USD/JPY
The USD/JPY balanced along our 2nd tier downtrend line, and is surging again to the upside looking to retest the highly psychological 100 area. The move comes as the S&P futures try to stabilize at 700 ahead of heavily-weighted economic data. Japan will release its Capital Spending number tonight with analysts expecting a decrease of -15.6%. If capital expenditure decreases more than expected, signaling lower production, and U.S. economic data comes in line then we could easily see a retest of 100. With the Carry Trade unwound, investors are now judging the currency based on the comparative economic health of the two nations. With Japan faring worse the America, the USD/JPY continues its impressive rally. Fundamentally, we maintain our resistances of 99.64 and 100.30, with fresh resistances of 100.80 and 101.58. To the downside, we find supports of 99.05, 98.25, 97.66, and 97.22. The USD/JPY is currently exchanging at 99.30.
GBP/USD
The Cable is stabilizing from the psychological 1.40 area and is rising back above our 1st tier downtrend line. Therefore, we could see some solid near-term gains with a retest of our 2nd tier downtrend line. The strength of the Cable comes on the heels of a better than expected Services PMI. Furthermore, the S&P futures are fighting to stabilize around 700, which in turn is edging the GBP/USD back into the bottom-end of the February trading range. Don’t forget a strong positive correlation exists between the Cable and U.S. equities due to Britain’s heavy reliance on the financial sector for GDP growth. However, despite the present stabilization of the Cable, the downtrend remains largely intact. It will take a seismic fundamental shift to alter the course of the GBP/USD. If the S&P futures can’t stabilize at 700 and a sharp selloff ensues, expect the Cable to follow suit. Fundamentally, we maintain our resistances of 1.4119, 1.4173, and 1.4219 with fresh top-end resistance of 1.4292. To the downside, our 1.4078 resistance turns support while we hold our supports of 1.4023, 1.3964, and 1.3905. 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 1.4094.
EUR/USD
The EUR/USD continued its selloff on Tuesday as the S&P futures dipped below 700. However, the EUR/USD found support on our previous bottom-end support of 1.2458 early Wednesday. Euro traders are holding onto their breath waiting to see if U.S. equities manage to stabilize from present levels. If this is the case, then 2008 lows could hold for the time being. However, if the U.S. economic data is catastrophic and a sharp selloff ensues, we very well may see the EUR/USD test the patience of October 2008 lows. The biggest concern for the EUR/USD, not including U.S. equities, is the condition of Eastern Europe. Many of the EU’s largest banks have significant exposure to Eastern European economies. Therefore, if these economies worsen, the EU will find itself incredibly vulnerable. Meanwhile, the EUR/USD got a little good news today with its Final Services PMI coming in better than expected. However, the number still shows economic contraction. Fundamentally, we maintain our support of 1.2458 with 2nd tier and bottom end resting at 1.2405 and 1.2344, respectively. To the topside, our 1.2514 and 1.2555 supports turn resistance while we hold our resistances of 1.2634 and 1.2690. The EUR/USD is currently exchanging at 1.2511.
S&P
The S&P futures continued their rapid decline on Tuesday, setting new 2009 lows in the process. The futures have popped back up to the psychological 700 level on Wednesday morning as investors are fighting to keep the hope of stability alive. For if the S&P gives up on 700, the selloff could gain speed in the near term before finding a new bottom. Housing data was just horrible yesterday, for lack of a better word. Pending Home Sales declined by -7.7% while analysts were expecting a downturn of -3.0%. To make matters worse, the last release was revised downwards to -4.8%. Therefore, the Obama administration’s housing stimulus has either not filtered into the system yet, or the stimulus is having little impact. Additionally, vehicle sales are plummeting for U.S. automakers. Therefore, GM and Chrysler will need every penny of the bailout package they’re requesting, or the automakers may have no choice but to file for bankruptcy. Conversation and speculation concerning bank nationalization and systemic risk are still circling around the campfire. High uncertainty should prevail until a broad sweeping solution is introduced. High uncertainty normally yields declining equity prices, as we’ve seen throughout the economic crisis. Today the U.S. will release more data, including ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, and Crude Oil Inventories. Furthermore, Treasury Secretary Geithner will address the public while the Fed releases it’s Beige Book, giving investors an inside look into the government’s sentiment concerning the economy. Meanwhile, correlations are making positive developments for those long the S&P. Crude futures are surging through our 2nd tier downtrend and uptrend lines while Gold continues to experience profit taking. To top the cake, the 30 Year T-Bond futures look to post more losses. Hence, the correlations are pointing towards a near-term recovery in the S&P futures, which we very well may see as investors try to hold onto 700. Fundamentally, we find resistances of 709 with 2nd tier and top-end hanging at 717.25 and 725.5, respectively. To the downside, we see support of 697.75 with 2nd tier and bottom-end sitting at 688 and 682, respectively. The S&P futures are currently trading at 703.00.
