An Interesting Thursday by At Least One Measure

Currencies dithered all day long yet again, and mostly ended the day back at the starting point. Commodity currencies tried to sell-off, but ended the day unchanged. JPY crosses did largely the same. Meanwhile, risk ended the day on another high note, with the major US indices closing at a new high for the cycle, though the S&P's new high is only about two points above yesterday's mark. Bonds tried to gain encouragement from a very strong 30-year T-bond auction in the US - the strongest in about half a year in fact - but ended the day largely unchanged as well.

GBPUSD followed up on yesterday's bullish hammer reversal with some further gains today, but the magnitude was not overwhelming. EURGBP also reversed most of yesterday's gains. Still, it was a strong performance from the pound considering yesterday's bevy of ugly developments for the UK. Is the market getting a bit tired of selling the pound here?

The SNB failed to ignite the any volatility in CHF crosses and EURUSD's range on the day was 66 pips, which is the smallest range for a Thursday since last August. Whether it means anything or not, it is interesting. It might suggest that there is a lack of conviction in the market's response to risk appetite. It might be some sign of "the calm before the storm" Or it might mean that markets are simply going into boring mode. We would only reject the final hypothesis. Still, there is little juice to extract from such a dry boring day of activity, except to note that low volatility could mean an opportunity to express a view through options, as they're about as cheap as they have been since the crisis hit. (see more on this in the chart below)

Our chart of the day

One of the more interest charts we've dreamt up on one of the more forgetful days in recent memory. Here is a look at the VIX (yellow) as compared to the EURUSD 3M vol. (red) and then the AAII survey of percent of stock market investors who are bearish (green), which is close to its lowest multi-year lows. Looks like complacency from where we are sitting.

Looking ahead

Tonight we have NZ retail sales and tomorrow we have the Canadian employment report and the US Advance Retail Sales, as well as the preliminary University of Michigan confidence report for March.

Be careful out there.

Saxobank

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