TODAY IS THE ONE - I said earlier this week that today would probably be more important to markets than Tuesday. On Tuesday, we got to hear from the Fed Chair as he testified before Congress, and the market was very much focused on this testimony. And while we did see movement, as suspected, it seemed to me the market was holding back and may have been waiting for today's second round of testimony before really making a move. The reason has less to do with the testimony itself and more to do with what else is going on today, that could end up making today's testimony more interesting.
Q&A WISHLIST That thing going on today is US core PCE, an highly valued indicator when it comes to assessing inflation risk. So far in 2018, the signs have been there as far as confirming a push to higher inflation, but there haven't been enough just yet to have the market fully convinced. If the core PCE print comes in above forecast, it could open a much bigger reconsideration of positioning, that would have the Dollar racing higher and US equities collapsing. How this relates to the Fed Chair testimony in front of the Senate Banking Committee, has to do with the fact that the data will be out before Powell gets into the Q&A. So if we're at the point where one piece of data can make a difference, it would be great to hear someone ask Powell about it. All of this of course assumes the data comes in above forecast.
POSITIONS & STRATEGY - As far as positioning goes, February was super thin. Still, I can't say it was a bad thing. The fact that we sat back and took what was given is a great thing and it will be that much sweeter if we see more follow through on this AUDNZD position. Right now, the market needs to get back above 1.0900 to get this thing going. But so far, the general direction has been good. I'd like to see the market keep pushing and get back to challenging the 2017 high around 1.1300 sooner than later. Looking ahead, we'll see what comes next, but I would love to get a shot at buying GBPUSD into a bigger pullback. The chart looks super constructive and any weakness would be nothing more than a necessary correction before the market puts in that next higher low and continues along with this uptrend that has taken form over the past several months. Ideally, the market drops into the 1.3400-1.3600 area that coincides with rising channel support. Fundamentally, this one plays into less Brexit bumps and safe haven flow that benefits the Pound.