Market Update for June 24
Yesterday was an interesting trading day to say the least. The euro was in sell off mode all day. Even better PMI numbers out of Germany and Europe couldn't give the euro a lift. At 08:30 EDT there was a brief bounce in the euro after US durable goods orders came in weaker than expected. This rally lasted all of three minutes until the news hit that Fed member Powell expects the first interest rate hike to occur in September and then another one in December. This killed any hopes for the euro bulls.
The cross that sold off the hardest on the news was the British pound. The pound has had quite a rally the past week and Powell's statements made the Sterling bulls think twice and book profits.
Yesterday was a decided risk off day. We saw money coming out of the euro, the pound, and flowing into the US dollar. Even the Swiss franc was weak against the dollar.
I didn't trade yesterday because I couldn't make sense of the situation. I didn't have my "why" to trade. It's gotten to the point that reporters are looking to interview the pizza delivery guy to see if Greece and its creditors are meeting or not. Thanos Vamvakidis best summed it up when he told CNBC:
"It is very difficult to trade Greece. You get random headlines; false positives…The market rallied following the proposals by the Greek government, but the truth remains that we did not achieve any progress – everything has been postponed until later in the week."
Even though I preach to watch the headlines, yesterday there were positive headlines and the euro couldn't rally. A market that can't rally on bullish news is a bear market. I just didn't have the confidence to short the euro out of fear that a deal would be announced and I'd be caught on the wrong end of the trade. What was happening was that the euro ship was sinking and everyone was on one side of the trade (short). If a deal was announced, everyone would be caught on the wrong side and rush to cover. I've seen powerful short covering rallies and I like to catch them. However, that did not happen yesterday.
Today, we have a couple of important items on the agenda. First up at 04:00 EDT will be the German Ifo Business Climate Index. Expectations are for 108.1, down from 108.5 last month. At 04:30 we have UK BBA mortgage approvals. Expectations are for 43.1K, up from 42.1K. At 08:30 we get the biggest item of the day - US Q1 GDP. Expectations are for this reading to come in better at -0.2% from the prior reading of -0.7%.
As far as numbers, the EUR/USD has support at 1.1150 and the GBP/USD at 1.57. I'll be waiting for today's data and will trade off that, if at all. If you have any specific questions, you can always email me at markyagalla@gmail.com As always, best of luck and happy trading!
