Markets been surging but it’s a house of cards as data has yet to warrant the surge. In Focus Euro,metals,Cad and Aud.
Euro remains a great buy. The Euro index broke a long-established trend to the upside and closed above after Draghi commented that ”deflation has been replaced by reflation”. Market is convinced that a gradual taper is starting this year. However data needs to support this. Unhedged hedgefund euro longs inflows have fallen sharply, remains to see how low euro can go before they start to feel uncomfortable. For the coming week a dip is plausible especially against yen and a buy opportunity on more robust technical levels lower.
RBA meeting on Tuesday, interest rate decision. Audusd is right under a 2 and half year level. The only thing that could break this level is RBA committing to change stance from neutral to hawkish. With a flop in trade surplus and concerned businesses even with better iron ore prices and improved labour market we are unlikely to see that happening. If anything they’ll try to talk the currency down. At the moment the pair seem to be capped at 0.77¬ a any spike up could be an opportunity to get on a short position targeting 0.76.
BOC rate hike for 12th July is priced in over %75. Oil short covering resumed while US rig count came to a halt too. With lower inventory there is room to see $48 WTI. Hence any dip in CAD is a great opportunity to buy as downside is capped.
Silver longs have been fully squeezed and PA is indicating a total bottom out. A swift and aggressive pulse is on the cards. 4h insidebars offer options to advance higher.
Good Luck To Us All
Miad Kasravi
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