11/11 Daily market commentary

Prepared by Kenneth Veksler, Head Trader, Saxo Bank

Quiet markets overnight with equities remaining well bid and small retracements lower used as opportunities to seemingly buy more. Interestingly although not surprisingly Asia closed pretty much flat and the day ahead looks to be a quiet one with the US out on holiday or at least resting on the back of Veterans day. So in short expect the price action and liquidity to be thin at best.

Otherwise overnight of perhaps most interest was New Zealand’s Bollard out on the wires again jawboning the fate of the Kiwi, again repeating that such strength is undeserved in the local currency and ultimately not of any benefit to a faltering economy. Net result was only a small 30 point retracement lower in the NZDUSD. The AUDUSD on the other hand has once again failed at the 0.9330 mark and while it hasn’t come back too far it still seems to me that it’s running out of steam, but once again I urge caution in selling the cross too early. Look to the AUDNZD and as per previous comment look to sell the rally into 1.2650.

Today the only real event risk lies with the UK in the form of unemployment and the quarterly inflation report. The Cable comes in bid this morning with the market stop hunting in thin liquidity for orders sitting above 1.6750/70. I firmly believe we will see a buy the rumor sell the fact scenario unfold this morning and would be a seller of the cross on squeezes to what is likely to be 1.6830 at a stretch.

The EURGBP has held the 0.8950 level well overnight and looks like its gearing up for another serious attempt at 0.9050, although this will be entirely dependent on the Cable as per above.
As far as the other major crosses, I remain in the same frame of mind as yesterday in that we see tight trading ranges, with the USDJPY being a sell into 90.30, while the EURUSD is a buy on dips into 1.4950. As I print this though Gold makes new highs and the EURUSD goes with it, looking for the 1.5060 level.

Heads up for the BoE today and otherwise, all quiet on the western front.

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