EUR/USD
The Euro depreciated against the Dollar on Thursday, relinquishing all of its weekly gains. The selloff in the EUR/USD came in response to weakening equities amidst discouraging housing data. Investors will get another dose of economic data on Thursday as the U.S. releases more housing, unemployment, and durable goods numbers. EUR/USD will be paying close attention to what ECB President Trichet has to say. It is likely he will forewarn of an upcoming monetary shock considering the EU and Eastern European economies are weakening further. Even though Germany’s Unemployment Change was lower than expected Thursday, the EU money supply was a full a percentage point lower than expecting. Therefore, a substantial rate cut at the ECB’s next meeting seems imminent. This detracts from the attractiveness of the long rate payoff of the EUR/USD. Even though the EUR/USD has stabilized above February lows, the currency pair still faces multiple downtrend lines to the upside. If the S&P futures should fall below 2008 lows, then the EUR/USD will likely follow suit. Consequently, we maintain our negative outlook on the EUR/USD. Fundamentally, we find support of 1.2758 with 2nd tier and bottom-end supports resting at 1.2690 and 1.1.2655, respectively. To the topside, we see resistances of 1.2806, 1.2836, 1.2883, 1.2946. The 1.30 area will continue to serve as a psychological barrier. The EUR/USD is currently exchanging at 1.2770.
GBP/USD
The Cable sold off sharply on Wednesday, following their positive correlation with U.S. equities. On a positive note, the Cable still has found support on the 12/12-12/20 trading base, and is currently strengthening from our 1st tier downtrend line. Whether the base holds will likely depend on the upcoming economic data coming from the U.S. today. If the data is worse than expected, the S&P futures could decline, sinking the Cable with them. However, we foresee a retest of our 2nd tier downtrend line in the near term with U.S. equities pointing positive in the pre-market. If the Cable should fall below the 12/12-12/20 trading base, we could see a heightened selloff with a possible retest of January lows. Britain’s Nationwide HPI showed a greater decline than analyst expectations this morning. Therefore, Britain’s house prices are falling in lockstep with that of the U.S. Since the global recession began with the crumbling housing market, these data points prove very negative. Meanwhile, BOE Governor King will address the public today and investors will see if he hints at any future monetary policy. Fundamentally, our 1.4328 and 1.4392 supports turn resistance while we hold our resistances of 1.4505 and 1.4569. To the downside, we maintain our supports of 1.4242 and 1.4142 with fresh supports of 1.4069 and 1.3973. The 1.45 level still serves as a psychological barrier to the upside with 1.40 serving as a cushion to the downside. The GBP/USD is currently exchanging at 1.4269.
USD/JPY
The USD/JPY continues to surge higher and is presently approaching our previous top-end resistance of 98.25. The strength comes as investors eagerly await the flood of economy data from both Japan and the U.S. Investors will want to see if Japan’s economy continues to fare worse than America’s in order to determine whether to send the USD/JPY above the highly psychological 100 level. The Carry Trade has unwound, and investors are now pricing the currency based on comparing economic fundamentals between the two nations. While it’s easy to get carried away and be highly optimistic on the USD/JPY, we must remind ourselves of how far the USD/JPY has fallen throughout the economic crisis. Hence, there are multiple webs of resistance which can easily wrap up the USD/JPY and send it tumbling lower. As we mentioned previously, the psychological 100 level will prove crucial. We added two more downtrend lines to gauge key walls the currency pair must face. If the S&P futures should rise and Japanese economic data plummet, we could see the USD/JPY continue its amazing run. In the meantime, the USD/JPY will try to stab above 2/17 lows. Fundamentally, we maintain our resistance of 98.25 with fresh resistances of 99.05, 99.64, and 100.30. To the downside, we find supports of 97.66, 97.22, 96.56, and 95.96. The USD/JPY is currently exchanging at 97.92.
Crude
Crude futures surged above our uptrend line and all three resistance levels after the U.S. released lower than expected Crude Oil Inventories for the second week in a row. The OPEC supply cuts seem to be having their desired impact. U.S. crude imports are declining to a point that the U.S. must use more of its reserves, reducing supply and raising the price per barrel. Therefore, we cannot accurately deduce that U.S. production and consumption of crude oil is improving, which is why the S&P futures are not following suit. However, while we might see more near-term gains, the medium-term downtrend is still in control until U.S. equities and consequently the demand side of the equation recovers. The 2/12-2/17 trading range should serve as a telling barrier for the time being. We added a 2nd tier near-term downtrend line. If crude futures and climb healthfully above the 2nd tier, then we may see accelerated gains in the near term. Fundamentally, we find supports of $42.23/bbl, $41.48/bbl and $40.65/bbl. The $40/bbl area turns into a reliable psychological cushion for the near-term. To the topside, we see fresh resistances of $42.93/bbl, $44.05/bbl and $45.12/bbl. Meanwhile, the $45/bbl area will serve as a psychological barrier. Crude futures are currently trading at $42.60/bbl.
