EUR/USD
The EUR/USD’s rally topped out at our 1.3389 resistance yesterday, or April 13 highs. The hesitation comes as the S&P futures approach their critical 900 level. Therefore, we view today’s decline as healthy hesitation. The EUR/USD should find near-term safety in our 1.3208 support and 3rd tier downtrend line. However, if these fundamentals don’t hold, we could see a retracement towards our 1.3089 support, or 4/10 lows.
Weakness in the Euro comes despite a better than expected German Unemployment Change Number. Although the reading is high historically speaking, at least the release shows a topping out. Analysts were looking for a one basis point improvement in the EU’s CPI Flash, but they didn’t get it. The consumer price data remained at a very depreciated level, echoing the message sent on Tuesday by the German Prelim CPI number. Therefore, the message Europe’s data is sending thus far this week is an improvement in unemployment and consumer sentiment combined with slight deflation. Meanwhile, the CAC40 and DAX are rallying like mad, following in the footsteps of U.S. equities. Hence, the CPI data may be lagging behind relative consumer and corporate optimism, meaning prices could begin to rebound a little over the next month.
All of these developments are good news for the EUR/USD, since a recovery in equities means the EUR/USD will tag along for the ride due to their positive correlation. Additionally, if an economic recovery is truly taking place, the EU sits in an advantageous position since the ECB kept their benchmark rate at a respectable level while fighting off the temptation to use quantitative easing like the BOE, BOJ, and Fed. However, the ECB is still sending a mixed message and we will have to see how events unwind as their next monetary policy meeting approaches.
While the EUR/USD could continue to experience some weakness as the S&P struggles with 900, we believe a new bullish trend could be in place. Ultimately the currency pair will next to put 4/13 highs behind it for a shot at the psychological 1.35 mark. On the other hand, if the EUR/USD falls apart and 4/10 lows don’t hold, we could see a real reversal into the currency pair’s debilitating downtrend.
Fundamentally, we find resistances of 1.3236, 1.3295, 1.3329, 1.3389, and 1.3420. To the downside, we see supports of 1.3208, 1.3170, 1.3127, 1.3089, and 1.3039. The 1.30 area serves as a psychological cushion with 1.35 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.3218.
GBP/USD
The Cable reacted positively despite worse than expected Prelim GDP data from the U.S. yesterday, catapulting towards our previous top-tier resistance of 1.4951 before reversing course. The GBP/USD’s reversal marks a failure to climb through 4/6 highs, let alone tackle 1.50 and April highs. Therefore, the Cable certainly has its work cut out for it in to the upside as the S&P futures approach their highly psychological 900 level. Our 1.4730 support should prove to be a critical battle ground in the near-term if the Cable is to sell off further. If this level doesn’t hold, we could see a reversal towards 1.4626.
Weakness in the Cable comes despite a better than expected Nationwide HPI number. Even though the data surprised to the upside, housing prices registered a decline from April 2nd’s release. We saw a similar improvement in the HPI in November 2008 only to witness a sharp reversal in December. Therefore, investors could be concerned we’re witnessing another head-fake in home prices. Don’t forget the financial crisis began with a collapse in housing, meaning stabilization in this area is a crucial leg in the chair of recovery.
Skepticism aside, equities have been performing extraordinarily well as of late while breaking free of key fundamental barriers.
Therefore, if bright spots in economic data and outperformance in equities spells an economic recovery, the Pound should appreciate against the Dollar trend-wise due to its positive correlation. That being said, we have the results of the stress tests coming on Monday, implying volatility should remain elevated through the remainder of the week.
We maintain our bullish stance on the Cable, and the currency pair could recover quickly should it pop back above our 2nd tier downtrend line.
Fundamentally, we maintain resistances of 1.4773, 1.4826, 1.4870, 1.4905, and 1.4951. To the downside, we hold our supports of 1.4730, 1.4667, 1.4626, 1.45667, and 1.4532. 1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4749.
USD/JPY
The USD/JPY is surging off a much better than expected Prelim Industrial Production Data. The industrial production number shows a sharp reversal from the previous 5 months, and is likely due to a pickup in global consumption as stimulus packages kick in worldwide. The rebound in the USD/JPY is backed by a 4% jump in the Nikkei earlier today. Honda and Pioneer catapulted as investors speculate the worst is behind us. Additionally, we must consider the USD/JPY’s tight positive correlation with U.S. equities. The S&P futures sprinted to new 2009 highs yesterday and are looking to go to work on their highly psychological 900 level.
