- Aussie could run out of steam against Buck
- S&P 500 rally just a great short opportunity
- Additional Canadian Dollar upside limited
- US NFPs an important one to watch tomorrow
POTENTIAL TRADES - So we have a nice long AUDNZD trade running from 1.0640 and I'll be looking for this market to keep pushing so it can establish back above 1.1000 in the sessions ahead. But as much as I like Aussie higher against the New Zealand Dollar, I think there is room for weakness against some of the other currencies. The run up in AUDUSD this week has been more than impressive and I would recommend keeping a close watch on the 0.7385 level, which represents itself as some major medium-term resistance. I would say that if we get up there today, it actually could set up a nice opportunity to go short. But because of my long AUDNZD bias, it would probably make more sense in many ways to be selling NZDUSD once AUDUSD hits 0.7385. Whatever the case, the point I am making is that the US Dollar could soon make another run higher and it will be worth considering the fading of this run in the commodity currencies. USDCAD could be another play, with any dips down into the 1.3250 area to be used as an opportunity to buy into this major dip since January.
A RALLY TO SELL - The other trade that looks to be setting up right now is the SPX500. Selling rallies is the way to go now and if we see a jump back above 2000, it will be an excellent opportunity to build into a short. There is nothing about this rally that would make me believe it is sustainable and selling into it above 2000 would be a gift. Monetary policy is exhausted and the idea that a scaled back Fed or moves to negative interest rates from other countries is going to make investors feeling great about stocks is completely absurd. US data has also been pretty good of late, and no one is talking about this, but inflation is starting to tick up in the US. So as much as there is all this pressure for the Fed to scale back, it is going to be very hard to do so if the Fed is truly 'data dependent.' Tomorrow's monthly employment report out of the US will therefore be an important one to watch. If the data exceeds or even matches expectation, expect the Dollar to rally sharply and equities to fall hard. I don't think this USD uptrend is done just yet. Anyway, stand by and let's see if anything sets up today.