We saw a softer than expected CPI in the early hours of European trading, which saw EURJPY breach the 149 level, only to find a bid - which moved the price 100 pips through the US open.
With investors sat net long on euro, and recent data pointing to slowing growth and inflation rolling over, the natural reaction would be for investors to unwind some long euro trades. Therefore, there will be more pressure on the EUR.
Yesterday's data reflected the following:
- A more positive data out for the US, with consumer confidence still thriving
- A continuation of US bonds pushing higher, which also helps give gold a nudge higher due to the positive correlation between the two of them
Although, it would be worth noting that the correlations are changing with US10Y dropping and USD still marching higher - testing 104.5 once again.
On the other hand, Chinese equities continue to slide after breaking key support at 12830. Today's data showed no signs of improvement either.
In FX, the story remains the same: NZD is under constant pressure, and remains the weakest across the board.
"The trend is your friend until the bend in the end" - keep that in mind when trading.
However, as we see markets being sold across the board, it comes to our attention that this space is becoming overcrowded.
NZD longs could be appealing when we see a shift. We will be watching for a move above 6009 for a run into the channel resistance.
This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
All trading carries risk.