The recent recovery of the USD/JPY is a breath of fresh air for investors since the currency pair was playing with fire by trading below our 1st tier downtrend and 2nd tier uptrend lines. Meanwhile, the currency pair avoided the idea of retesting March lows, and now looks to have more room to run towards our 99.20 and 99.79 resistances. It will be interesting to see how the USD/JPY reacts should it reach these resistance levels, and whether it can break through to retest the key 100 level once more. Keep in mind we have 4 more downtrend lines bearing down on the USD/JPY, so there is plenty of work ahead to the topside.
Although we’re bullish on the USD/JPY in the near-term, a 100+ future ultimately depends on the performance of U.S. equities and whether they can leave the economic crisis in the background.
Fundamentally, we find resistances of 98.56, 99.20, 99.79, 100.56, and 101.43. To the downside, we see supports of 97.98, 97.11, 96.33, 95.55, and 95.04. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 98.43.
Crude Oil
Weekly crude oil inventories skyrocketed again, coming in 3.1 million barrels above analyst expectations. The pattern of rising inventories implies a corresponding decline in demand, supported by yesterday’s disappointing Prelim GDP number. Another driving force behind the flood in inventories could also be the rise in U.S. oil imports from the likes of Brazil and Russia, providing a counter punch to OPEC’s steep cuts in production. Adding to demand worries is today’s announcement that Chrysler is officially heading for bankruptcy. Chrysler’s bankruptcy highlights the fact that there are fewer cars on the road burning gas, taking a bite out of crude consumption.
These negative price shocks combined would normally result in a steep sell off in crude futures. However, the fundamentally significant gains made by equities over the last 24 hours are helping offset the inclination to sell crude. Even though crude futures are presently dangling below our 3rd tier downtrend line, they remain comfortably above the highly psychological $50/bbl level. Therefore, any near-term weakness in crude should be fought off by rising U.S. equities and the psychological support.
That being said, we wouldn’t be surprised to see crude touch our $49.99/bbl support today due to the news of higher supply and falling production. However, if this support doesn’t hold we could see the downturn pickup speed towards our uptrend line. As for the upside, crude futures would need a huge reversal in momentum with daily highs hanging in the distance.
Fundamentally, we find supports of $49.99/bbl, $49.66/bbl, $49.22/bbl, $48.78/bbl, and $50.37/bbl. To the topside, we see resistances of $50.55/bbl, $51.13/bbl, $51.70/bbl, $52.08/bbl, and $52.41/bbl. $50/bbl turns becomes a key psychological cushion again while $55/bbl serves as a psychological cushion. Crude is presently trading at $50.37/bbl.
Gold
Gold is experiencing a sharp retracement from the highly psychological $900/oz level and our 2nd tier downtrend line in reaction to the S&P futures leaping to new 2009 highs. Hence, the precious metal continues to follow its negative correlation with U.S. equities, even if it registers relative strength on the knowledge that China is buying up gold to diversify its reserves.
Even though gold is showing this relative strength, losses in the precious metal could accelerate if it does in fact kiss $900/oz goodbye this time around. Due to the vast fundamental strides made by global equities over the past 24 hours, we wouldn’t be surprised to witness gold buckle under the pressure of its downtrend.
Despite the negative developments in gold, we could see a nice decent sized pop up in the precious metal today as investors may be inclined to take profits in equities with the S&P approaching 900. Therefore, we wouldn’t be surprised to see gold head back up towards our $889.87/oz resistance today. The key to the downside will likely be our $877.79/oz support. If this level doesn’t hold, we could see near-term losses accelerate. Keep a close eye on equities as the two investment vehicles will be closely tied.
Fundamentally we find resistances of $887.19/oz, $889.87/oz, $893.01/oz, $896.59/oz, and $899.72/oz. To the downside, we see supports of $882.04/oz, $880.03/oz, $877.79/oz, $874.88/oz, and $873.09/oz. Gold is currently trading at $884.40/oz.
S&P
The S&P futures finally made a commitment to new 2009 highs, and we view the development as a significant step fundamentally. Although the futures still need to face the highly psychological 900 level, the S&P had really been struggling with making yesterday’s key move. Additionally, new 2009 highs came despite a disappointing Prelim GDP number, showing the worst has been priced into equities for now. Therefore, the upwards momentum is for real and it appears the economic stabilization process is safe for now.