Crude Oil
Crude futures have surged through our 2nd tier downtrend line and are now climbing above our near-term uptrend line. It seems crude has put in a nice bottom, and we could see a retest of February 27 highs shortly. The OPEC supply cuts are having their desired effect on price, which could be confirmed further by the Crude Oil Inventories release this afternoon. While the medium-term downtrend is far from over, Crude futures could easily continue their solid near-term rally. The mid-January to mid-February trading range will provide a true test for the futures. Fundamentally, we find supports of $42.22/bbl, $41.75/bbl, $41.35/bbl, and $40.60/bbl. The $40/bbl area remains a reliable psychological cushion for the near-term, while the $45/bbl area acts as a psychological barrier. To the topside, we see resistances of $42.82/bbl, $43.65/bbl, $44.34/bbl, and $44.92/bbl. Crude futures are currently trading at $42.76/bbl.
Gold
Gold sold off further on Tuesday despite equities finishing the session relatively flat. Gold has dipped below our 2nd tier uptrend line, but still has the psychological $900/oz area and our 1st tier uptrend line to rely on. Gold’s correlation with equities has been a bit out of whack over the past few sessions, which could indicate healthy fundamental profit-taking. On the other hand, if Gold closes below $900/oz. and our 1st tier, we could witness a heightened selloff in Gold coupled with a strong rally in equities. Considering the remaining fundamental supports, we maintain our positive outlook on Gold trend wise. Fundamentally, we find resistances of $922.49/oz, $930.76, $937.81/oz, and $945.57/oz. To the downside, we see supports of $911.60/oz, $903.29/oz., $895.12/oz., and $889.48/oz. The $900/oz area should serve as a reliable psychological cushion in the near-term. Gold is currently trading at $911.71/oz.
30 Year
The 30 Year T-Bond futures are weakening Wednesday, but found temporary support on our 124.98 level. If the futures are to fall below February lows, we anticipate a heightened near-term selloff. Since equities and treasuries are normally negatively correlated, the lack of movement to the upside in the 30 Year with equities at critical lows shows the downtrend is intact. Furthermore, the fact the 30 Year futures are declining with equities shows investors are concerned the demand for government debt is insufficient to satisfy supply. As a result, yields are rising and price falling, placing exorbitant downward pressure on the 30 Year T-Bond futures. With the uptrend walking away into the distance and the 2nd tier downtrend line re-approaching, we maintain our negative stance on the 30 Year futures. Fundamentally, we hold our resistance of 125.75 with 2nd tier and bottom-end hanging at 126.64 and 127.25, respectively. To the downside, we maintain supports of 124.98 and 124.36. The 30 Year Treasury Bond futures are currently trading at 125 05.0.
The USD/JPY balanced along our 2nd tier downtrend line, and is surging again to the upside looking to retest the highly psychological 100 area. The move comes as the S&P futures try to stabilize at 700 ahead of heavily-weighted economic data. Japan will release its Capital Spending number tonight with analysts expecting a decrease of -15.6%. If capital expenditure decreases more than expected, signaling lower production, and U.S. economic data comes in line then we could easily see a retest of 100. With the Carry Trade unwound, investors are now judging the currency based on the comparative economic health of the two nations. With Japan faring worse the America, the USD/JPY continues its impressive rally. Fundamentally, we maintain our resistances of 99.64 and 100.30, with fresh resistances of 100.80 and 101.58. To the downside, we find supports of 99.05, 98.25, 97.66, and 97.22. The USD/JPY is currently exchanging at 99.30.
GBP/USD
The Cable is stabilizing from the psychological 1.40 area and is rising back above our 1st tier downtrend line. Therefore, we could see some solid near-term gains with a retest of our 2nd tier downtrend line. The strength of the Cable comes on the heels of a better than expected Services PMI. Furthermore, the S&P futures are fighting to stabilize around 700, which in turn is edging the GBP/USD back into the bottom-end of the February trading range. Don’t forget a strong positive correlation exists between the Cable and U.S. equities due to Britain’s heavy reliance on the financial sector for GDP growth. However, despite the present stabilization of the Cable, the downtrend remains largely intact. It will take a seismic fundamental shift to alter the course of the GBP/USD. If the S&P futures can’t stabilize at 700 and a sharp selloff ensues, expect the Cable to follow suit. Fundamentally, we maintain our resistances of 1.4119, 1.4173, and 1.4219 with fresh top-end resistance of 1.4292. To the downside, our 1.4078 resistance turns support while we hold our supports of 1.4023, 1.3964, and 1.3905. 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 1.4094.
EUR/USD
The EUR/USD continued its selloff on Tuesday as the S&P futures dipped below 700. However, the EUR/USD found support on our previous bottom-end support of 1.2458 early Wednesday. Euro traders are holding onto their breath waiting to see if U.S. equities manage to stabilize from present levels. If this is the case, then 2008 lows could hold for the time being. However, if the U.S. economic data is catastrophic and a sharp selloff ensues, we very well may see the EUR/USD test the patience of October 2008 lows. The biggest concern for the EUR/USD, not including U.S. equities, is the condition of Eastern Europe. Many of the EU’s largest banks have significant exposure to Eastern European economies. Therefore, if these economies worsen, the EU will find itself incredibly vulnerable. Meanwhile, the EUR/USD got a little good news today with its Final Services PMI coming in better than expected. However, the number still shows economic contraction. Fundamentally, we maintain our support of 1.2458 with 2nd tier and bottom end resting at 1.2405 and 1.2344, respectively. To the topside, our 1.2514 and 1.2555 supports turn resistance while we hold our resistances of 1.2634 and 1.2690. The EUR/USD is currently exchanging at 1.2511.
