August In September


Morning signals from the algo were productive with a short EUR/USD from $1.1550 good for a quick 10 point gain. The EUR/USD is now sitting a key suuport level of $1.1530. The bid to the dollar looks firmly entact however versus typical safe-haven crosses of JPY and CHF, the dollar seems a bit tired.

The price action in USD/CAD has been to buy on dips near $1.2800 as it seems to want to gravitate back higher towards $1.2850 - any punch higher through there would open up a $1.2900 handle I think. That is my prefernce for long dollar plays.

August is typically a quiet month in FX and other financial markets as Europe goes on 'Holiday' and seasonal eps reports for major US stocks experience a lull. However, this August saw fireworks in the form of Emerging Market stress (Turkey, Argentia, South Africa, Russia) and geo-political tension with regards to trade with China, Canada and the EU.

September by comparison was a bit more tame so those wishing to jump back in and trade some action may have seen certain false starts in major moves. Time does indeed fly and here we sit in October - historically one of the worst months for stocks - and instead we mark the 102nd time that President Trump has 'Tweeted' about the strength of the US equity markets (indeed the S&P500 is +40% since Trump took office).

Today the US economy continued to report healthy figures, this time in the form of monthly services PMI readings. Indeed with several Fed speakers in various venues, one doesn't need to look far to her soundbytes such as "this is about as good as it gets", and "it is pretty easy to see the future path", according to Chicago Fed President Charles Evans, and others.

With the North American trade deal having been sorted, and NAFTA now the 'USMCA' (United States-Mexico-Canada-Agreement), we can turn our attention to trade deals (tensions) with the EuroZone and more importantly China.

The situation on the latter does not look particuarly encouraging but that could also be by design as the US political mid-term elections loom. It is possible this is greater trade concern along with domestic China slowdown concern is being expressed by a particuarly weak AUD/USD cross.

Today also sees a decent-sized option expiry in AUD/USD at $0.7190. I am currently long the pair just under $0.7150 with a tight stop and a take-profit of $0.7185.

Still some nice beach weather here on Long Island so enjoy, "September in October" !!