Daily Market Commentary
EUR/USD Pulls Back Sharply Towards Bottom-End Support
The EUR/USD is starting off the week on a negative note as investors seemingly price in a troublesome earnings season. We don’t have any news moving the markets other than the EU’s disappointing Sentix investor confidence number. The Cable is faring worse than the EUR/USD, and is also moving on little to no news. Therefore, we conclude investors are giving into the downside as they lose some confidence in regards to the sustainability of the global economic recovery. Crude and the S&P futures are also logging substantial losses Monday, reflecting a lack of confidence in the 2nd quarter earnings season. As a result, the tug of war may be swinging in favor of the bears. However, before investors jump to conclusions, we will have to see how the EUR/USD interacts with our new 2nd tier uptrend line. If this trend line doesn’t hold, we could witness a contraction towards key June lows and our new 1st tier uptrend line.
Meanwhile, the S&P futures are playing with fire again as they break from their own June lows. We expect the EUR/USD to experience a tight positive correlation with U.S. equities this week since investors will receive a relatively light load economic data from both the EU and U.S. The focus will be on the U.S. earnings season which kicks off Wednesday with Alcoa. The 2nd quarter performance of U.S. corporations and their guidance for the 3rd quarter should be critical for the near-term direction of U.S. equities. Investors will be paying close attention to the corporate outlook to see whether officers believe the economic recovery has legs. Hence, the next few trading sessions could end up being an important turning point concerning trend for the U.S. Dollar.
Today’s development in the EUR/USD is certainly disconcerting, and investors should monitor whether volume picks up to the downside. Bulls appear to be giving in after weeks of battle, and it will be interesting to see where the new bottom forms. A near-term retest of our 1.3826 support seems likely, and if the bottom-end of our new support structure doesn’t hold, the EUR/USD may enter a more prolonged downturn. On the other hand, the bulls have an opportunity to salvage the uptrend at our 2nd tier uptrend line, though the near-term momentum clearly lies in favor of the bears.
Present Price: 1.3895
Resistances: 1.3923, 1.3942, 1.3964, 1.3985, 1.4018
Supports: 1.3889, 1.3865, 1.3848, 1.3826, 1.3802
Psychological: 1.40
GBP/USD’s Tight Mid-June Trading Range Fails
The Cable finally broke below the bottom-end of the mid-June trading range we were eyeing before, represented by our previous 1.6212 support. There are whispers floating around Monday in regards to the reason behind the Cable’s pullback, but we don’t see any concrete evidence. We believe investors are setting a tone for the week ahead, highlighted by the beginning of the 2nd quarter earnings season and the G8 meetings. The upcoming earnings season will be a determining factor in settling the battle between the bulls and the bears. The bulls have suffered a large setback today, though we’ve yet to see a confirmation in high volume to the downside. The GBP/USD is balancing along our new 2nd tier uptrend line as it approaches an inflection point with our 1st tier downtrend line. Our 3rd tier uptrend and 2nd tier downtrend lines are also colliding today, meaning volatility could rise over the next few trading sessions.
The FX market seems to be waking from its daze, and it appears investors may be ready commit to a direction. Crude futures are posting large losses as they freefall below $65/bbl while the S&P futures trade at June lows. Unfortunately for the bulls, the downtrend is picking up momentum, and we may be a confirmation away from settling on a near-term downtrend outlook. Investors are indicating they expect economic struggles in the near-future with recent economic data coming in mixed. Britain’s surprisingly negative GDP and current account data last week shook the bulls from their comfort zone. Therefore, investors will be paying close attention to tomorrow’s Halifax HPI and manufacturing production data points. Since Britain’s manufacturing PMI came in shallow last week, we expect a negative manufacturing production number. If both British data releases are negative tomorrow, this could apply considerable immediate-term downward pressure on the Cable. More disappointing economic data releases would stoke the concern that we may have witnessed a large head-fake in global economic performance in the first half of the year.
With investors and analysts focused on the beginning of the earnings season and the G8 meeting, the BoE’s monetary policy decision on Thursday has fallen to the background. However, volatility in the Pound could pick up as the BoE meeting draws nearer. Investors will be curious to see how the BoE handles its current quantitative easing program, and whether the central bank increase its injection of liquidity. As for the immediate-term, if the Cable can’t hold our 2nd tier trend line, we will likely see a retest of the psychological 1.60 area.
