Daily Alert: For Thursday 11th February 2016

Mark Nugent2016 H1, Daily Alert, February 2016


Fundamentals and Sentiment

See video below.

We are still very much risk off. Not as risk off as yesterday, Tuesday, but still definitely risk off. The Vix is greater than 25, and commodities are nearing their multi-year low. WTI goes down to $28 per barrel and Brent is sitting around $31 per barrel. On the stock markets the Hang Seng is up, the Nikkei is down but not by as much as yesterday, and all Western stock markets are up. The JPY index plunges down. For the commodity currencies, CAD is down (due to the oil price fall) and the AUD and the NZD are both up. To reiterate, we are definitely still risk off.

In the UK, Manufacturing Production disappointed at -0.2% versus a forecast of 0.0%.

Janet Yellen, testifying in front of the House Financial Services Committee, keeps the door open for a March rate increase, but there is no explicit timeline for tightening of future hikes. Financial market turmoil will not be used as a reason to delay rate increases. Rate increases will be based on economic fundamentals.


I am not going to go through all the trading opportunities because these have been widely covered in Monday’s weekly review and outlook and yesterday’s daily alert. I will cover yesterday’s EURGBP long and also a new idea I have.

EURGBP – as I mentioned yesterday I had brought my stoploss up to breakeven. This was hit today.

The new trading idea (Theme 5) is to trade the JPY strengthening on safe haven flow. The pair I like the look of is GBPJPY as there is a good technical reason to get in, which is near-term support. I will go short if today’s candle goes below the short-term support and closes. The entry will be a continuation of the downwards move. I will use a stoploss of about 1.3 or 1.4 times ETR.

Here’s some comments from the marketplace about current trading conditions:

“Putting on a trade at the moment would feel like standing in front of an oncoming freight train” – Juan Esteban Valencia, Societe Generale

Richard Breslow, Bloomberg – “No one is trading unless they have to.”

Goldman’s President Cohn (on Bloomberg TV) – “small amount of buying and selling in any market today has a dramatic impact.”


More Janet Yellen in the House and the RBA’s Glenn Stevens will be talking.

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