Is risk going OFF?

May 23, 2011

FOREX, Global Macro

I’m always wary of Asian trade headfakes as Asia often gets it wrong in our timezone (traders in our region not the generic population) so it’s too early to be calling time, on the risk rally, for the sake of not even half the worlds first trading day of the week. It’s like we wrote this morning, the greek situation really threatens a complacent, although worried, market but it doesn’t guarantee a crash today.

So even though the AUD, Equities and other risk assets in our time zone are off  we’ll have to wait till tomorrow to see how the globe views the current Eurozone problems and whether this is the start of something bigger. Cyclically, or seasonally probably, as we move toward summer holidays in the northern hemisphere trader’s and investor’s thoughts turn to relaxation and anything that threatens that will be abandoned.

To me that says position squaring and a reversal of recent runs – at least over the next month or two if not tonight.

In summary for the AUD I respect the 1.05 region until it breaks then look for 1.0350 and then 1.02 below that. For equities the S&P looks headed to test support at 1318 and a break of here opens the way to 1290 and 1250. This implies a move back toward 4473 really important support for the ASX 200.

Levels to watch for support but a northern summer sell off might offer some very good individual company opportunities in the Australian and global equity markets and an opportunity to buy AUD or AUD crosses relatively cheap.

Here is my latest AUD short term outlook over at MacroBusiness

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Trackbacks/Pingbacks

  1. Close Call – markets show their teeth | Lighthouse Securities - May 24, 2011

    […] we asked if risk is going off and we’d have to argue that if it’s not off it is a little ripe. Yesterday’s price […]

  2. Cats, Debts and ancient Greece | Lighthouse Securities - May 25, 2011

    […] Importantly for investors at home here in Australia we saw the ASX 200 bounce of really important support that stretches back to the 2009 low. It’s down a little this morning which could lead to that pullback to 4473 we talked about earlier in the week. […]

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