GBP/USD
The Pound has depreciated against the Dollar over the past 24 hours despite the enormous rally in U.S. equities on Tuesday. The nationalization of Lloyd’s bank is obviously not sitting well with investors. The BOE is treading water playing with nationalization and quantitative easing since the approach has proven unsuccessful in the past. Hence, investors continue to punish the Cable. To make matters worse, Britain reported a Trade Balance below expectations, revealing that the economy continues to import far more than it exports. A negative Trade Balance is normally highly negative for the home currency. Hence, investors aren’t biting on the rally taking place on Wall Street. The GBP/USD remains far below all of our downtrend lines. While we may see the continuation of its near-term rally, we hold our negative outlook trend wise. Fundamentally, we find resistances of 1.3844, 1.3877, 1.3936, and 1.4001. To the downside, we see supports of 1.3805, 1.3777, 1.3726, and 1.3683. The 1.40 level serves as a psychological barrier to the upside with 1.35 playing as a cushion to the downside. The GBP/USD is currently exchanging at 1.3833.
EUR/USD
The EUR/USD experienced wild swings yesterday despite an incredible rally in U.S. equities. Considering both have been positively correlated during significant movements, the EUR/USD’s lackluster performance was a bit disconcerting. However, the EUR/USD found support on our uptrend line once again, and is rallying strongly on Wednesday. Interestingly, the Euro is appreciating today despite extremely negative reports from the EU’s economic powerhouse, Germany. Germany’s PPI came in below expectations while the country’s Factory Orders data was dismal. Hence, the EUR/USD certainly doesn’t have the data backing to follow through on its present rally. While the EUR/USD has been trying to piece together an uptrend over the last week, the currency pair has not shown a convincing streak of upward movements thus far. The EUR/USD still faces February highs, our 2nd tier downtrend line, and the psychological 1.30 level. Considering all of the above, even though we may see the continuation of a near-term rally, we have a negative stance on the EUR/USD trend wise. Fundamentally, we find support of 1.2730 with additional supports resting at 1.2706, 1.2673, and 1.2633. To the topside, see resistance at 1.2770 with additional resistances hanging at 1.2797, 1.2828 and 1.2868. The EUR/USD is currently exchanging at 1.2768.
USD/JPY
The USD/JPY confirms the lack of FX investor excitement concerning the massive rally on Wall Street. The USD/JPY moved sideways showing indifference to a surging S&P. Even though Japan’s Core Machinery Orders experienced a hefty decline, the number came in better than analyst expectations. Therefore, investors are questioning whether the Japanese or U.S. economy is performing better right now. If Japanese data continues to beat expectations while U.S. disappoints, then we could witness a return to the negative correlation between the USD/JPY and S&P futures. It seems the USD/JPY has cooled off for now, and may experience a little profit taking as the currency pair builds a new base before deciding upon its next move. Meanwhile, the 3rd tier downtrend line is bearing down on the USD/JPY with the highly psychological 100 level lurking in the distance. Investors are highly anticipating Japan’s Final GDP release hitting the news wire tonight. Fundamentally, our 98.25 support turns resistance while we hold our additional resistances of 99.05, 99.96, and 100.69. To the downside, we maintain our supports of 97.66, 97.22, and 96.59 with fresh bottom-end support of 95.92. The USD/JPY is currently exchanging at 98.01.
Crude Oil
Crude futures declined yesterday despite a huge rally in equities. The fact Crude didn’t follow the S&P to the upside is confusing, and a bit discouraging for the bulls. Meanwhile, Crude has dipped below our downtrend line, indicating we could witness a continued selloff until our 2nd tier uptrend line. The U.S. will release Crude Oil Inventories today. Analysts are expecting an increase of 0.1M barrels. If the number should come in higher than expected coupled with profit-taking in U.S. equities, this would provide the fuel for a sharp movement to the downside. Though we are negative in the short-term concerning Crude futures, there are still multiple uptrend lines within which the futures can find support. Fundamentally, we find supports of $44.59/bbl, $43.77/bbl, $42.83/bbl, and $42.43/bbl. It will be interesting to see if Crude fights to stay above the psychological $45/bbl level. To the topside, we see resistances of $45.27/bbl, $45.81/bbl, $46.68/bbl, and $47.52/bbl. Crude futures are currently trading at $44.85/bbl.
