EUR/USD
The EUR/USD is strengthening after yesterday’s large losses in the wake of a better than expected trade balance number out of Germany coupled with encouraging German factory orders data. Germany’s trade balance seems to be bottoming out, indicating stabilization in its export industry. Though Germany’s factory orders data came in below analyst expectations, the number shows a vast improvement from 2009’s previous releases. Germany and France are the heavy-weights in the EU economically, so signs of improvement in German production is welcoming news for a beleaguered EUR/USD. The EUR/USD has caught the brunt of the pullback in U.S. equities since Trichet and the ECB offered little certainty concerning future monetary policy shocks. The positive data is allowing the EUR/USD to rally from oversold conditions as the S&P futures find strength in their key psychological 800 level. Consequently, the currency pair has managed to stay above March 30 lows and is propelling from our 1st tier uptrend line. As a result, the uptrend has been saved, for now. We could see a nice pop in the EUR/USD as our trend lines collide, signifying the uncertainty prevalent in the marketplace. However, the currency pair may wait for U.S. equities to commit to an uptrend or crash back into their downtrend before it makes another real directional move. The heightened volatility we are witnessing stems from the Federal Reserve’s quantitative easing announcement, and we don’t expect the wild ride to slow any time soon. Fundamentally, we maintain our supports of 1.3223, 1.3192, 1.3162, 1.3126 and 1.3088. To the topside, we hold our resistances of 1.3271, 1.3323, 1.3351, 1.3375 and 1.3413. The 1.35 area acts a psychological barrier again with 1.30 serving as a key psychological cushion. The EUR/USD is currently exchanging at 1.3245.
GBP/USD
The Cable continues to show relative strength on the back of surprisingly positive data surfacing from Britain over the past couple weeks. The GBP/USD kept its cool yesterday despite the broad selloff in U.S. equities and the Cable is running with the EUR/USD and U.S. equities Wednesday morning. We expect to see the Cable’s strength continue as long as Britain’s data outperforms and its major financial institutions stay out of the headlines. If U.S. equities and the EUR/USD head north today, the GBP/USD should follow. On the other hand, if U.S. equities selloff again, we may see the Cable hold up once more. However, we can’t forget the importance of the financial industry to Britain’s economy. Therefore, if U.S. banks hit another roadblock, the GBP/USD may have no choice but to head lower. Speculation set aside, the Cable is in great shape for the time being. It sits comfortably above our 1st tie uptrend line with no downtrend line in sight. On the other hand, the failure of the GBP/USD to eclipse February highs and 1.50 is a cause for concern, and we’ll keep this in mind. If the Cable can climb back above March highs today we could see a nice short-term pop. Even though Britain is quite on the news front today, the Pound could come alive tomorrow with a PPI release coupled with a BOE rate decision. Analysts are expecting the BOE to hold the benchmark rate at .50%. Fundamentally, we maintain resistance of 1.4730 with additional resistances hanging at 1.4770, 1.4834, 1.4883 and 1.4946. The 1.50 level serves as a key psychological barrier while the 1.45 area acts as a psychological cushion. To the downside, we hold our supports of 1.4676, 1.4612, 1.4571, 1.4538 and 1.4484. The GBP/USD is currently exchanging at 1.4702.
USD/JPY
The USD/JPY is wrestling with the almighty 100 level again today after briefly dropping below. The USD/JPY strengthened slightly after Japan released a better than excepted trade balance. However, the optimism is faint since a record decline in imports is responsible for the improvement. Therefore, consumers are tightening their budgets as the economic downturn picks up steam. Japan continues to be the hardest hit in the global economic crisis. Export demand has been cut in half with consumers world-wide losing their taste for durable goods. Though the recent rally in the USD/JPY does provide some relief for the Japanese economy, the currency pair is still trading 20% below June 2007 levels. However, a stabilizing American economy could help push the USD/JPY higher since the currency pair is being valued by the comparative performance of both economies. That being said, the USD/JPY has three more downtrend lines to push through before it can yield substantial gains. 100 will continue to be a battle zone as U.S. equities struggle with their own demons. If U.S. equities make another leg down, we would not be surprised to see the USD/JPY follow suit. Japan will release Core Machinery Orders tonight. The data is forward looking since corporate capital expenditure normally signifies expansion. Analysts are expecting a decline of -6.8%. Fundamentally, our 100.28 support turns resistance while we maintain our resistances of 100.71, 101.44, 101.98, and 102.50. To the downside, we hold our supports of 99.79, 99.06, 98.16, and 97.59 with fresh bottom-end resting at 97.11. The USD/JPY is currently exchanging at 99.99.