Gold
Gold is finally finding support from our $951.92/oz support as the precious metal continues to bounce within our uptrend band. The precious metal is still comfortably above our 1st tier uptrend line while the S&P futures are facing considerable resistances. The negative correlation between Gold and equities should stay constant. Therefore, we have little reason to change our positive outlook on Gold, and we could very well see a retest of the highly psychological $1000/oz level. With the U.S. releasing more key data this morning, we expect another volatile day in Gold. Fundamentally, we maintain our resistances of $961.79/oz, $970.96/oz and $977.31/oz. To the downside, we hold our supports of $951.92/oz, $945.57/oz, $937.81/oz and $930.76/oz. Gold is currently trading at $954.10/oz.
Corn
Corn futures logged solid gains for the 2nd straight session, rising above our 2nd tier uptrend line on the news that the USDA is lowering its production forecast over 3% below previous analyst expectations. The reduced forecast comes in reaction to higher fertilizer costs. Additionally, the ethanol industry is expected to ask the U.S. government to issue a bill doubling the ethanol composition of U.S. gasoline from 10% to 20%. Finally, Crude prices are rising, increasing the attractiveness of ethanol as a substitute. These factors combined sent corn futures up to our previous top-end resistance of $3.6425/bshl. Our 1st tier uptrend and downtrend lines will reach an inflection point to, so we could see corn break out to the upside. However, the futures still need to face the psychological $4/bshl area. Fundamentally, see resistance at $3.69/bshl, with 2nd tier and top-end resistances hanging at $3.73/bshl and $3.77/bshl, respectively. To the downside, our $3.64/bshl resistance is turning support, with additional supports resting at $3.6025/bshl, $3.5625/bshl, and $3.51/bshl. Corn futures are currently trading at $3.6425/bshl.
S&P
The S&P futures ended a volatile session on a low note Wednesday after President Obama discouraged investors by implying increased government oversight of financial institutions. Furthermore, Existing Home Sales data was discouraging, showing the housing market has yet to bottom out. Therefore, despite the psychological initiatives via government stimulus and reassurances from Fed Chairman Bernanke, critical data continues to paint a bleak economic picture. Encouragingly, the banks and auto manufacturers are stabilizing a bit, easing fears of bankruptcies. The U.S. will release more key economic data today including New Home Sales, Durable Goods Orders, and weekly Unemployment Claims. Around the globe, investors will be keeping a keen ear on what Trichet and King have to say about the European and British economies, respectively. Additionally, Japan will release a slew of economic data in the evening, showing us just how bad the Japanese economy is. As a result, Thursday could provide more than enough evidence to heighten volatility over the next two trading sessions. Correlation wise, Crude futures are breaking out while the 30 Year is flirting with the idea of falling below February lows. Therefore, the correlations are creating a situation where the S&P futures could see a nice pop to the upside with a possible retest of the psychological 800 level. However, conditions remain highly sensitive and could swing one way or another at the drop of a coin. Our downtrend line is still bearing down on the S&P futures with the uptrend line well out of reach. Therefore, we have no circumstantial evidence to alter our negative outlook on U.S. equities. Fundamentally, we maintain our resistance of 774 with fresh 2nd tier and top-end hanging at 782 and 789.75, respectively. To the downside, we hold our support of 766.25, with 2nd tier and bottom-end supports resting at 760.25 and 754.25, respectively. The S&P futures are currently trading at 771.25.
30 Year
The 30 Year T-Bond futures crashed below our uptrend line Wednesday, making up for only moderate losses amidst large equity gains on Tuesday. However, the 30 Year futures stabilized above February lows in an attempt to keep the uptrend alive. The futures remain wedged between our uptrend line and 2nd tier downtrend line as the S&P futures trade around 2008 lows. Therefore, it appears investors are waiting to see if the 2008 lows for the S&P will hold. If not, then we may see the 30 Year futures surge well above February highs. We maintain our positive stance on the 30 Year futures until they fall below February lows and our 2nd tier downtrend line. Fundamentally, we find resistance of 127.08 with 2nd tier and bottom-end hanging at 127.82 and 128.58, respectively. To the downside, we see support of 126.38 with 2nd tier and bottom-end resting at 125.75 and 124.98, respectively. The 30 Year Treasury Bond futures are currently trading at 126 18.5.