Investors got more economic data today. Although weekly unemployment claims were slightly better than expected, they remain at elevated levels. Furthermore, we saw a slight downturn in employment cost and personal spending, showing disposable income continues to get hit by the economic downturn. However, we got a very nice Chicago PMI, which is the most encouraging data release we’ve seen all week. Hence, the bright spots in data continue to appear.
Not only are investors looking beyond weak GDP data, they are also shrugging off the official bankruptcy of Chrysler. Investors are buying on the news and it appears the bankruptcy has already been priced in. Conversely, we should meditate on the fact that Chrysler’s bankruptcy should accelerate the unemployment level and take another bite out of consumption.
Regardless, the momentum is in the upwards direction with the highly-anticipated stress test results coming to late on Monday. Additionally, we will see ISM Manufacturing tomorrow morning.
Fundamentally, we find supports of 877.25, 872.50, 866.50, 861.25, and 857 with key psychological resistance waiting at 900. The S&P futures are currently trading at 884.50.
30 Year T-Bond
The 30 Year T-Bond futures plunged to set 2009 lows as the S&P futures set corresponding 2009 highs. The negative correlation remains in full-effect, and we are not at all surprised by the development in the 30 Year futures over the past 24 hours. The futures have been drifting towards this day for over a month. We could see losses accelerate now that 2009 lows have finally snapped. The 30 Year futures will now search for a new stabilization point. However, we don’t expect near-term stabilization to be too far out since the S&P futures will likely struggle with their highly psychological 900 level.
The 30 Year’s key psychological movement to the downside coincides with the largest auction of U.S. Treasuries taking place over the next week. The price action in the 30 Year futures should be heavily influenced by the outcome of these auctions. If U.S. debt receives limited demand, the downward momentum of the 30 Year futures could really pick up pace. On the other hand, if U.S. debt finds sufficient interest from buyers, this could help with stabilizing the futures.
Fundamentally, we find supports of 122.33 and 121.83. To the topside, we see resistances of 122.88, 123.30, 123.69, and 124.22. The 30 Year futures are presently trading at 122 15.0.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as 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 property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized 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’s rally topped out at our 1.3389 resistance yesterday, or April 13 highs. The hesitation comes as the S&P futures approach their critical 900 level. Therefore, we view today’s decline as healthy hesitation. The EUR/USD should find near-term safety in our 1.3208 support and 3rd tier downtrend line. However, if these fundamentals don’t hold, we could see a retracement towards our 1.3089 support, or 4/10 lows.
Weakness in the Euro comes despite a better than expected German Unemployment Change Number. Although the reading is high historically speaking, at least the release shows a topping out. Analysts were looking for a one basis point improvement in the EU’s CPI Flash, but they didn’t get it. The consumer price data remained at a very depreciated level, echoing the message sent on Tuesday by the German Prelim CPI number. Therefore, the message Europe’s data is sending thus far this week is an improvement in unemployment and consumer sentiment combined with slight deflation. Meanwhile, the CAC40 and DAX are rallying like mad, following in the footsteps of U.S. equities. Hence, the CPI data may be lagging behind relative consumer and corporate optimism, meaning prices could begin to rebound a little over the next month.
All of these developments are good news for the EUR/USD, since a recovery in equities means the EUR/USD will tag along for the ride due to their positive correlation. Additionally, if an economic recovery is truly taking place, the EU sits in an advantageous position since the ECB kept their benchmark rate at a respectable level while fighting off the temptation to use quantitative easing like the BOE, BOJ, and Fed. However, the ECB is still sending a mixed message and we will have to see how events unwind as their next monetary policy meeting approaches.
While the EUR/USD could continue to experience some weakness as the S&P struggles with 900, we believe a new bullish trend could be in place. Ultimately the currency pair will next to put 4/13 highs behind it for a shot at the psychological 1.35 mark. On the other hand, if the EUR/USD falls apart and 4/10 lows don’t hold, we could see a real reversal into the currency pair’s debilitating downtrend.
Fundamentally, we find resistances of 1.3236, 1.3295, 1.3329, 1.3389, and 1.3420. To the downside, we see supports of 1.3208, 1.3170, 1.3127, 1.3089, and 1.3039. The 1.30 area serves as a psychological cushion with 1.35 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.3218.
