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

Positioning/Data Due Out/Chart View (AUD, EUR, 10-yr Note vs. $ Index)
1 June 2018/7:41 a.m. ET

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 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...

060118 due out.png


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.

060118 aud 240.png


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. 

060118 eur 240.png


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. 

060118 dollar index and 10 yr.png

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