S&P
The S&P futures continued their rapid decline on Tuesday, setting new 2009 lows in the process. The futures have popped back up to the psychological 700 level on Wednesday morning as investors are fighting to keep the hope of stability alive. For if the S&P gives up on 700, the selloff could gain speed in the near term before finding a new bottom. Housing data was just horrible yesterday, for lack of a better word. Pending Home Sales declined by -7.7% while analysts were expecting a downturn of -3.0%. To make matters worse, the last release was revised downwards to -4.8%. Therefore, the Obama administration’s housing stimulus has either not filtered into the system yet, or the stimulus is having little impact. Additionally, vehicle sales are plummeting for U.S. automakers. Therefore, GM and Chrysler will need every penny of the bailout package they’re requesting, or the automakers may have no choice but to file for bankruptcy. Conversation and speculation concerning bank nationalization and systemic risk are still circling around the campfire. High uncertainty should prevail until a broad sweeping solution is introduced. High uncertainty normally yields declining equity prices, as we’ve seen throughout the economic crisis. Today the U.S. will release more data, including ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, and Crude Oil Inventories. Furthermore, Treasury Secretary Geithner will address the public while the Fed releases it’s Beige Book, giving investors an inside look into the government’s sentiment concerning the economy. Meanwhile, correlations are making positive developments for those long the S&P. Crude futures are surging through our 2nd tier downtrend and uptrend lines while Gold continues to experience profit taking. To top the cake, the 30 Year T-Bond futures look to post more losses. Hence, the correlations are pointing towards a near-term recovery in the S&P futures, which we very well may see as investors try to hold onto 700. Fundamentally, we find resistances of 709 with 2nd tier and top-end hanging at 717.25 and 725.5, respectively. To the downside, we see support of 697.75 with 2nd tier and bottom-end sitting at 688 and 682, respectively. The S&P futures are currently trading at 703.00.
Crude Oil
Crude futures have surged through our 2nd tier downtrend line and are now climbing above our near-term uptrend line. It seems crude has put in a nice bottom, and we could see a retest of February 27 highs shortly. The OPEC supply cuts are having their desired effect on price, which could be confirmed further by the Crude Oil Inventories release this afternoon. While the medium-term downtrend is far from over, Crude futures could easily continue their solid near-term rally. The mid-January to mid-February trading range will provide a true test for the futures. Fundamentally, we find supports of $42.22/bbl, $41.75/bbl, $41.35/bbl, and $40.60/bbl. The $40/bbl area remains a reliable psychological cushion for the near-term, while the $45/bbl area acts as a psychological barrier. To the topside, we see resistances of $42.82/bbl, $43.65/bbl, $44.34/bbl, and $44.92/bbl. Crude futures are currently trading at $42.76/bbl.
Gold
Gold sold off further on Tuesday despite equities finishing the session relatively flat. Gold has dipped below our 2nd tier uptrend line, but still has the psychological $900/oz area and our 1st tier uptrend line to rely on. Gold’s correlation with equities has been a bit out of whack over the past few sessions, which could indicate healthy fundamental profit-taking. On the other hand, if Gold closes below $900/oz. and our 1st tier, we could witness a heightened selloff in Gold coupled with a strong rally in equities. Considering the remaining fundamental supports, we maintain our positive outlook on Gold trend wise. Fundamentally, we find resistances of $922.49/oz, $930.76, $937.81/oz, and $945.57/oz. To the downside, we see supports of $911.60/oz, $903.29/oz., $895.12/oz., and $889.48/oz. The $900/oz area should serve as a reliable psychological cushion in the near-term. Gold is currently trading at $911.71/oz.
30 Year
The 30 Year T-Bond futures are weakening Wednesday, but found temporary support on our 124.98 level. If the futures are to fall below February lows, we anticipate a heightened near-term selloff. Since equities and treasuries are normally negatively correlated, the lack of movement to the upside in the 30 Year with equities at critical lows shows the downtrend is intact. Furthermore, the fact the 30 Year futures are declining with equities shows investors are concerned the demand for government debt is insufficient to satisfy supply. As a result, yields are rising and price falling, placing exorbitant downward pressure on the 30 Year T-Bond futures. With the uptrend walking away into the distance and the 2nd tier downtrend line re-approaching, we maintain our negative stance on the 30 Year futures. Fundamentally, we hold our resistance of 125.75 with 2nd tier and bottom-end hanging at 126.64 and 127.25, respectively. To the downside, we maintain supports of 124.98 and 124.36. The 30 Year Treasury Bond futures are currently trading at 125 05.0.