Crude Oil
The battle back to $50/bbl never materialized yesterday and crude futures continued to freefall from our 1st tie uptrend line. Though we don’t want to be premature, it seems the backbone of the uptrend has been broken. Now, we could always see a strong rally today to get the futures back above our 1st tier uptrend line. However, our point of no return uptrend line is looking down at price. This is a strong statement, and crude futures could be in for even more large losses before they stabilize. The futures are holding onto April lows for dear life, and if these don’t hold, look out below. The U.S. will release weekly inventory data today and the number has come in above analyst expectations the last four weeks. Another rise in inventories could force investors to pause and question whether the OPEC production cuts are actually having their desired impact on supply. Today’s inventory release aside, crude futures should continue to follow their tight correlation with U.S. equities for the time being. Therefore, the negative fundamental developments in crude raise a cautionary flag concerning the ability of the S&P futures to hold 800. Fundamentally, we find resistances of $48.21/bbl, $48.74/bbl, $49.28/bbl, $49.72/bbl, and $50.20/bbl. To the downside, we see supports of $47.72/bbl, $47.32/bbl, $46.89/bbl, $46.42/bbl, and $45.92/bbl. Crude futures are presently trading at $48.04/bbl.
Gold
Gold continued its oversold rise yesterday while U.S. equities logged heavy losses. However, the precious metal is turning south again as the S&P futures find solid support in their key 800 psychological level. Therefore, the negative correlation between the two appears to be active once again. However, the relation between the two has been scattered and unreliable as of late. On one hand, Gold could be suggesting that the equity rally is legitimate and will reactivate shortly. On the other hand, Gold could be participating in the deflationary pressures we witnessed during the height of the economic crisis. It is difficult to be certain right now. However, the leg of the uptrend has clearly been broken, and we will have to see what this says about equities. Our 1st tier uptrend line and the psychological $900/oz level have been washed away. Even though gold may try to retest $900/oz, the message has been sent. Fundamentally we see resistances of $884.10/oz, $887.21/oz, $890.64/oz, $894.46/oz, and $897.82/oz. To the downside, we find supports of $881.57, $877.02/oz, $873.74/oz, $870.47/oz, and $866.11. Gold is currently trading at $882.60s/oz.
S&P
The S&P futures continued their selloff yesterday as well-regarded economists, including Dallas Fed’s Fisher, flooded the wires with negative outlooks concerning the health of the economy and solvency of banks. Although the present pullback has been brisk, it hasn’t been supported by high volume or U.S. economic data. Regardless, the selloff has taken the wind out of the rally’s sails. The S&P futures went as far as to dip below our 1st tier trend line. However, investors will need very negative news on the earnings or data front to send the futures back below the critical 800 level. That being said, the rally in the S&P futures has been disappointing by failing to eclipse our 3rd tier downtrend line and February highs. As a result, the futures are creating the possibility of a return to the devastating downtrend of the economic crisis. Focus will remain on corporate earnings until Thursday’s trade balance and unemployment claims release. On a positive note, economic data releases are showing signs of improvement in Britain and the EU, adding to speculation that the economic crisis is subsiding. Conversely, Japan’s economy continues to unravel with no signs of a bottom. Correlation wise, crude futures have crashed below our 1st tier uptrend line and the highly psychological $50/bbl. Since crude and equities have been tightly correlated, the deterioration taking place in the fundamentals of crude futures are a bit concerning. On the other hand, gold and the 30 Year T-Bond futures continue tier respective lines. Therefore, the S&P’s correlations are painting a mixed picture, highlighting the uncertainty prevalent in the markets right now. Pushing the distortion aside, everybody’s asking the same question: ‘Is the economic crisis really over?’ While economic data points in the U.S., EU, and Britain are showing signs of stabilization, they could easily be a pop up on the way down. Therefore, investors are on guard to see if the all around rally can materialize into something more than a bear market rally. Fundamentally, we find supports of 815, 809.25, 804.75, 799.75, and 794. To the topside, we see resistances of 821.5, 829.5, 834.75, 840.25, and 845.25. The S&P futures are currently trading at 816.50.