Gold
Gold dropped on Tuesday, exercising its negative correlation with U.S. equities to the full extent by dipping below the highly psychological $900/oz level. However, the precious metal is finding support on our 1st tier trend line on Wednesday and has fought back to $900/oz. The question becomes whether U.S. equities can follow through on yesterday’s impressive rally, or if Tuesday’s surge was merely a head-fake. If the S&P does continue upwards and Gold sinks below our 1st tier uptrend line, then we could witness a near-term crash in the precious metal. The next few trading sessions will certainly be telling as far as trend is concerned. Fundamentally, we find resistances of $906.42/oz, $913.80/oz, $919.01/oz, and $922.92/oz. To the downside, we see supports of $895.56/oz, $890.35/oz., $883.40/oz., and $878.19/oz. Gold is currently trading at $900.90/oz.
S&P
The S&P futures posted an incredible rally on Tuesday fueled by Citigroup claiming itself profitable thus far in 2009. The financials surged with Citigroup and Bank of America climbing an astronomical 38% and 28%, respectively. The movement was backed by solid volume, allowing yesterday’s rally to become a possible 1st step in a permanent bottom. The S&P is trying to follow through on Wednesday, trading up over 1% pre-market. However, before we get too excited, we must realize there are multiple layers of downtrend lying in the road ahead. Furthermore, we still haven’t seen an upturn in significant economic data or a confirmation of stabilization from other major banks. In fact, this morning UBS reported an $18 Billion loss for the 2008 fiscal year, larger than analyst expectations. Further tempering the excitement is bad news out of China. Exports fell a whopping 25%, far exceeding analyst expectations of a 5% decline. The news of plummeting Chinese exports reflects the lack of global consumption and demand. Therefore, the economic downturn seems to be heating up. Remaining in Asia, Japan’s Core Machinery Orders showed a decline of a 3.2%. Hence, Japanese production and exports are declining as well, confirming the news out of China concerning demand. In Europe, German PPI fell more than expected and the country’s Factory Orders plummeted. In other words, the EU is experiencing deflation and is being hit by the lack of consumption worldwide. Putting all of the news together, we notice a common theme. Global production and consumption are deteriorating at a rapid pace. Therefore, there is certainly enough negative data to counteract the optimism out of Citigroup. Correlation wise, crude futures experienced an odd sell-off Tuesday despite the rally in equities when the two normally exhibit a positive correlation in such moments. Additionally, 30 Year T-Bond futures are recovering above March lows while Gold is fighting with the highly psychological $900/oz level. On the FX side, the Euro, Yen, and Pound correlations didn’t participate fully in the equity rally. Hence, commodities and currencies haven’t committed to a U.S. recovery yet. Therefore, we wouldn’t be surprised to see some profit-take this afternoon. Fundamentally, we find resistance of 722.75 with additional resistances hanging at 732.75, 740, and 750. The 700 level becomes a key psychological cushion in the near-term. To the downside, we see support of 710.25 with additional supports sitting at 703.25, 693.25, and 685.75. The S&P futures are currently trading at 723.50.
30 Year
The 30 Year T-Bond futures tumbled yesterday in reaction to the huge surge in U.S. equities. Even though the 30 Year futures sold off, they are holding comfortably above March lows on Wednesday morning. Therefore, the futures are trying to hold onto the uptrend while avoiding our 2nd tier downtrend line. The lack of commitment to the downside in the 30 Year futures shows traders aren’t entirely convinced by the rally in the S&P futures on Tuesday. However, despite the present stabilization in the 30 Year futures, the momentum remains to the downside due to the large supply of long-term bonds to fund the government’s stimulus package. If equities can follow through on their rally, we may very well see a breach of the significant March lows. Therefore, the next few sessions will play an important role in determining the near-term trend direction of the 30 Year futures. Fundamentally, we see resistances of 126.734, 127.422, 127.91, and 128.563. To the downside, we find support of 125.75 with 2nd tier and bottom-end waiting at 125.031 and 124.594, respectively. The 30 Year Treasury Bond futures are currently trading at 125 27.5.
