Head of FX Strategy
Summary: An extremely low volatility market, but the USD is pushing higher and breaking out in an increasing number of pairs, including an attempt higher versus the euro and Aussie today. Sterling is trying to perk up as well, while SEK has stumbled again after an aggressive extension higher intraday.
The link below takes you to the latest FX Breakout Monitor, a concise PDF overview of all current and recent price breakouts for the short and medium term for major FX pairs and spot silver and gold.
Today’s Breakout monitor
Below is a snap of the full list of currency pairs we track for the breakout monitor. Note the sea of deep blue in the ATR readings for the majority of the pairs in the universe we cover, something that requires that the trading ranges are in the lowest 15% of the last one thousand observations.
Despite the low volatility, the US dollar continues to make waves, edging to new highs for a third day versus the Singapore dollar (SGD), looking at a new high close versus CAD and AUD today and even threatening to break higher versus gold and silver and euro.
Elsewhere, action is mostly muted and we note that one of the more interesting technical breaks of late – the EURSEK push down through the recent range lows, is backfilling badly today – typical of the action in the Scandies of late.
Sterling is looking higher again versus the CHF and the rather weak euro, possibly setting up an extension after the prior surge failed to yield much for sterling bulls. Still, a lot of event risk uncertainty ahead of the December 12 UK elections.
Today’s Breakout Highlight: AUDUSD
As we are writing this post, the AUDUSD is pushing on the local pivot that is the last real support line ahead of the sub-0.6700 lows (note that the pair has not close below that round figure in over a decade), though the nominal low daily close for the cycle is 0.6786. The broadly firmer USD gives some confidence, but the very compressed trading ranges and a number of false breaks virtually all over FX of late are cause for concern for momentum traders. The key data from the US is up next week ahead of the subsequent week’s FOMC meeting. In Australia, the RBA’s Lowe will be out speaking later today.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
