Thursday, May 16, 2013

Dollars & Cents

Dollars & Cents

U.S. equities retreated from their high of Wednesday, creating what may be considered a reversal pattern on many of the equity indexes. The concern we have is that tomorrow is expected to be a big POMO day. On the New York Fed’s website, they list their purchasing operations calendar showing what they plan on purchasing on what days. Though they don’t always follow this, it is good data to watch. Tuesday, the Fed reported to be buying between 2.7 and 3.5 billion in purchases. Friday, the Fed is expected to buy 4.75 to 5.75 billion in assets. If they purchase all that they are scheduled to purchase, we could see a very bullish move in the markets in spite of the fact that it is expiration Friday. If foreign investors step in with the Fed, we will likely see the dollar rise with the move.

The EUR/USD traded relatively flat today. If we see the same activity we have seen on other big Fed intervention days, this pair is likely to drop tomorrow. We will watch for support near 1.27 to be tested. (see EUR/USD below)

The USD/HKD rallied today, pushing above the short term consolidation. We are watching for price to clear the highs of the year, which should push us up to our target over the next week or two. (see USD/HKD below)

The AUD/USD continued to drop and we still expect to see price hit the 0.9600 level in the next month. It could take multiple weeks but the current pace could see the price hit the annual lows in a matter of a couple of days. We will watch for price to slow near 0.96 and we will watch for a buy limit. (see AUD/USD below)

The AUD/CAD dropped just like the AUD/USD pair but not as dramatically. Price fell and triggered our long positions and bounced slightly. We have another order set lower but we will watch for price to bounce here and we will look for the add later. (see AUD/CAD below)