30 Year
The 30 Year T-Bond futures logged only modest gains despite yesterday’s broad selloff in U.S. equities. The 30 Year futures are following our downtrend to a tee, indicating they are still gravitating towards the downside. Therefore, the 30 Year futures could be transmitting the same message as gold in that the present selloff in U.S. equities is only temporary. On the other hand, the selloff in the 30 Year futures could be disconcerting in the fact that the movement represents disinterest in the massive treasury auctions taking place to fund America’s economic initiatives. As a result, the downward movement in the 30 Year futures could indicate an insufficient impact from the Fed’s use of quantitative easing due to booming supply and waning demand. We can’t forget March 18th’s historical rise in reaction to the Fed’s announcement of quantitative easing, and we wouldn’t be surprised to see high volatility return to the 30 Year futures shortly. However, before we tread too far down the speculative path, we will take the current downturn in the 30 Year futures as a normal negative correlation with U.S. equities. The trend in the 30 Year futures remains to the downside barring a significant fundamental reversal. Fundamentally, we hold our resistances of 127.05, 127.28, 127.64, 127.89, and 128.31. To the downside, we maintain our supports of 126.69, 126.45, 126.19, 125.91, and 125.47. The 30 Year T-Bond futures are presently trading at 126 31.5.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.All materials are proprerty of Fast Trading services, LLC and unless otherwise indicated, any unauthorised reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
The EUR/USD is strengthening after yesterday’s large losses in the wake of a better than expected trade balance number out of Germany coupled with encouraging German factory orders data. Germany’s trade balance seems to be bottoming out, indicating stabilization in its export industry. Though Germany’s factory orders data came in below analyst expectations, the number shows a vast improvement from 2009’s previous releases. Germany and France are the heavy-weights in the EU economically, so signs of improvement in German production is welcoming news for a beleaguered EUR/USD. The EUR/USD has caught the brunt of the pullback in U.S. equities since Trichet and the ECB offered little certainty concerning future monetary policy shocks. The positive data is allowing the EUR/USD to rally from oversold conditions as the S&P futures find strength in their key psychological 800 level. Consequently, the currency pair has managed to stay above March 30 lows and is propelling from our 1st tier uptrend line. As a result, the uptrend has been saved, for now. We could see a nice pop in the EUR/USD as our trend lines collide, signifying the uncertainty prevalent in the marketplace. However, the currency pair may wait for U.S. equities to commit to an uptrend or crash back into their downtrend before it makes another real directional move. The heightened volatility we are witnessing stems from the Federal Reserve’s quantitative easing announcement, and we don’t expect the wild ride to slow any time soon. Fundamentally, we maintain our supports of 1.3223, 1.3192, 1.3162, 1.3126 and 1.3088. To the topside, we hold our resistances of 1.3271, 1.3323, 1.3351, 1.3375 and 1.3413. The 1.35 area acts a psychological barrier again with 1.30 serving as a key psychological cushion. The EUR/USD is currently exchanging at 1.3245.