Present Price: 1.6132
Resistances: 1.6133, 1.6152, 1.6183, 1.6212, 1.6245, 1.6278
Supports: 1.6082, 1.6052, 1.6018, 1.5978, 1.5924, 1.5887
Psychological: 1.60
USD/JPY Drags as Investors Head for Safety
The USD/JPY is edging lower again with investors exiting crude while sending the Cable and EUR/USD lower. Although the S&P hasn’t logged as large of losses as the aforementioned correlations, they are trading right at June lows, an important level technically. The slight pullback in the USD/JPY reinforces a theme of negative market sentiment. However, the USD/JPY remains above 6/29 lows, and we’ve yet to witness significant volume to the downside. Therefore, the consolidation of the USD/JPY carriers on with our 1st tier uptrend line slowly creeping into the picture. We expect the consolidation to continue until investors make a more concrete directional decision in the S&P. The trend decision could come sooner than later with the 2nd quarter earnings season beginning Wednesday while most of the USD/JPY’s correlations trade at or near important technical levels. The amount of investor uncertainty is increasing in regards to the sustainability of the present economic recovery. This uncertainty is reflected by the negative tendency of the USD/JPY. Any retracement below our 1st tier uptrend line and March lows could signal the beginning of a new leg down.
Japan will release a set of economic data points tomorrow, including core machinery orders, bank lending, current account and the M2 money stock. Investors will pay close attention to see if core machinery orders can continue their positive performance, or whether the data point experiences a setback along with the recent Tankan number. It seems Japan’s manufacturing and export sectors are stuck in a rut due to declining global consumption coupled with an abnormally appreciated Yen.
Present Price: 95.26
Resistances: 95.73, 96.33, 96.90, 97.45, 98.05
Supports: 94.99, 94.45, 93.76, 93.32, 92.57
Psychological: 95
Gold Retreats towards June Lows with Appreciating Dollar
Gold has ducked from our previous 1st tier uptrend line, which we noted as an important technical level in our previous analysis. The precious metal is currently flirting with the concept of testing our second important technical level, June lows. If our new 1st tier uptrend line and June lows don’t hold, we believe a retracement towards the psychological $890/oz-$900/oz zone is likely. The importance of the moment is reflected in the dollar, crude, and the S&P futures. Gold will likely take its cue from its positive correlation with U.S. equities. The S&P futures are trading right at June lows, and any retracement below here and May lows could spell a similar downturn in gold. The 2nd quarter earnings season kicks off on Wednesday as the G8 Summit convenes. Therefore, the news wires are heating up, and we believe the S&P could finally deviate from the consolidative pattern it has established over the past couple months. Meanwhile, near-term momentum remains to the downside, and all investors need is a concrete confirmation in the markets to make a large commitment to the downtrend. Though investor sentiment is turning sour, the uptrend has a presence, so we will wait for further confirmation before taking a stronger stance ourselves.
Present Price: $923.03/oz
Resistances: $923.59/oz, $926.30/oz, $928.15/oz, $930.52/oz, $933.43/oz
Supports: $921.41/oz, $921.41/oz, $918.65/oz, $916.27/oz, $910.99/oz
Psychological: $900/oz
Crude Futures Log Large Declines on Demand Concern
Crude futures have posted significant losses since dropping below June lows on Friday. Investors are becoming more concerned with the unemployment situation and its impact on present/future consumption of crude. The increasing uncertainty in regards to the demand side of the equation is taking its toll on price as investors ignore declining crude inventories. We believe the near-term pullback may have more room to go before crude experiences a more concrete bottom due to the overwhelmingly negative volume we’ve witnessed over the past week. Our new $61.68/bbl bottom-end support should serve as a reliable cushion. If not, the $60-$61/bbl range should act as a strong defense because of its historical, psychological weight. Meanwhile, our uptrend lines are fading into the distance and $65/bbl is working to become a psychological barrier. Therefore, technical constraints are forming to the upside, making a quick turn-around in crude less likely. With the S&P futures trading on the edge of June lows, commodity traders will be paying particularly close attention to the performance of U.S. equities over the coming week before deciding how far to take the selloff in crude.
Second quarter earnings season begins on Wednesday with Alcoa. Corporate earnings and 3rd quarter outlook should be a driving force for the near-term performance of crude and equities. If corporations project lower earnings, this implies a decline in production, manufacturing, and consequently overall consumption of crude. On the flipside, should corporations provide a rosy outlook for the upcoming quarter, crude futures could bottom and begin a substantial rebound. Crude futures are in a vulnerable position trend-wise, reflected by the technical setbacks in the GBP/USD, EUR/USD and S&P. However, the futures are making a little bounce right now due to the positive ISM non-manufacturing PMI release, which should relieve some immediate-term anxiety. The question becomes whether the present downturn in crude is merely a setback in the commodity’s uptrend, or whether it indicates the beginning of a new bearish leg. Once again, the true near-term driver will be the outcome in 2nd quarter earnings, so we’ll have to wait and see.
