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