GBP/USD
The Cable continues to show relative strength on the back of surprisingly positive data surfacing from Britain over the past couple weeks. The GBP/USD kept its cool yesterday despite the broad selloff in U.S. equities and the Cable is running with the EUR/USD and U.S. equities Wednesday morning. We expect to see the Cable’s strength continue as long as Britain’s data outperforms and its major financial institutions stay out of the headlines. If U.S. equities and the EUR/USD head north today, the GBP/USD should follow. On the other hand, if U.S. equities selloff again, we may see the Cable hold up once more. However, we can’t forget the importance of the financial industry to Britain’s economy. Therefore, if U.S. banks hit another roadblock, the GBP/USD may have no choice but to head lower. Speculation set aside, the Cable is in great shape for the time being. It sits comfortably above our 1st tie uptrend line with no downtrend line in sight. On the other hand, the failure of the GBP/USD to eclipse February highs and 1.50 is a cause for concern, and we’ll keep this in mind. If the Cable can climb back above March highs today we could see a nice short-term pop. Even though Britain is quite on the news front today, the Pound could come alive tomorrow with a PPI release coupled with a BOE rate decision. Analysts are expecting the BOE to hold the benchmark rate at .50%. Fundamentally, we maintain resistance of 1.4730 with additional resistances hanging at 1.4770, 1.4834, 1.4883 and 1.4946. The 1.50 level serves as a key psychological barrier while the 1.45 area acts as a psychological cushion. To the downside, we hold our supports of 1.4676, 1.4612, 1.4571, 1.4538 and 1.4484. The GBP/USD is currently exchanging at 1.4702.
USD/JPY
The USD/JPY is wrestling with the almighty 100 level again today after briefly dropping below. The USD/JPY strengthened slightly after Japan released a better than excepted trade balance. However, the optimism is faint since a record decline in imports is responsible for the improvement. Therefore, consumers are tightening their budgets as the economic downturn picks up steam. Japan continues to be the hardest hit in the global economic crisis. Export demand has been cut in half with consumers world-wide losing their taste for durable goods. Though the recent rally in the USD/JPY does provide some relief for the Japanese economy, the currency pair is still trading 20% below June 2007 levels. However, a stabilizing American economy could help push the USD/JPY higher since the currency pair is being valued by the comparative performance of both economies. That being said, the USD/JPY has three more downtrend lines to push through before it can yield substantial gains. 100 will continue to be a battle zone as U.S. equities struggle with their own demons. If U.S. equities make another leg down, we would not be surprised to see the USD/JPY follow suit. Japan will release Core Machinery Orders tonight. The data is forward looking since corporate capital expenditure normally signifies expansion. Analysts are expecting a decline of -6.8%. Fundamentally, our 100.28 support turns resistance while we maintain our resistances of 100.71, 101.44, 101.98, and 102.50. To the downside, we hold our supports of 99.79, 99.06, 98.16, and 97.59 with fresh bottom-end resting at 97.11. The USD/JPY is currently exchanging at 99.99.
Crude Oil
The battle back to $50/bbl never materialized yesterday and crude futures continued to freefall from our 1st tie uptrend line. Though we don’t want to be premature, it seems the backbone of the uptrend has been broken. Now, we could always see a strong rally today to get the futures back above our 1st tier uptrend line. However, our point of no return uptrend line is looking down at price. This is a strong statement, and crude futures could be in for even more large losses before they stabilize. The futures are holding onto April lows for dear life, and if these don’t hold, look out below. The U.S. will release weekly inventory data today and the number has come in above analyst expectations the last four weeks. Another rise in inventories could force investors to pause and question whether the OPEC production cuts are actually having their desired impact on supply. Today’s inventory release aside, crude futures should continue to follow their tight correlation with U.S. equities for the time being. Therefore, the negative fundamental developments in crude raise a cautionary flag concerning the ability of the S&P futures to hold 800. Fundamentally, we find resistances of $48.21/bbl, $48.74/bbl, $49.28/bbl, $49.72/bbl, and $50.20/bbl. To the downside, we see supports of $47.72/bbl, $47.32/bbl, $46.89/bbl, $46.42/bbl, and $45.92/bbl. Crude futures are presently trading at $48.04/bbl.