Present Price: $64.10/bbl
Resistances: $64.37/bbl, $64.86/bbl, $65.20/bbl, $65.49/bbl, $65.89/bbl
Supports: $63.47/bbl, $62.93/bbl, $62.59/bbl, $61.99/bbl, $61.68bbl
Psychological: $65/bbl
S&P Futures Battle June Lows, Tempted to Test May Lows
The S&P futures are struggling with June lows today as they begin to test the bottom-end of an important trading zone. Investors seem to be ignoring the positive ISM non-manufacturing PMI number for the most part as they instead focus on the pullbacks in all of the S&P’s major positive correlations. Last week’s sign of an incessant, heightened level of unemployment is painting a bleak picture over just about everything right now. That could be cured by an optimistic earnings season, which begins Tuesday with Dow bellweather Alcoa. However, today’s movements in crude, the GBP/USD, EUR/USD, USD/JPY, and gold signal the market is in a vulnerable position. Hence, it seems investors are preparing for the worst come earnings season. Therefore, we’ll have to see how equities react to earnings as they begin to trickle in.
Despite the negative sentiment and downward pressure, the S&P futures still have some bottom-end defenses, most notably May lows. Although, should May lows give way and the S&P’s correlations make similar technical setbacks, investors could witness the near-term downturn pick up speed. Meanwhile, we notice the S&P futures are giving way to our 1st tier uptrend line with our two near-term downtrend lines bearing overhead. Therefore, we’re certainly inclined to be more negative than positive as far as outlook is concerned. For the meantime, investors should take notice of where volume is centered not only in the S&P futures, but in crude, gold, treasuries, and the Dollar as well. Any large movements backed by significant volume in either the S&P or its correlations could signal a substantial pullback.
Present Price: 898
Resistances: 903.75, 909.5, 919.25, 924, 929.5
Supports: 895.25, 888.75, 881.5, 873.5, 864.25
Psychological: 900
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.
EUR/USD Pulls Back Sharply Towards Bottom-End Support
The EUR/USD is starting off the week on a negative note as investors seemingly price in a troublesome earnings season. We don’t have any news moving the markets other than the EU’s disappointing Sentix investor confidence number. The Cable is faring worse than the EUR/USD, and is also moving on little to no news. Therefore, we conclude investors are giving into the downside as they lose some confidence in regards to the sustainability of the global economic recovery. Crude and the S&P futures are also logging substantial losses Monday, reflecting a lack of confidence in the 2nd quarter earnings season. As a result, the tug of war may be swinging in favor of the bears. However, before investors jump to conclusions, we will have to see how the EUR/USD interacts with our new 2nd tier uptrend line. If this trend line doesn’t hold, we could witness a contraction towards key June lows and our new 1st tier uptrend line.
Meanwhile, the S&P futures are playing with fire again as they break from their own June lows. We expect the EUR/USD to experience a tight positive correlation with U.S. equities this week since investors will receive a relatively light load economic data from both the EU and U.S. The focus will be on the U.S. earnings season which kicks off Wednesday with Alcoa. The 2nd quarter performance of U.S. corporations and their guidance for the 3rd quarter should be critical for the near-term direction of U.S. equities. Investors will be paying close attention to the corporate outlook to see whether officers believe the economic recovery has legs. Hence, the next few trading sessions could end up being an important turning point concerning trend for the U.S. Dollar.
Today’s development in the EUR/USD is certainly disconcerting, and investors should monitor whether volume picks up to the downside. Bulls appear to be giving in after weeks of battle, and it will be interesting to see where the new bottom forms. A near-term retest of our 1.3826 support seems likely, and if the bottom-end of our new support structure doesn’t hold, the EUR/USD may enter a more prolonged downturn. On the other hand, the bulls have an opportunity to salvage the uptrend at our 2nd tier uptrend line, though the near-term momentum clearly lies in favor of the bears.
