risk-on” day in the global markets Wednesday.
The technician’s take on Wednesday’s action
Tim Thielen, CMT and the head of technical analysys at the Sea Change Report feels the bullish action in the Aussie Dollar, Canadian Dollar and the euro (in other words, the “risk currencies”) is all likely to be short-lived / capped off at their respective macro “correction resistance levels” (0.926 – 0.927 for the AUDUSD; 1.32 – 1.3241 for the EURUSD; 1.5623 for the GBPUSD; and, 1.0557 for the USDCAD).
On the other side of the ledger, Thielen says the DXY is the only one of the “safety” currencies that is sporting a unambiguously bullish chart – despite Wednesday’s correction. He does feel that the Yen is likely to catch a bid when the Syrian situation come to a head next week. “So…”, he says, “…enjoy the party while it lasts as another (final) down move is very likely lurking around the corner for risk assets before the macro correction in risk is completely over”. Thielen says that the tops for the risk currencies may very well correspond in terms of timing with the S&P 500 futures hitting his upside correction target of 1,690.