GBP/USD
The Cable reacted positively despite worse than expected Prelim GDP data from the U.S. yesterday, catapulting towards our previous top-tier resistance of 1.4951 before reversing course. The GBP/USD’s reversal marks a failure to climb through 4/6 highs, let alone tackle 1.50 and April highs. Therefore, the Cable certainly has its work cut out for it in to the upside as the S&P futures approach their highly psychological 900 level. Our 1.4730 support should prove to be a critical battle ground in the near-term if the Cable is to sell off further. If this level doesn’t hold, we could see a reversal towards 1.4626.
Weakness in the Cable comes despite a better than expected Nationwide HPI number. Even though the data surprised to the upside, housing prices registered a decline from April 2nd’s release. We saw a similar improvement in the HPI in November 2008 only to witness a sharp reversal in December. Therefore, investors could be concerned we’re witnessing another head-fake in home prices. Don’t forget the financial crisis began with a collapse in housing, meaning stabilization in this area is a crucial leg in the chair of recovery.
Skepticism aside, equities have been performing extraordinarily well as of late while breaking free of key fundamental barriers.
Therefore, if bright spots in economic data and outperformance in equities spells an economic recovery, the Pound should appreciate against the Dollar trend-wise due to its positive correlation. That being said, we have the results of the stress tests coming on Monday, implying volatility should remain elevated through the remainder of the week.
We maintain our bullish stance on the Cable, and the currency pair could recover quickly should it pop back above our 2nd tier downtrend line.
Fundamentally, we maintain resistances of 1.4773, 1.4826, 1.4870, 1.4905, and 1.4951. To the downside, we hold our supports of 1.4730, 1.4667, 1.4626, 1.45667, and 1.4532. 1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4749.
USD/JPY
The USD/JPY is surging off a much better than expected Prelim Industrial Production Data. The industrial production number shows a sharp reversal from the previous 5 months, and is likely due to a pickup in global consumption as stimulus packages kick in worldwide. The rebound in the USD/JPY is backed by a 4% jump in the Nikkei earlier today. Honda and Pioneer catapulted as investors speculate the worst is behind us. Additionally, we must consider the USD/JPY’s tight positive correlation with U.S. equities. The S&P futures sprinted to new 2009 highs yesterday and are looking to go to work on their highly psychological 900 level.
The recent recovery of the USD/JPY is a breath of fresh air for investors since the currency pair was playing with fire by trading below our 1st tier downtrend and 2nd tier uptrend lines. Meanwhile, the currency pair avoided the idea of retesting March lows, and now looks to have more room to run towards our 99.20 and 99.79 resistances. It will be interesting to see how the USD/JPY reacts should it reach these resistance levels, and whether it can break through to retest the key 100 level once more. Keep in mind we have 4 more downtrend lines bearing down on the USD/JPY, so there is plenty of work ahead to the topside.
Although we’re bullish on the USD/JPY in the near-term, a 100+ future ultimately depends on the performance of U.S. equities and whether they can leave the economic crisis in the background.
Fundamentally, we find resistances of 98.56, 99.20, 99.79, 100.56, and 101.43. To the downside, we see supports of 97.98, 97.11, 96.33, 95.55, and 95.04. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 98.43.
Crude Oil
Weekly crude oil inventories skyrocketed again, coming in 3.1 million barrels above analyst expectations. The pattern of rising inventories implies a corresponding decline in demand, supported by yesterday’s disappointing Prelim GDP number. Another driving force behind the flood in inventories could also be the rise in U.S. oil imports from the likes of Brazil and Russia, providing a counter punch to OPEC’s steep cuts in production. Adding to demand worries is today’s announcement that Chrysler is officially heading for bankruptcy. Chrysler’s bankruptcy highlights the fact that there are fewer cars on the road burning gas, taking a bite out of crude consumption.
These negative price shocks combined would normally result in a steep sell off in crude futures. However, the fundamentally significant gains made by equities over the last 24 hours are helping offset the inclination to sell crude. Even though crude futures are presently dangling below our 3rd tier downtrend line, they remain comfortably above the highly psychological $50/bbl level. Therefore, any near-term weakness in crude should be fought off by rising U.S. equities and the psychological support.
That being said, we wouldn’t be surprised to see crude touch our $49.99/bbl support today due to the news of higher supply and falling production. However, if this support doesn’t hold we could see the downturn pickup speed towards our uptrend line. As for the upside, crude futures would need a huge reversal in momentum with daily highs hanging in the distance.
