Market Update - 13 May 2013

• US Dollar is the theme for the coming week. If you all recall I have been calling for a Dollar rally since a couple weeks back and this could be the rally I’m calling for, but still too early to validate.

• Although sell in May and go away holds for Equities, but as all asset classes are correlated, this risk off in equities should also be tracked closely for FX and other asset class. I would be very cautious as we head towards end May and June.

• G10s is dragging everything higher, let’s start with AUDUSD, as of now it’s already below parity and if RBA continue to cut the cash rates to 2.50-2.25%, then good chance we can see the pair test 0.9880 the previous support. AUDMYR is already sub 3.0000 and looks to be heading lower.

• UK still looking bleak, they just avoided a dip back into recession but GBPUSD still looks likely to dip lower as 1.5300 support looks a little iffy now. GBPMYR at 4.6000, and much like AUDMYR looks likely to head lower in the short term.

• How can I not touch about USDJPY as well, the break above 100.00 is validated to be a firm break and its going to be a buy on dips from here on, but somehow even though the trend is your friend I really don’t know how high can it really go.

• USDMYR and USD/Asia is also heading higher. USDMYR opened back up above 3.0000 and we should see the pair track back towards the 3.0300 resistance. Trading range for the week 2.9700-3.0300, bias on the upside. I know market is pretty long USDMYR but for those players who haven’t turn long by now, you could be in for some real pain.

• US likely to have a 0.2% decline in top-line April retail sales, reflecting a decline in motor vehicle sales and lower gas station receipts. It will be interesting to see if US Equities market will continue to rally the way it has and continue to make new highs. Old saying goes, what goes up has to come down…and healthily so if we are to look for a longer more sustainable run up.