Fat Finger Freddie

Discussion in 'Market Commentary' started by SimonDenham, Jun 7, 2016.

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  1. SimonDenham

    SimonDenham Simon Denham CEO Mercor Index Staff Member

    A bit of excitement in the currency markets this morning as Cable shot up nearly 200 pips in a few seconds. Talk of fat finger errors are doing the rounds. Obviously someone somewhere made a mistake but it will not only be this person who will have suffered. The Reaction will have triggered a very large number of stop loss orders (or instant margin closures) which will have magnified the move and I can imagine that there will be some painful conversations for FX companies having to placate irate clients.

    Only those longs who happened to be glued to their screens at 05.10 this morning will have been in a position to benefit as the cross pretty much immediately fell back down again so this will be one instance where the market makers will be happy bunnies.

    In the UK the explaining away of the opinion polls is in full swing and by the close of business yesterday the Remain camp seemed to have almost convinced themselves that the results were actually the other way around. Reading most commentators there seems to be an almost wilful belief that what people say and what they do will be completely different. The disbelief in the more intellectual circles that the voters might actually vote against their best interests seems almost a matter of faith.

    Reading some of the financial commentators one would imagine that the UK was voting on whether to move the entire country to just offshore of Siberia rather than exiting from a trade bloc.

    The general talk in the markets is of extended trading hours, extraordinary margin requirements, etc etc. Normally when all this type of talk goes around the actual experience is a total non-event.

    Markets are looking solid this morning as investors regain some confidence after the recent weakness, German Industrial data has reversed yesterday’s soft number and dealers look to be more interested in believing the ‘good’ rather than the ‘bad’. Asia had a good session with the Hang Seng up nearly 1.5% and we are seeing solid buying across all indices and in most equity classes.

    Economic Data

    As mentioned the German Data this morning on output in April was in line with expectations but did not reflect the weak orders data out yesterday. The reaction of the German market seems a little extreme as they seem to consider that a future indicator to be less important than a measure of the past. But this is the nature of Bullish (or Bearish in their time) markets. The temptation is always to read information in the light of the prevailing mood.

    French data was interesting as well with both imports and exports higher than forecast. Whilst the trade balance has deteriorated slightly the general tone of the data is for increased activity which will be of some comfort to President Hollandaise Sauce.

    This afternoon we have about five or six minor US releases on revised data for Labor costs and Productivity and a release for April’s Consumer Credit.



    As we mentioned yesterday the FTSE seemed to be finally showing some indications of strength and the solidity showed throughout the session closing up about 70 points whilst the other European markets rather wallowed.

    This morning we are up another 40 points but this time following in line with other global markets. The fear of Brexit does not seem to have permeated the equity markets at all with even the more UK centric FTSE 250 holding its own over the last four or five months.

    Support is at 6175/85, 6045/50 then 5980/90

    Resistance is at 6340/50 then 6410/30


    As we commented yesterday the Dax’s poor performance over the last few sessions appeared a little perverse and this morning they seem to have woken up to the fact and bought in with a vengeance. The index is the best performing of the majors today (by quite some margin) and is currently up 130 points (1.3%). Whether it can hold on to this particular moment in the sun is another matter as the index has generally struggled above 10250 in recent times.

    Support is at 10160/70, 10090/00, 10030/40 and 9880/90

    Resistance is at 10280/90 then 10350/60 and 10410/20


    the Dow is just under the 18000 level in early action this morning continuing on from the late moves higher yesterday. Dealers will be mindful that the 18000-18300 level has proved something of a graveyard for the bulls in recent years so there will be a certain amount of caution BUT as we have commented many times over the last few months there is not much value in cash, bonds and property so the search for yield may well push equities above ‘reasonable’ valuations.

    Support is at 17870/80, 17710/20, 17605/15
    Resistance is at 17990/00, 18050/60, 18215/25

    FX markets


    The Euro has slowly had the life squeezed out of it over the last 24 hours and we are still just under resistance at 1.1365/75 which is where we were this time yesterday. The 200 point spike in sterling might as well have been on another planet as the Euro took absolutely zero interest managing just 8 pips of reaction (which was swiftly reversed!).

    The entire trading range since the effects of the NFP release had dissipated could be covered by a small paper napkin and truth be told it is tempting to just toss a coin to try to guess which way we will go next.

    Support is at 1.1320/30, 1.1223/35 and 1.1110/20
    Resistance is 1.1365/75, 1.1460/70, 1.1590/00 then 1.1720/30


    Excitement in the pound today as some poor bugger is probably, as I write, picking up his P45. Considering the controls that can be put into trading systems nowadays the concept of actually having Fat Finger events seems totally bizarre but there is always someone, somewhere who will not use (or even remove) such controls.

    The rally was almost entirely reversed by the 08.00 mark but since then we have seen continued buying as dealers probe the up side anyway. Such thinking is not actually unreasonable as there was obviously not an enormous amount of resistance to the Fat Finger event so the temptation to ‘have another go’ at the upside is almost irresistible.

    Support is at 1.4440/50, 1.4380/90, 1.4320/30 and 1.4250/60

    Resistance 1.4560/70, 1.4745/55, 1.4810/20 1.4915/25


    Gold is .. unchanged from this time yesterday….. whheeeee. I have to admit not really paying much attention to the yellow metal yesterday as it did not seem to be doing anything and it seems to be doing just as much today. The daily candlestick shows an almost perfect Doji which is often taken as a signal for a pending reversal. The problem is … would this be a reversal of the recent bounce? Or a reversal of the bearish trend of the last month?

    Support is at 1240/42 1228/30 1216/18, 1204/06

    Resistance is 1250/52 and 1266/68 then 1277/79


    Another attempt at breaking above 50/51 dollars for the Brent contract and this particular attempt has been on-going for some time now.

    Unless the market has a change of heart the bulls will remain confident of a break out.

    Support is at 48.60/70, 47.40/50, 46.60/70 and 45.35/45,
    Resistance is at 50.70/80 and 52.05/15

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