Market Outlook – Mar 5th ‘09

We have seen general risk aversion in the market with Eur and Gbp both losing ground against the USD. They however are finding support at the 1.2500 and the 1.40 level respectively. I expect this support to be tested for today and tomorrow even, as i don’t see much fundamentals causing these pairs to go south. Also, we have NFP out tomorrow, which can impose pretty boring days with hardly any movements. If these levels are to hold, i would expect only a NFP based movement to break them, if the report works out for USD as expected.

On the flipside, G/Y and E/Y have gained in strength. This shows that the Yen is weakening against the dollar faster than the Eur and Gbp value is weakening against the dollar. This therefore causes a synthetic bridge between all of these pairs which you can trade, or you may just choose to use for analysis if you may prefer. In other words, you may buy U/Y, sell G/U, E/U and buy E/J and G/J. If it is too complex, forget it. You can just pick 1 pair and still make pretty good income. My point is that by understanding underlying pair movements, you can assess overall trends which can work in multi-directions across many pairs.

Now, for today;

I don’t expect an exciting day today and infact, i might even stay out of the market. Technically, there could be setups i would take, but there are no driving forces fundamentally. Reasons;

1) We have Halifax HPI and Official bank rate coming out from UK which would affect the GBP. I don’t have any bias towards these reports apart from an overall bearish bias. However, i believe that a bottom or fair value estimate is achieved with GBP and only a dramatically negative news can break the Gbp on the downside. Usd strength will cause more damage than the actual weakness of the Gbp or the Eur. I am therefore skeptical about this having much room on the downside and if the market already gets what it wants, it could cause some upward movement. I might therefore completely skip this or just speculate on news release noise.

2) ECB Press conference – This is another one of those ra-ra talkshows which could go on forever with no real direction. I expect most content to be conservative and with no real direction, we could see lots of whipsawing. Once again, cause for concern and avoidance.

3) US – Unemployment Claims – This could be the more tradeable release of the 3 and hopefully it causes some real momentum. As with the ADP release yesterday, both forecast and actual, as well as with the forecast today, they are all in the same <700k region. I expect no surprises and we could see some immediate upward thrust on the USD should the numbers come out as expected. Otherwise, it can be a stalemate and the market could completely brush it off.

So, if you are experienced and aggressive, you can try to trade the whipsawing noises today. Otherwise, you might just choose to stay out, like me! Remember, the market is always there, will you be?

Happy Trading,
Seeni

Bookmark It

Hide Sites