The Pound has depreciated against the Dollar over the past 24 hours despite the enormous rally in U.S. equities on Tuesday. The nationalization of Lloyd’s bank is obviously not sitting well with investors. The BOE is treading water playing with nationalization and quantitative easing since the approach has proven unsuccessful in the past. Hence, investors continue to punish the Cable. To make matters worse, Britain reported a Trade Balance below expectations, revealing that the economy continues to import far more than it exports. A negative Trade Balance is normally highly negative for the home currency. Hence, investors aren’t biting on the rally taking place on Wall Street. The GBP/USD remains far below all of our downtrend lines. While we may see the continuation of its near-term rally, we hold our negative outlook trend wise. Fundamentally, we find resistances of 1.3844, 1.3877, 1.3936, and 1.4001. To the downside, we see supports of 1.3805, 1.3777, 1.3726, and 1.3683. The 1.40 level serves as a psychological barrier to the upside with 1.35 playing as a cushion to the downside. The GBP/USD is currently exchanging at 1.3833.
EUR/USD
The EUR/USD experienced wild swings yesterday despite an incredible rally in U.S. equities. Considering both have been positively correlated during significant movements, the EUR/USD’s lackluster performance was a bit disconcerting. However, the EUR/USD found support on our uptrend line once again, and is rallying strongly on Wednesday. Interestingly, the Euro is appreciating today despite extremely negative reports from the EU’s economic powerhouse, Germany. Germany’s PPI came in below expectations while the country’s Factory Orders data was dismal. Hence, the EUR/USD certainly doesn’t have the data backing to follow through on its present rally. While the EUR/USD has been trying to piece together an uptrend over the last week, the currency pair has not shown a convincing streak of upward movements thus far. The EUR/USD still faces February highs, our 2nd tier downtrend line, and the psychological 1.30 level. Considering all of the above, even though we may see the continuation of a near-term rally, we have a negative stance on the EUR/USD trend wise. Fundamentally, we find support of 1.2730 with additional supports resting at 1.2706, 1.2673, and 1.2633. To the topside, see resistance at 1.2770 with additional resistances hanging at 1.2797, 1.2828 and 1.2868. The EUR/USD is currently exchanging at 1.2768.
USD/JPY
The USD/JPY confirms the lack of FX investor excitement concerning the massive rally on Wall Street. The USD/JPY moved sideways showing indifference to a surging S&P. Even though Japan’s Core Machinery Orders experienced a hefty decline, the number came in better than analyst expectations. Therefore, investors are questioning whether the Japanese or U.S. economy is performing better right now. If Japanese data continues to beat expectations while U.S. disappoints, then we could witness a return to the negative correlation between the USD/JPY and S&P futures. It seems the USD/JPY has cooled off for now, and may experience a little profit taking as the currency pair builds a new base before deciding upon its next move. Meanwhile, the 3rd tier downtrend line is bearing down on the USD/JPY with the highly psychological 100 level lurking in the distance. Investors are highly anticipating Japan’s Final GDP release hitting the news wire tonight. Fundamentally, our 98.25 support turns resistance while we hold our additional resistances of 99.05, 99.96, and 100.69. To the downside, we maintain our supports of 97.66, 97.22, and 96.59 with fresh bottom-end support of 95.92. The USD/JPY is currently exchanging at 98.01.
Crude Oil
Crude futures declined yesterday despite a huge rally in equities. The fact Crude didn’t follow the S&P to the upside is confusing, and a bit discouraging for the bulls. Meanwhile, Crude has dipped below our downtrend line, indicating we could witness a continued selloff until our 2nd tier uptrend line. The U.S. will release Crude Oil Inventories today. Analysts are expecting an increase of 0.1M barrels. If the number should come in higher than expected coupled with profit-taking in U.S. equities, this would provide the fuel for a sharp movement to the downside. Though we are negative in the short-term concerning Crude futures, there are still multiple uptrend lines within which the futures can find support. Fundamentally, we find supports of $44.59/bbl, $43.77/bbl, $42.83/bbl, and $42.43/bbl. It will be interesting to see if Crude fights to stay above the psychological $45/bbl level. To the topside, we see resistances of $45.27/bbl, $45.81/bbl, $46.68/bbl, and $47.52/bbl. Crude futures are currently trading at $44.85/bbl.
