Super Mario Sunk My Battleship, No Bazooka Needed

Super Mario struck yesterday and it wasn’t just by cutting rates by 25 basis points, he also effectively put a rather swift end to the EU summit before it had even begun in earnest. In his press conference he made it fairly clear that the current treaty doesn’t allow for any major augmentation and thus these rocket scientists that make up the EU will need to find a new and yet more creative way of saving what is ever quicker becoming a consummate failure. As a result what the market has now come to rely on as “risk” was sold off rather strongly and the almighty USD made a resurgence. Key levels in major crosses were taken out and the EURUSD for example made one hell of an effort to trade down to almost that next important pivot level of 1.3250, stopping just shy as bids came in around the 1.3280 area.

The other high beta cross that took the biggest hit by far and away was the little AUDUSD battler, which after an initial stop run to the topside cleaning orders all the way into 1.0380 or so, took a major about face and ran, and I do mean ran down to 1.0050 overnight lows. USD/CAD similarly fared well to the upside having once again based around the 1.0050/60 levels, trading all the way higher into 1.0250/60. M&A flows in the Cable once again saw it rally early doors, but once the general sentiment turned, so did the Cable trading again lower into 1.5550/70 support.

The market of course will today sit and eagerly await late evening headlines regarding resolutions, bazookas and final solutions to what is clearly plainly put, a mess...

In the meantime you can expect heightened volatility in an ever thinning market losing liquidity with each passing minute. Most traders will prefer to sit on hands and only the brave and/or stupid will be chasing the inevitable 30/60 point moves as they occur. The year is ending and those that were able to make any money will be ever so keen to hold onto it, while those that are already down (depending on their suicidal tendencies) will potentially look to chase what’s left of this trading year.

Data on the day has us looking for both the CAD and USD Trade balance numbers, but of course all eyes will be on news tickers looking for that next market moving headline.

With regard to levels on the crosses, despite yesterday's wild moves the broader ranges still remain intact and levels likewise. Perhaps the only thing to keep an eye on will be the AUD/USD which still has the potential for more significant declines.