Still waiting on debt ceiling decision; Eurozone problems persist

Understandably the USD was sold off on the news (although possibly not as much as most would have expected) and the U.S. equity market took a small beating, leading Asia into a similar quarry. With regards to the S&P500 as long as we continue to sit above the 1285 level (tested or otherwise) the overall scenario still looks constructive, and simply intimates nothing more than profit taking and consolidation. Below that 1285, the door opens for a nice clean out of stops having built up and the road is freshly paved for a legitimate test of the 1250 major support.

Meanwhile (as I’ve noted now for a couple of days), the European problem hasn’t exactly just disappeared… The peripheral spreads keep blowing out, with Italy leading the charge over the last two days. Fear of contagion is still rife in the air and just because some stuffy highly overpaid people got together last week in Brussels and seemingly came to a conclusion, doesn’t mean that we’re out of the woods just yet. As noted individual ratification is still required and we all know how much of a headache that can prove to be…  Needless to say this will keep the EUR under pressure and in the direct cross the U.S. woes won’t be as heavily felt…

On the day we have a relatively heavy data slate which includes, U.K. housing data, CAD GDP, U.S. advanced GDP as well as the Chicago PMI figures. Truthfully though little if anything will really come of these numbers until this evening after the U.S. close when the vote is now scheduled to occur…

On the crosses, yesterday proved to be a profitable day for those that got on the back of my EURUSD call, as it almost traded word for word, pip for pip as outlined in this piece yesterday. Having said that we still trade heavy in the cross and for the time being sit on pivot/support levels at 1.4250. My preference is not to get involved today, but the gun to head trade would be a wait and see, looking to fade any rallies above the 1.4300 handle… But don’t!

The AUDJPY is looking constructive for those that didn’t wait (like I did for the right level) and just blindly sold, helped even further by a tier 1 name coming out calling for the cross to be trading closer to fair value at 82.00. Nonetheless, I’m not a seller here and still prefer to wait for another blip before I get involved.

The AUDUSD has retreated somewhat, but is simply consolidation it’s outrageous move over the last few days. Stops under the 1.0980 level got taken and save for the clean out, price action still looks constructive for another attempt to the upside.

The Cable remains a USD story and should be played that way, but on a Friday, why would you bother…
My GBPCAD however remains well bid and overnight touched the 1.5550 target I had in mind. I’m not ready to dump it just yet, either to close my long or reverse my sentiment, I still think there’s a couple of upside attempts left in this old dog yet.

EURJPY is still floundering lower and now looks for 109.50/80 as the target on the downside, if you’re not already short, don’t get involved now as you’ll get cut up chasing an irrational EUR.