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Price Levels & Exuberance

The final 30 minutes of Wednesday’s S&P500 cash session saw the biggest decline in the index since September. The sell-off across US indices (and global futures) was largely attributed to the release of the March FOMC minutes and House Speaker Paul Ryan’s comments on the remaining obstacles facing Trump’s tax stimulus. The quotes below indicate FOMC officials have grown bolder in expressing their doubts with equity valuations, something similar to Greenspan’s irrational exuberance speech 21 years ago.

Technical analysts will tell you the above explanations are fundamental triggers for developments largely apparent in the charts. The 20,800 and 2370 territories in the Dow30 and SP500 acted as previous support, now resistance levels, while the USD index faces rising pressure at 100.80s. We could elaborate further on the relevant pressure points in US 10-year yields and individual USD pairs, but… you get the picture.

As we approach tomorrow’s US jobs report, some decisions may have to be made with regards to our existing USD and cross pair Premium trades. Some may say Friday’s report is least important of the year as there is no Fed meeting scheduled for this month. The upside surprise in this week’s ADP release may suggest the figures could come in above the 180K expected, following the 235K in February. But as we saw in the last report, USD and yields are increasingly to the mercy of the earnings figures. 4 Premium trades remain in FX and 2 in indices. The 2 trades in commodities have not and will not be touched for quite some time.

Ashraf Laidi
Ashraf Laidihttp://ashraflaidi.com/
Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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