17/11 Daily Market Commentary

Prepared by: Ken Veksler, Head Trader, Saxo Bank

Markets are clearly risk appetite giddy and looking for more upside. In an atmosphere where the S&P makes new record highs for the year, gold continues steaming to new all time highs and the DXY is heading for new lows one can imagine how nervous the market is when listening to the likes of Bernanke and his posse. This could not have been clearer than how it played out last night when Bernanke’s comments sent significant ripples through the market.

Initially misinterpreted, his remarks led to a significant bid tone hitting the greenback, but once they were chewed over and mulled considerably the old chest nut of “exceptionally low, for an extended period” kicked in and it was seemingly business as usual for USD bears.

The main movers on the back of this nonsense were the EUR and the Cable, but once the dust settled we saw the Cable catch a seriously bid tone and away we went. The cross now has 1.6900 firmly in its sights but might find it hard going ahead of the CPI data out this morning. News overnight in the Times also spoke about the fact that the UK recession is now firmly over….

(Pass the dutchy to the left hand side). I remain short of the GBPCHF and will be wrong and taken out of the trade above 1.7100, for now though I prefer that cross to the EURGBP which at t his stage despite logic is seriously eyeing the downside with talk this morning of stops sitting in under 0.8865.

The antipodeans still show promise even after the RBA minutes were released last night, indicating some level of indecision as to the next rate move. The market has all but priced in 25bps for December but after less than hawkish comments overnight the AUDUSD is looking a little more exposed and more stops are now sitting under the 0.9280 level, having cleared the first round at 0.9320 already this morning. Also hearing macro names on the offer this morning clearing out existing longs.

The USDJPY is taking a nosedive and no one is happier than I as I have been calling this thing lower for the last 2 weeks, 88.50/30 is now the next level to keep an eye on, and frankly I would expect a dead cat bounce out, translation, sell on rallies.

As for the EURUSD today, I am still a buyer on dips despite potentially ugly data out later this morning. 1.4950/30 through to 1.4870 should provide good support for the cross.