It is hard to believe Twitter is a large-cap company when you see a near 30% gain in the post market. These sorts of moves are almost what you’d expect from an oil exploration or small pharm company, but it seems the results have wholly impressed. An 11% beat on revenue and 54% beat on adjusted earnings have certainly helped, with upgrades to the companies Q3 and full-year estimates. Advertising growth is accelerating, with mobile advertising revenue growth of 186% yoy. Clearly there has been some heavy short covering as well, but the volatility in this name is extremely impressive and it seems many are seeing actually quite a strong investment case here, despite being expensive.
My long USD/CAD idea from July 15 (at 1.0711) has traded through my limit of 1.0850 and thus the position has realised a 1.3% profit. I am keen to look at new long ideas. I suggested looking at potential long USD/JPY trades yesterday in ‘one to watch’ from 101.84, and again this seems to be working out fairly well. It promises to be a big night for the USD, and while the US ten-year treasury has found good buyers of late (now at 2.45%), at the same time the two-year treasury has been sold off and at 54 basis points is the highest yield since May 2011. This is the key catalyst behind the moves higher of late in the USD. With US Q2 GDP (expected to grow 3% yoy), ADP private payrolls (+230,000) and the FOMC meeting at 04:00 AEST in focus, it promises to be an interesting night.
Gold is a tough asset to trade right now, although I would potentially be selling into moves to $1320 in the short term. Good bids seem to be coming into the market around $1292 to $1290, so a break here could see gold trading down to the $1250 area. The FOMC meeting could be interesting and traders will be dissecting the statement for further clues around when short-term rates could be lifted. Judging by price action in the USD and front-end treasuries, it seems the market is saying the risks are towards a more hawkish stance.
EUR/USD is oversold, while short positioning (as seen in the weekends Commitment of Traders report) is also stretched, however it seems the pair wants to head to the double-top target of 1.3380. I would potentially be working offers into moves to the 1.3450 area, but with new sanctions imposed by the EU on Russian state-owned firms, it will be Europe that suffers the most here. It’s interesting to see that European equities are also underperforming both other developed markets, but emerging markets even more so. A short bias is certainly warranted from both a fundamental and technical standpoint.
This currency pair opens at 16:00 AEST, so it will be interesting to see potential weakness in the Russian ruble given the new sanctions imposed on Russian corporates.