The Euro depreciated against the Dollar on Thursday, relinquishing all of its weekly gains. The selloff in the EUR/USD came in response to weakening equities amidst discouraging housing data. Investors will get another dose of economic data on Thursday as the U.S. releases more housing, unemployment, and durable goods numbers. EUR/USD will be paying close attention to what ECB President Trichet has to say. It is likely he will forewarn of an upcoming monetary shock considering the EU and Eastern European economies are weakening further. Even though Germany’s Unemployment Change was lower than expected Thursday, the EU money supply was a full a percentage point lower than expecting. Therefore, a substantial rate cut at the ECB’s next meeting seems imminent. This detracts from the attractiveness of the long rate payoff of the EUR/USD. Even though the EUR/USD has stabilized above February lows, the currency pair still faces multiple downtrend lines to the upside. If the S&P futures should fall below 2008 lows, then the EUR/USD will likely follow suit. Consequently, we maintain our negative outlook on the EUR/USD. Fundamentally, we find support of 1.2758 with 2nd tier and bottom-end supports resting at 1.2690 and 1.1.2655, respectively. To the topside, we see resistances of 1.2806, 1.2836, 1.2883, 1.2946. The 1.30 area will continue to serve as a psychological barrier. The EUR/USD is currently exchanging at 1.2770.
GBP/USD
The Cable sold off sharply on Wednesday, following their positive correlation with U.S. equities. On a positive note, the Cable still has found support on the 12/12-12/20 trading base, and is currently strengthening from our 1st tier downtrend line. Whether the base holds will likely depend on the upcoming economic data coming from the U.S. today. If the data is worse than expected, the S&P futures could decline, sinking the Cable with them. However, we foresee a retest of our 2nd tier downtrend line in the near term with U.S. equities pointing positive in the pre-market. If the Cable should fall below the 12/12-12/20 trading base, we could see a heightened selloff with a possible retest of January lows. Britain’s Nationwide HPI showed a greater decline than analyst expectations this morning. Therefore, Britain’s house prices are falling in lockstep with that of the U.S. Since the global recession began with the crumbling housing market, these data points prove very negative. Meanwhile, BOE Governor King will address the public today and investors will see if he hints at any future monetary policy. Fundamentally, our 1.4328 and 1.4392 supports turn resistance while we hold our resistances of 1.4505 and 1.4569. To the downside, we maintain our supports of 1.4242 and 1.4142 with fresh supports of 1.4069 and 1.3973. The 1.45 level still serves as a psychological barrier to the upside with 1.40 serving as a cushion to the downside. The GBP/USD is currently exchanging at 1.4269.
USD/JPY
The USD/JPY continues to surge higher and is presently approaching our previous top-end resistance of 98.25. The strength comes as investors eagerly await the flood of economy data from both Japan and the U.S. Investors will want to see if Japan’s economy continues to fare worse than America’s in order to determine whether to send the USD/JPY above the highly psychological 100 level. The Carry Trade has unwound, and investors are now pricing the currency based on comparing economic fundamentals between the two nations. While it’s easy to get carried away and be highly optimistic on the USD/JPY, we must remind ourselves of how far the USD/JPY has fallen throughout the economic crisis. Hence, there are multiple webs of resistance which can easily wrap up the USD/JPY and send it tumbling lower. As we mentioned previously, the psychological 100 level will prove crucial. We added two more downtrend lines to gauge key walls the currency pair must face. If the S&P futures should rise and Japanese economic data plummet, we could see the USD/JPY continue its amazing run. In the meantime, the USD/JPY will try to stab above 2/17 lows. Fundamentally, we maintain our resistance of 98.25 with fresh resistances of 99.05, 99.64, and 100.30. To the downside, we find supports of 97.66, 97.22, 96.56, and 95.96. The USD/JPY is currently exchanging at 97.92.
Crude
Crude futures surged above our uptrend line and all three resistance levels after the U.S. released lower than expected Crude Oil Inventories for the second week in a row. The OPEC supply cuts seem to be having their desired impact. U.S. crude imports are declining to a point that the U.S. must use more of its reserves, reducing supply and raising the price per barrel. Therefore, we cannot accurately deduce that U.S. production and consumption of crude oil is improving, which is why the S&P futures are not following suit. However, while we might see more near-term gains, the medium-term downtrend is still in control until U.S. equities and consequently the demand side of the equation recovers. The 2/12-2/17 trading range should serve as a telling barrier for the time being. We added a 2nd tier near-term downtrend line. If crude futures and climb healthfully above the 2nd tier, then we may see accelerated gains in the near term. Fundamentally, we find supports of $42.23/bbl, $41.48/bbl and $40.65/bbl. The $40/bbl area turns into a reliable psychological cushion for the near-term. To the topside, we see fresh resistances of $42.93/bbl, $44.05/bbl and $45.12/bbl. Meanwhile, the $45/bbl area will serve as a psychological barrier. Crude futures are currently trading at $42.60/bbl.
