June 1, 2018 | Positioning/Data Due Out/Chart View (AUD, EUR, 10-yr Note vs. $ Index)

A slew of data due out today, including non-farm payrolls which bond traders (10-year chart and comments below) will likely react to, if not the currency guys…

AUD/USD 240-min view: Our risk on this trade is 0.7510; the 61.8% retrace is 0.7519; today’s first pivot support comes in at 0.7527–needless to say we need to see Aussie turn in here or we will be stopped out. Seems an appropriate place for a move higher and a rally in minor (c) of [c] toward our 0.7700 target. We shall see.

EUR/USD 240-min: Seems decent price action relative to the news here. Despite the turmoil across Europe (Italy and Spain specifically) the seems well supported. However, near-term resistance is 1.1730 and the pair turned down from that level yesterday. So, we need to see a push through 1.1730 to have more confidence in our view.

10-year Note Futures versus US$ Index Daily: What is interesting here is the fact that higher yields (seen as lower 10-yr Note prices) have correlated to a “falling dollar.” It appears the bond spike we have seen is a bit extended. So, if bonds fall on non-farm payroll this morning (yields rise), and this correlation holds, it would mean a weaker dollar. This is why it has been so difficult for many moons to link fundamental analysis to currency trading; the traditional guide post of yield spread has not seemed to matter for a long time now. That may change. But hasn’t yet.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.
Jack Crooks June 1st, 2018
Posted In: Black Swan Currency Currents
Next: Why Trump Is President »