Summary:
- USD rising despite sub par new home sales data
- USDMXN hits 6-week high back near 18
- Latest CFTC data offers cause for possible reversals in 3 markets
- Bitcoin rises back towards 4000 following Draghi comments
The main economic releases from the US this afternoon have come in a little worse than expected, with the fall in new home sales in particular a disappointment. Against a consensus forecast for 585k the print of 560k was sub par and also the lowest reading since the February release. Despite the negativity of the new home sales release, the US dollar has remained well supported after rising ahead of the release. The buck is rising against almost all of its peers on the day with notable gains seen against the SEK, PLN and NZD.
The technical situation for the USDMXN is growing increasingly in favour of bulls, with the market hitting a 6-week high today. Price has moved back above the Ichimoku cloud on D1 for the first time since the end of January, and this could be seen as a sign of a trend change after the declines seen throughout much of the last 8 months.
The CFTC report is widely viewed amongst market participant in an attempt to gauge what others are positioning for. Extreme levels of longs or shorts compared to recent history can often show that a trade is crowded and be seen to provide a contrarian signal for that market. The latest release suggests that reversals in the US dollar, Sugar and Oil could lie ahead due to large imbalances in speculative positioning.
Bitcoin rose to its highest level of the week around lunchtime with the cryptocurrency adding to recent gains following positive comments from ECB president Draghi. Draghi announced that the ECB has no a mandate to prohibit digital currencies like Bitcoin, he highlighted three major risks though. The first was the size, the second the extent of its use and the third an impact on the economy.