Daily Alert: For Wednesday 6th January 2015

Mark Nugent2016 H1, Daily Alert, January 2016

Today’s slides are HERE.

Today’s Economic News

The Chinese situation continues to dominate the markets. Major (unannounced) Central Bank intervention has stopped the rot in both the Shanghai Composite and the CSI300 stockmarket indices, both being essentially flat on the day so far. Further, large institutions have been told that the recommencement of the ability to sell shares next week will NOT now happen.

More broadly, the Vix is above 20, JPY is stregthening, all non-Chinese stock markets fall for the second day and the commodity pairs of AUD and NZD are down, meaning we are still RISK-OFF.

Looking at the calendar, Eurozone flash CPI missed target. The Euro fell. The latest round of dairy prices in New Zealand went negative for the fourth month out of the last six. This was another day not to be trading forex.

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Opportunities

1. Strong + Emerging Markets

Neither USDTRY or USDZAR are showing attractive setups at the moment.

2. Swedish Central Bank Intervention?

USDSEK and EURSEK moving in the right direction but we need to see a pullback before jumping in.

3. Reversal of JPY Safe Haven Flow

We need to see the risk-off indicators reverse (Vix, stock markets, JPY itself and AUD and NZD strengthening) before we can consider trading on Yen weakness.

Major Issues for tomorrow

FOMC meeting minutes should give an insight into Fed thinking behind the first rate rise in 9 years.