Macro meets technical – enough already and no more noise!

When I make a call I try and play the probability of what is more likely to happen. I do this whilst hedging my risk to zero. For those who follow me on Linked In you’ll be aware it is a phrase I often use. I like it because it takes the pressure off me getting it right. By the way getting it wrong is more than ok but that’s for another post. I’ve been doing this for a while and i’m quite good at using my macro/technical filter. It comes after a number of years looking at screens whilst being hurt by Mr Market.

With that mind this week will be big in my eyes. The only reason is US CPI and the relationship with wages. That is all i’m concerned about.

I’m bearish USD and here are my considerations

  • US CPI last month – USD spot lost its short term gains AND MUCH MORE after last month’s release. Not good even if firm
  • NFP on Friday – massive beat on headline and weak wages meant USD lost the intraday fight. Wages and inflation still the key and subsequent fear for markets. Be aware.
  • US 10 year yields look toppy. The divergence still in play and risks are to the downside for DXY if yields drop and close to new lows.
  • DXY had a double bottom but failed to gain new significant highs. We remain in consolidation at the lows on the DAILY
  • LIBOR-OIS spreads exploding could be out of sympathy of TED spreads. Why ? Fiscal deficit increase via Trump or interbank risks much higher. Either way it’s bearish for USD

There is no other reason why i’m short and nothing else matters to me. See you in a weeks time


Patrick Reid
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