Present Price: 1.3895
Resistances: 1.3923, 1.3942, 1.3964, 1.3985, 1.4018
Supports: 1.3889, 1.3865, 1.3848, 1.3826, 1.3802
Psychological: 1.40
GBP/USD’s Tight Mid-June Trading Range Fails
The Cable finally broke below the bottom-end of the mid-June trading range we were eyeing before, represented by our previous 1.6212 support. There are whispers floating around Monday in regards to the reason behind the Cable’s pullback, but we don’t see any concrete evidence. We believe investors are setting a tone for the week ahead, highlighted by the beginning of the 2nd quarter earnings season and the G8 meetings. The upcoming earnings season will be a determining factor in settling the battle between the bulls and the bears. The bulls have suffered a large setback today, though we’ve yet to see a confirmation in high volume to the downside. The GBP/USD is balancing along our new 2nd tier uptrend line as it approaches an inflection point with our 1st tier downtrend line. Our 3rd tier uptrend and 2nd tier downtrend lines are also colliding today, meaning volatility could rise over the next few trading sessions.
The FX market seems to be waking from its daze, and it appears investors may be ready commit to a direction. Crude futures are posting large losses as they freefall below $65/bbl while the S&P futures trade at June lows. Unfortunately for the bulls, the downtrend is picking up momentum, and we may be a confirmation away from settling on a near-term downtrend outlook. Investors are indicating they expect economic struggles in the near-future with recent economic data coming in mixed. Britain’s surprisingly negative GDP and current account data last week shook the bulls from their comfort zone. Therefore, investors will be paying close attention to tomorrow’s Halifax HPI and manufacturing production data points. Since Britain’s manufacturing PMI came in shallow last week, we expect a negative manufacturing production number. If both British data releases are negative tomorrow, this could apply considerable immediate-term downward pressure on the Cable. More disappointing economic data releases would stoke the concern that we may have witnessed a large head-fake in global economic performance in the first half of the year.
With investors and analysts focused on the beginning of the earnings season and the G8 meeting, the BoE’s monetary policy decision on Thursday has fallen to the background. However, volatility in the Pound could pick up as the BoE meeting draws nearer. Investors will be curious to see how the BoE handles its current quantitative easing program, and whether the central bank increase its injection of liquidity. As for the immediate-term, if the Cable can’t hold our 2nd tier trend line, we will likely see a retest of the psychological 1.60 area.
Present Price: 1.6132
Resistances: 1.6133, 1.6152, 1.6183, 1.6212, 1.6245, 1.6278
Supports: 1.6082, 1.6052, 1.6018, 1.5978, 1.5924, 1.5887
Psychological: 1.60
USD/JPY Drags as Investors Head for Safety
The USD/JPY is edging lower again with investors exiting crude while sending the Cable and EUR/USD lower. Although the S&P hasn’t logged as large of losses as the aforementioned correlations, they are trading right at June lows, an important level technically. The slight pullback in the USD/JPY reinforces a theme of negative market sentiment. However, the USD/JPY remains above 6/29 lows, and we’ve yet to witness significant volume to the downside. Therefore, the consolidation of the USD/JPY carriers on with our 1st tier uptrend line slowly creeping into the picture. We expect the consolidation to continue until investors make a more concrete directional decision in the S&P. The trend decision could come sooner than later with the 2nd quarter earnings season beginning Wednesday while most of the USD/JPY’s correlations trade at or near important technical levels. The amount of investor uncertainty is increasing in regards to the sustainability of the present economic recovery. This uncertainty is reflected by the negative tendency of the USD/JPY. Any retracement below our 1st tier uptrend line and March lows could signal the beginning of a new leg down.
Japan will release a set of economic data points tomorrow, including core machinery orders, bank lending, current account and the M2 money stock. Investors will pay close attention to see if core machinery orders can continue their positive performance, or whether the data point experiences a setback along with the recent Tankan number. It seems Japan’s manufacturing and export sectors are stuck in a rut due to declining global consumption coupled with an abnormally appreciated Yen.
Present Price: 95.26
Resistances: 95.73, 96.33, 96.90, 97.45, 98.05
Supports: 94.99, 94.45, 93.76, 93.32, 92.57
Psychological: 95
Gold Retreats towards June Lows with Appreciating Dollar
Gold has ducked from our previous 1st tier uptrend line, which we noted as an important technical level in our previous analysis. The precious metal is currently flirting with the concept of testing our second important technical level, June lows. If our new 1st tier uptrend line and June lows don’t hold, we believe a retracement towards the psychological $890/oz-$900/oz zone is likely. The importance of the moment is reflected in the dollar, crude, and the S&P futures. Gold will likely take its cue from its positive correlation with U.S. equities. The S&P futures are trading right at June lows, and any retracement below here and May lows could spell a similar downturn in gold. The 2nd quarter earnings season kicks off on Wednesday as the G8 Summit convenes. Therefore, the news wires are heating up, and we believe the S&P could finally deviate from the consolidative pattern it has established over the past couple months. Meanwhile, near-term momentum remains to the downside, and all investors need is a concrete confirmation in the markets to make a large commitment to the downtrend. Though investor sentiment is turning sour, the uptrend has a presence, so we will wait for further confirmation before taking a stronger stance ourselves.
