The $AUD which I showed yesterday and thus the AUD/JPY should take a back seat to USD/JPY (as shown with a negative divegrence in $AUD yesterday) as there are renewed calls on the street that the RBA will have to cut rates before year end.
AUD/JPY's positive divergence off lows for the week yesterday and a range bound move ever since yesterday's negative divegrence in the $AUD single currency futures.
"There was no Dominant P/V relationship today. The only thing I see that might suggest a little noisier bounce are several of the major averages with "Hammer" candlesticks on a slight increase in volume which typically is a pretty decent indication of a close higher the next day"
Gold is worth watching, after yesterday's update, we may have the signal for the timing of a decline there...
The EU is obviously a bit nervous as new Russian sanctions are unveiled, German Bunds rose to all time yield highs and there's trouble again in Portugal as Banco Espirito Santo was down -10% on the day at 1 week lows.
As for the major event tomorrow we find out what's what with GDP at 8:30, the US "may" be in recession this time tomorrow. Typically two consecutive quarters of back to back negative growth signal a recession, but some purists believe that GDP must print at least +2.9 or else the entire first half shows no growth and we are thus in a technical recession, although I doubt the mainstream financial media would consider it as such.
As for tomorrow's F_O_M_C policy statement (meeting begins today), I don't expect much although we have to always beware of the F_E_D knee jerk effect that is so commonly seen and so often incorrect or faded at some point. I doubt the F_O_M_C will release anything too market moving UNLESS that's specifically what they want. The fact is that employment and inflation data have been somewhat inconclusive since the last meeting with inflation data moving pretty much sideways, while employment data has toned up a bit, forward looking forecasts from manufacturing and services reports have al shown expectations for, if not real declines in employment moving forward. Business and Housing as well as wage growth/inflation have certainly been softer since the last meeting, but I just don't think the data has been firm enough to make any solid decisions based on them, unless as we have suspected, the F_E_D is already on a preset course that is data independent. Just this week the F_E_D's Fisher wrote in the WSJ that the F_E_D should/may consider shrinking the reinvestment of assets in their portfolio for the first time, essentially rather than letting assets mature and roll off the F_E_D's balance sheet, this would be active balance sheet contraction. If you ever want to see why they say "Don't fight the F_E_D, look at a chart of the size of the F_E_D's balance sheet with the SPX overlaid. Still I'd be aware of the knee jerk effect and I'm keenly interested to see if there's a change of character there as well as we usually see it 90% of the time.
The ECI and PCE inflation data and NFP non Farm Payrolls later in the week will be much more solid data and I seriously doubt the morning's GDP release will change the statement at that point, so I'd expect the September meeting to stir the pot much more than tomorrow's policy guidance.
Keep an eye on our HLF short today, I'll follow up on GLD/GDX and of course Z.
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