Gold
Gold continued its oversold rise yesterday while U.S. equities logged heavy losses. However, the precious metal is turning south again as the S&P futures find solid support in their key 800 psychological level. Therefore, the negative correlation between the two appears to be active once again. However, the relation between the two has been scattered and unreliable as of late. On one hand, Gold could be suggesting that the equity rally is legitimate and will reactivate shortly. On the other hand, Gold could be participating in the deflationary pressures we witnessed during the height of the economic crisis. It is difficult to be certain right now. However, the leg of the uptrend has clearly been broken, and we will have to see what this says about equities. Our 1st tier uptrend line and the psychological $900/oz level have been washed away. Even though gold may try to retest $900/oz, the message has been sent. Fundamentally we see resistances of $884.10/oz, $887.21/oz, $890.64/oz, $894.46/oz, and $897.82/oz. To the downside, we find supports of $881.57, $877.02/oz, $873.74/oz, $870.47/oz, and $866.11. Gold is currently trading at $882.60s/oz.
S&P
The S&P futures continued their selloff yesterday as well-regarded economists, including Dallas Fed’s Fisher, flooded the wires with negative outlooks concerning the health of the economy and solvency of banks. Although the present pullback has been brisk, it hasn’t been supported by high volume or U.S. economic data. Regardless, the selloff has taken the wind out of the rally’s sails. The S&P futures went as far as to dip below our 1st tier trend line. However, investors will need very negative news on the earnings or data front to send the futures back below the critical 800 level. That being said, the rally in the S&P futures has been disappointing by failing to eclipse our 3rd tier downtrend line and February highs. As a result, the futures are creating the possibility of a return to the devastating downtrend of the economic crisis. Focus will remain on corporate earnings until Thursday’s trade balance and unemployment claims release. On a positive note, economic data releases are showing signs of improvement in Britain and the EU, adding to speculation that the economic crisis is subsiding. Conversely, Japan’s economy continues to unravel with no signs of a bottom. Correlation wise, crude futures have crashed below our 1st tier uptrend line and the highly psychological $50/bbl. Since crude and equities have been tightly correlated, the deterioration taking place in the fundamentals of crude futures are a bit concerning. On the other hand, gold and the 30 Year T-Bond futures continue tier respective lines. Therefore, the S&P’s correlations are painting a mixed picture, highlighting the uncertainty prevalent in the markets right now. Pushing the distortion aside, everybody’s asking the same question: ‘Is the economic crisis really over?’ While economic data points in the U.S., EU, and Britain are showing signs of stabilization, they could easily be a pop up on the way down. Therefore, investors are on guard to see if the all around rally can materialize into something more than a bear market rally. Fundamentally, we find supports of 815, 809.25, 804.75, 799.75, and 794. To the topside, we see resistances of 821.5, 829.5, 834.75, 840.25, and 845.25. The S&P futures are currently trading at 816.50.
30 Year
The 30 Year T-Bond futures logged only modest gains despite yesterday’s broad selloff in U.S. equities. The 30 Year futures are following our downtrend to a tee, indicating they are still gravitating towards the downside. Therefore, the 30 Year futures could be transmitting the same message as gold in that the present selloff in U.S. equities is only temporary. On the other hand, the selloff in the 30 Year futures could be disconcerting in the fact that the movement represents disinterest in the massive treasury auctions taking place to fund America’s economic initiatives. As a result, the downward movement in the 30 Year futures could indicate an insufficient impact from the Fed’s use of quantitative easing due to booming supply and waning demand. We can’t forget March 18th’s historical rise in reaction to the Fed’s announcement of quantitative easing, and we wouldn’t be surprised to see high volatility return to the 30 Year futures shortly. However, before we tread too far down the speculative path, we will take the current downturn in the 30 Year futures as a normal negative correlation with U.S. equities. The trend in the 30 Year futures remains to the downside barring a significant fundamental reversal. Fundamentally, we hold our resistances of 127.05, 127.28, 127.64, 127.89, and 128.31. To the downside, we maintain our supports of 126.69, 126.45, 126.19, 125.91, and 125.47. The 30 Year T-Bond futures are presently trading at 126 31.5.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.All materials are proprerty of Fast Trading services, LLC and unless otherwise indicated, any unauthorised reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