Gold
Gold dropped on Tuesday, exercising its negative correlation with U.S. equities to the full extent by dipping below the highly psychological $900/oz level. However, the precious metal is finding support on our 1st tier trend line on Wednesday and has fought back to $900/oz. The question becomes whether U.S. equities can follow through on yesterday’s impressive rally, or if Tuesday’s surge was merely a head-fake. If the S&P does continue upwards and Gold sinks below our 1st tier uptrend line, then we could witness a near-term crash in the precious metal. The next few trading sessions will certainly be telling as far as trend is concerned. Fundamentally, we find resistances of $906.42/oz, $913.80/oz, $919.01/oz, and $922.92/oz. To the downside, we see supports of $895.56/oz, $890.35/oz., $883.40/oz., and $878.19/oz. Gold is currently trading at $900.90/oz.
S&P
The S&P futures posted an incredible rally on Tuesday fueled by Citigroup claiming itself profitable thus far in 2009. The financials surged with Citigroup and Bank of America climbing an astronomical 38% and 28%, respectively. The movement was backed by solid volume, allowing yesterday’s rally to become a possible 1st step in a permanent bottom. The S&P is trying to follow through on Wednesday, trading up over 1% pre-market. However, before we get too excited, we must realize there are multiple layers of downtrend lying in the road ahead. Furthermore, we still haven’t seen an upturn in significant economic data or a confirmation of stabilization from other major banks. In fact, this morning UBS reported an $18 Billion loss for the 2008 fiscal year, larger than analyst expectations. Further tempering the excitement is bad news out of China. Exports fell a whopping 25%, far exceeding analyst expectations of a 5% decline. The news of plummeting Chinese exports reflects the lack of global consumption and demand. Therefore, the economic downturn seems to be heating up. Remaining in Asia, Japan’s Core Machinery Orders showed a decline of a 3.2%. Hence, Japanese production and exports are declining as well, confirming the news out of China concerning demand. In Europe, German PPI fell more than expected and the country’s Factory Orders plummeted. In other words, the EU is experiencing deflation and is being hit by the lack of consumption worldwide. Putting all of the news together, we notice a common theme. Global production and consumption are deteriorating at a rapid pace. Therefore, there is certainly enough negative data to counteract the optimism out of Citigroup. Correlation wise, crude futures experienced an odd sell-off Tuesday despite the rally in equities when the two normally exhibit a positive correlation in such moments. Additionally, 30 Year T-Bond futures are recovering above March lows while Gold is fighting with the highly psychological $900/oz level. On the FX side, the Euro, Yen, and Pound correlations didn’t participate fully in the equity rally. Hence, commodities and currencies haven’t committed to a U.S. recovery yet. Therefore, we wouldn’t be surprised to see some profit-take this afternoon. Fundamentally, we find resistance of 722.75 with additional resistances hanging at 732.75, 740, and 750. The 700 level becomes a key psychological cushion in the near-term. To the downside, we see support of 710.25 with additional supports sitting at 703.25, 693.25, and 685.75. The S&P futures are currently trading at 723.50.
30 Year
The 30 Year T-Bond futures tumbled yesterday in reaction to the huge surge in U.S. equities. Even though the 30 Year futures sold off, they are holding comfortably above March lows on Wednesday morning. Therefore, the futures are trying to hold onto the uptrend while avoiding our 2nd tier downtrend line. The lack of commitment to the downside in the 30 Year futures shows traders aren’t entirely convinced by the rally in the S&P futures on Tuesday. However, despite the present stabilization in the 30 Year futures, the momentum remains to the downside due to the large supply of long-term bonds to fund the government’s stimulus package. If equities can follow through on their rally, we may very well see a breach of the significant March lows. Therefore, the next few sessions will play an important role in determining the near-term trend direction of the 30 Year futures. Fundamentally, we see resistances of 126.734, 127.422, 127.91, and 128.563. To the downside, we find support of 125.75 with 2nd tier and bottom-end waiting at 125.031 and 124.594, respectively. The 30 Year Treasury Bond futures are currently trading at 125 27.5.