Present Price: $923.03/oz
Resistances: $923.59/oz, $926.30/oz, $928.15/oz, $930.52/oz, $933.43/oz
Supports: $921.41/oz, $921.41/oz, $918.65/oz, $916.27/oz, $910.99/oz
Psychological: $900/oz
Crude Futures Log Large Declines on Demand Concern
Crude futures have posted significant losses since dropping below June lows on Friday. Investors are becoming more concerned with the unemployment situation and its impact on present/future consumption of crude. The increasing uncertainty in regards to the demand side of the equation is taking its toll on price as investors ignore declining crude inventories. We believe the near-term pullback may have more room to go before crude experiences a more concrete bottom due to the overwhelmingly negative volume we’ve witnessed over the past week. Our new $61.68/bbl bottom-end support should serve as a reliable cushion. If not, the $60-$61/bbl range should act as a strong defense because of its historical, psychological weight. Meanwhile, our uptrend lines are fading into the distance and $65/bbl is working to become a psychological barrier. Therefore, technical constraints are forming to the upside, making a quick turn-around in crude less likely. With the S&P futures trading on the edge of June lows, commodity traders will be paying particularly close attention to the performance of U.S. equities over the coming week before deciding how far to take the selloff in crude.
Second quarter earnings season begins on Wednesday with Alcoa. Corporate earnings and 3rd quarter outlook should be a driving force for the near-term performance of crude and equities. If corporations project lower earnings, this implies a decline in production, manufacturing, and consequently overall consumption of crude. On the flipside, should corporations provide a rosy outlook for the upcoming quarter, crude futures could bottom and begin a substantial rebound. Crude futures are in a vulnerable position trend-wise, reflected by the technical setbacks in the GBP/USD, EUR/USD and S&P. However, the futures are making a little bounce right now due to the positive ISM non-manufacturing PMI release, which should relieve some immediate-term anxiety. The question becomes whether the present downturn in crude is merely a setback in the commodity’s uptrend, or whether it indicates the beginning of a new bearish leg. Once again, the true near-term driver will be the outcome in 2nd quarter earnings, so we’ll have to wait and see.
Present Price: $64.10/bbl
Resistances: $64.37/bbl, $64.86/bbl, $65.20/bbl, $65.49/bbl, $65.89/bbl
Supports: $63.47/bbl, $62.93/bbl, $62.59/bbl, $61.99/bbl, $61.68bbl
Psychological: $65/bbl
S&P Futures Battle June Lows, Tempted to Test May Lows
The S&P futures are struggling with June lows today as they begin to test the bottom-end of an important trading zone. Investors seem to be ignoring the positive ISM non-manufacturing PMI number for the most part as they instead focus on the pullbacks in all of the S&P’s major positive correlations. Last week’s sign of an incessant, heightened level of unemployment is painting a bleak picture over just about everything right now. That could be cured by an optimistic earnings season, which begins Tuesday with Dow bellweather Alcoa. However, today’s movements in crude, the GBP/USD, EUR/USD, USD/JPY, and gold signal the market is in a vulnerable position. Hence, it seems investors are preparing for the worst come earnings season. Therefore, we’ll have to see how equities react to earnings as they begin to trickle in.
Despite the negative sentiment and downward pressure, the S&P futures still have some bottom-end defenses, most notably May lows. Although, should May lows give way and the S&P’s correlations make similar technical setbacks, investors could witness the near-term downturn pick up speed. Meanwhile, we notice the S&P futures are giving way to our 1st tier uptrend line with our two near-term downtrend lines bearing overhead. Therefore, we’re certainly inclined to be more negative than positive as far as outlook is concerned. For the meantime, investors should take notice of where volume is centered not only in the S&P futures, but in crude, gold, treasuries, and the Dollar as well. Any large movements backed by significant volume in either the S&P or its correlations could signal a substantial pullback.
Present Price: 898
Resistances: 903.75, 909.5, 919.25, 924, 929.5
Supports: 895.25, 888.75, 881.5, 873.5, 864.25
Psychological: 900
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.
