Daily Alert: For Friday 18th December 2015

Mark Nugent2015 H2, Daily Alert

Today’s slides are HERE.

Today’s Economic News

Last night the Fed raised interest rates as expected by 25 basis points. After the initial volatility, the USD has been strengthening modestly across the major pairs. The statement was reasonably upbeat about the US economy, but the mantra stating that future rises will be gradual was repeated.

NZ GDP beat expectations but the response from the NZD was muted.

Today, UK retail sales got a significant boost from Black Friday.

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On the wider question of risk on/risk off (as of 1700 GMT): WTI (oil) is having another down day. Stock market activity is mixed, but the US and London markets are down. The JPY and EUR indices are flat on the week so far. The VIX gaps down overnight again and then spends all day rising to 18.46 as of my writing. We are risk on, but tomorrow is a Friday and volumes are low. Treat carefully.

Current Trades and Opportunities

GBPNZD – Yesterday’s loses have been recouped.

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GBPCAD – CAD is being sold heavily (and more than is merited by the oil price movements). This is pure speculation and is a self-fulfilling prophecy – CAD weakens. USDCAD hits a 15 year high and my GBPCAD trade goes against me. If I survive this unwarranted sell off, the reversal should land me some pips. The OPEC situation and the US intention to allow oil exports for the first time in 40 years do not merit this kind of action.

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I will not be taking any more trades this year as I have two that are both under water but you may consider these three:

AUDUSD – USD strength takes this pair to the bottom of the triangle. A long would be a counter-bias channel trade and risky because of it. A further move outside the channel is a reasonable pro-bias short.

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EURUSD – moves strongly down through my recent, untriggered, entry price. A sell would be a pro-bias trade.

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GBPJPY – the price is at the bottom of a nice channel. A long would be a pro-bias channel trade. As we are risk on there is less chance of a safe haven flow into JPY taking this pair down and going against a long position.

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Major Issues for tomorrow

Canadian Core CPI at 1330 GMT.