A new month, a new ball game – bring it on!

Salam friends,

What a month it was last month. Now let’s look to the future and target more pips..huhuh

Fundamental

Currently, higher-yielding currencies are buoyed by the rally in the stock market. This gave confidence to investors to invest in riskier assets as can be seen by the Commitment of Traders (pls refer to fx websites and just type the phrase in its search tool) whereby net shorts of USD has been at the extremes. It is a matter of ‘when’ rather than ‘if’ the USD will post a correction. And it would take a single (given the significance) or strings of bad economic data like the ones that are coming out this week to see investors unloaded their short position of the Uncle Sam’s currency.

Having said that, my bias for the week is to follow the market but cautiously; i.e by putting tight SL for fear of any strong reversal. It could be volatile this week looking at hordes of important data coming out.

The most important and anticipated data is coming out this Friday, the non other than the Non Farm Payroll (NFP). As usual, economist are targeting good numbers but what we did learn from last time? Expect the unexpected. Last month, the number came out worst by more than 107k than estimated.

Last week, advanced 2Q GDP result shows that the economy contracted less than expected. However, the revised 1Q GDP shows that the US economy suffered its worst q/q performance in 27 years. Personal consumption is still heavily subdued, so I am personally think that current strong rally in both the stock and currency markets are overly done and some correction looms.

Other important data coming out: ISM Manufacturing PMI (improve 46.4 vs. last mth’s 44.8), Pending Home Sales m/m (0.6% vs 0.1%), ISM Non-Manufacturing PMI (48.1 vs 47)

Sorry but this week I was pretty tight on time so I didn't update views on each of my favorite currencies.