Gold
Gold is finally finding support from our $951.92/oz support as the precious metal continues to bounce within our uptrend band. The precious metal is still comfortably above our 1st tier uptrend line while the S&P futures are facing considerable resistances. The negative correlation between Gold and equities should stay constant. Therefore, we have little reason to change our positive outlook on Gold, and we could very well see a retest of the highly psychological $1000/oz level. With the U.S. releasing more key data this morning, we expect another volatile day in Gold. Fundamentally, we maintain our resistances of $961.79/oz, $970.96/oz and $977.31/oz. To the downside, we hold our supports of $951.92/oz, $945.57/oz, $937.81/oz and $930.76/oz. Gold is currently trading at $954.10/oz.
Corn
Corn futures logged solid gains for the 2nd straight session, rising above our 2nd tier uptrend line on the news that the USDA is lowering its production forecast over 3% below previous analyst expectations. The reduced forecast comes in reaction to higher fertilizer costs. Additionally, the ethanol industry is expected to ask the U.S. government to issue a bill doubling the ethanol composition of U.S. gasoline from 10% to 20%. Finally, Crude prices are rising, increasing the attractiveness of ethanol as a substitute. These factors combined sent corn futures up to our previous top-end resistance of $3.6425/bshl. Our 1st tier uptrend and downtrend lines will reach an inflection point to, so we could see corn break out to the upside. However, the futures still need to face the psychological $4/bshl area. Fundamentally, see resistance at $3.69/bshl, with 2nd tier and top-end resistances hanging at $3.73/bshl and $3.77/bshl, respectively. To the downside, our $3.64/bshl resistance is turning support, with additional supports resting at $3.6025/bshl, $3.5625/bshl, and $3.51/bshl. Corn futures are currently trading at $3.6425/bshl.
S&P
The S&P futures ended a volatile session on a low note Wednesday after President Obama discouraged investors by implying increased government oversight of financial institutions. Furthermore, Existing Home Sales data was discouraging, showing the housing market has yet to bottom out. Therefore, despite the psychological initiatives via government stimulus and reassurances from Fed Chairman Bernanke, critical data continues to paint a bleak economic picture. Encouragingly, the banks and auto manufacturers are stabilizing a bit, easing fears of bankruptcies. The U.S. will release more key economic data today including New Home Sales, Durable Goods Orders, and weekly Unemployment Claims. Around the globe, investors will be keeping a keen ear on what Trichet and King have to say about the European and British economies, respectively. Additionally, Japan will release a slew of economic data in the evening, showing us just how bad the Japanese economy is. As a result, Thursday could provide more than enough evidence to heighten volatility over the next two trading sessions. Correlation wise, Crude futures are breaking out while the 30 Year is flirting with the idea of falling below February lows. Therefore, the correlations are creating a situation where the S&P futures could see a nice pop to the upside with a possible retest of the psychological 800 level. However, conditions remain highly sensitive and could swing one way or another at the drop of a coin. Our downtrend line is still bearing down on the S&P futures with the uptrend line well out of reach. Therefore, we have no circumstantial evidence to alter our negative outlook on U.S. equities. Fundamentally, we maintain our resistance of 774 with fresh 2nd tier and top-end hanging at 782 and 789.75, respectively. To the downside, we hold our support of 766.25, with 2nd tier and bottom-end supports resting at 760.25 and 754.25, respectively. The S&P futures are currently trading at 771.25.
30 Year
The 30 Year T-Bond futures crashed below our uptrend line Wednesday, making up for only moderate losses amidst large equity gains on Tuesday. However, the 30 Year futures stabilized above February lows in an attempt to keep the uptrend alive. The futures remain wedged between our uptrend line and 2nd tier downtrend line as the S&P futures trade around 2008 lows. Therefore, it appears investors are waiting to see if the 2008 lows for the S&P will hold. If not, then we may see the 30 Year futures surge well above February highs. We maintain our positive stance on the 30 Year futures until they fall below February lows and our 2nd tier downtrend line. Fundamentally, we find resistance of 127.08 with 2nd tier and bottom-end hanging at 127.82 and 128.58, respectively. To the downside, we see support of 126.38 with 2nd tier and bottom-end resting at 125.75 and 124.98, respectively. The 30 Year Treasury Bond futures are currently trading at 126 18.5.
