Daily Alert: For Friday 4th March 2016

Mark Nugent2016 H1, Daily Alert, March 2016

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Fundamentals and Sentiment – New Information (Economic Calendar)

A quick look at the Vix and the equity markets show we are still risk-on.

Thursday

UK Services PMI misses at 52.7 vs expectation of 55.1.

In the US, ISM Non-Manufacturing PMI is essentially on target at 53.4 vs expectation of 53.2.

Fundamentals and Sentiment – Market Reaction

The Vix drops to 17, its lowest since late December. Equities are mixed with no large moves. Oil edges up but with no great vigour. There is a huge spike in the commodity index for which I have no explanation. The Yen weakens as does CAD. AUD and NZD strengthen.

Today is actually quiet with most pairs moving significantly less than their ATRs.

Fundamentals and Sentiment – Financial Media

Some talk of the dangers of lowering interest rates in the Eurozone at the ECB meeting next Thursday as it may stop banks lending. UK poor Services PMI hits the headlines. The malaise in European banks is analysed.

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Trades

The USD has been weak yesterday and today. As all this week’s strategies are dependent upon a STRONG USD, we need to be careful. We can use the adverse moves caused by the weak USD to find better entry prices for our strategies, but we need to be certain the USD weakness is over before entering new trades. The USD Index is the chart to watch for that.

  1. Euro Weakness

Yesterday the pair moved up in the US session and again today, paring some of my notional profit. This is USD weakness for reasons unclear. I will assess the options for placing a second short tonight at 10pm.

EURAUD is giving another nice flag.

  1. GBP Weakness

The weak USD takes the pair up. This is the same USD weakness seen in the EURUSD trade. I would like to see this subside before trading a GBP weakness strategy.

GBPAUD makes a double bottom. An entry as postulated yesterday at 1.9250 would be just in profit.

  1. JPY Weakness

This trade fell back yesterday in the US session and is struggling today. No need to panic.

  1. NZD Weakness

Again, NZDUSD moves up on USD weakness. This is a NZD weakness strategy so any setups are not valid as the dynamic (USD weakness) is not what we are trying to trade, although it may give us a better entry when it abates.

Tomorrow

AUD Retail Sales.

US Average Hourly Earnings is big, also NFP, Trade Balance and Unemployment Rate.

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