Fundamentally, we find supports of $49.99/bbl, $49.66/bbl, $49.22/bbl, $48.78/bbl, and $50.37/bbl. To the topside, we see resistances of $50.55/bbl, $51.13/bbl, $51.70/bbl, $52.08/bbl, and $52.41/bbl. $50/bbl turns becomes a key psychological cushion again while $55/bbl serves as a psychological cushion. Crude is presently trading at $50.37/bbl.
Gold
Gold is experiencing a sharp retracement from the highly psychological $900/oz level and our 2nd tier downtrend line in reaction to the S&P futures leaping to new 2009 highs. Hence, the precious metal continues to follow its negative correlation with U.S. equities, even if it registers relative strength on the knowledge that China is buying up gold to diversify its reserves.
Even though gold is showing this relative strength, losses in the precious metal could accelerate if it does in fact kiss $900/oz goodbye this time around. Due to the vast fundamental strides made by global equities over the past 24 hours, we wouldn’t be surprised to witness gold buckle under the pressure of its downtrend.
Despite the negative developments in gold, we could see a nice decent sized pop up in the precious metal today as investors may be inclined to take profits in equities with the S&P approaching 900. Therefore, we wouldn’t be surprised to see gold head back up towards our $889.87/oz resistance today. The key to the downside will likely be our $877.79/oz support. If this level doesn’t hold, we could see near-term losses accelerate. Keep a close eye on equities as the two investment vehicles will be closely tied.
Fundamentally we find resistances of $887.19/oz, $889.87/oz, $893.01/oz, $896.59/oz, and $899.72/oz. To the downside, we see supports of $882.04/oz, $880.03/oz, $877.79/oz, $874.88/oz, and $873.09/oz. Gold is currently trading at $884.40/oz.
S&P
The S&P futures finally made a commitment to new 2009 highs, and we view the development as a significant step fundamentally. Although the futures still need to face the highly psychological 900 level, the S&P had really been struggling with making yesterday’s key move. Additionally, new 2009 highs came despite a disappointing Prelim GDP number, showing the worst has been priced into equities for now. Therefore, the upwards momentum is for real and it appears the economic stabilization process is safe for now.
Investors got more economic data today. Although weekly unemployment claims were slightly better than expected, they remain at elevated levels. Furthermore, we saw a slight downturn in employment cost and personal spending, showing disposable income continues to get hit by the economic downturn. However, we got a very nice Chicago PMI, which is the most encouraging data release we’ve seen all week. Hence, the bright spots in data continue to appear.
Not only are investors looking beyond weak GDP data, they are also shrugging off the official bankruptcy of Chrysler. Investors are buying on the news and it appears the bankruptcy has already been priced in. Conversely, we should meditate on the fact that Chrysler’s bankruptcy should accelerate the unemployment level and take another bite out of consumption.
Regardless, the momentum is in the upwards direction with the highly-anticipated stress test results coming to late on Monday. Additionally, we will see ISM Manufacturing tomorrow morning.
Fundamentally, we find supports of 877.25, 872.50, 866.50, 861.25, and 857 with key psychological resistance waiting at 900. The S&P futures are currently trading at 884.50.
30 Year T-Bond
The 30 Year T-Bond futures plunged to set 2009 lows as the S&P futures set corresponding 2009 highs. The negative correlation remains in full-effect, and we are not at all surprised by the development in the 30 Year futures over the past 24 hours. The futures have been drifting towards this day for over a month. We could see losses accelerate now that 2009 lows have finally snapped. The 30 Year futures will now search for a new stabilization point. However, we don’t expect near-term stabilization to be too far out since the S&P futures will likely struggle with their highly psychological 900 level.
The 30 Year’s key psychological movement to the downside coincides with the largest auction of U.S. Treasuries taking place over the next week. The price action in the 30 Year futures should be heavily influenced by the outcome of these auctions. If U.S. debt receives limited demand, the downward momentum of the 30 Year futures could really pick up pace. On the other hand, if U.S. debt finds sufficient interest from buyers, this could help with stabilizing the futures.
Fundamentally, we find supports of 122.33 and 121.83. To the topside, we see resistances of 122.88, 123.30, 123.69, and 124.22. The 30 Year futures are presently trading at 122 15.0.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as 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 property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized 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.
