Daily Market Commentary
EUR/USD’s Rally Sputters after Weak Sentiment and IP Data
The EUR/USD is flat-lining after disappointing economic sentiment and industrial production data from the EU. Disappointing Eco data from both the EU and U.S. are taking the wind out of the rally’s sails. While we forewarned of expecting too much from industrial production, the reversal in economic sentiment delivers a slight blow to the concept of an economic recovery. Thought the German reading of 39.5 is below June’s 44.8 and the expectation of 48, investors will likely keep their emotions in check before seeing next month’s report. Investors are curious whether today’s setback represents a reversal to the downtrend, or a natural bump on the way towards expansion (50+). We notice a spike in volume to the downside on the 1-hour after the U.S. released mixed economic data of its own. The S&P futures registered a similar spike in sell-side volume as investors react negatively to the higher than anticipated PPI and lower than expected core retail sales data points. However, the EUR/USD is bouncing off of our 2nd tier uptrend line and the currency pair appears to be stabilizing right now. Unfortunately for the bulls, the negative EU numbers come as the currency pair battles the psychological 1.40 level. The EUR/USD could use all of the help it can get since there are quite a few barriers and trends weighing down on price.
The EUR/USD has yet to experience large volume to the upside coupled with a technical move. Therefore, it seems the near-term momentum remains in the downtrend’s corner. The EUR/USD faces challenging barriers to the upside, including 1.40, July 9th highs, and our 3rd tier downtrend line. Though the EUR/USD may continue to stabilize, our 3rd tier downtrend is drawing nearer, and the currency pair will need to make a directional decision sooner or later. As for the downside, any reversal below July 10th and/or July 8th lows on rising volume would raise a red flag. The EUR/USD has our 1st tier and 2nd tier uptrend lines to fall back on before these lows, so we don’t expect any trend-setting reversals for the time being. The EU will release its CPI reading tomorrow, and after that the EU will be quiet for the remainder of the week on the data front. This leaves the ball in America’s court both data and earnings-wise. Therefore, investors should keep a close watch on the S&P futures for any technical movement to either the upside or downside.
Present Price: 1.3975
Resistances: 1.3991, 1.4020, 1.4050, 1.4065, 1.4091
Supports: 1.3970, 1.3944, 1.3915, 1.3889, 1.3865
Psychological: 1.40
GBP/USD Bounces and Fades
The Cable continued to propel from our 1st tier downtrend line, gaining traction to the upside after Britain released data showing surveyors saw housing prices recovering at an encouraging rate. Additionally, although Britain’s CPI was a discouraging 1.8%, the number met analyst expectations and the Pound is being rewarded accordingly. Despite the Cable’s recent stability, the rally is fading in the face of insufficient buy-side volume, turning course after failing to surpass July 9th highs and our 3rd tier downtrend line. Could it be that another tight trading range is forming, similar to the one experienced in June? Such a progression would fall in line with the concept of summer doldrums. Correlation wise, the S&P and crude futures have recovered to comfortable levels, avoiding another large selloff for the time being. Therefore, the S&P and crude could be in for more consolidation as well with investors torn between mixed economic data and earnings reports, supporting a new trading zone for the GBP/USD.
British economic data is not done for the week, with the new claimant count change (CCC) and average earnings index on deck tomorrow morning. Analysts are expecting a slight increase in the CCC from 39.3k to 41.4k. However, we anticipate the CCC will continue its brisk decline and comfortably beat expectations. A lower than anticipated CCC number would likely result additional stability to the GBP/USD and provide relative near-term strength to the Pound across the board. The key near-term obstacles for the Cable continue to be July 9th highs and our 3rd tier downtrend line. Meanwhile, the currency pair has stacked additional cushions to the downside via its recent performance, most notably our 1st tier uptrend line, 2nd tier downtrend line, July 13th lows and the psychological 1.60 level. Therefore, it would take a large movement on abnormally high volume to send the Cable spinning back into its downtrend. Altogether, the GBP/USD is still searching for its near/medium-term directional identity, and it doesn’t seem the confusion will be solved today.
Present Price: 1.6276
Resistances: 1.6314, 1.6346, 1.6380, 1.6433, 1.6470
Supports: 1.6255, 1.6211, 1.6168, 1.6127, 1.6077
Psychological: 1.60, 1.65
USD/JPY Stabilizes Above July Lows
The USD/JPY continues its stabilization pattern on declining volume post-July 8th. The USD/JPY found a little strength in the S&P’s rally yesterday, though no substantial movements occurred. It seems the USD/JPY is attempting to form a new base amid a lack of trend identity across markets. However, the momentum remains to the downside considering we haven’t seen any noteworthy action to the upside for some time. Hence, it appears the USD/JPY could be lodged at depressed levels for a while longer, only inflicting further damage on a Japanese economy struggling with a bombing export economy.
We still believe a retest of 90 will occur, it’s just a matter of when. The key for the USD/JPY will be avoiding a retest of January lows, for a retracement beneath these levels could inflict considerable damage. The USD/JPY would likely need a large downturn in U.S. equities to test the bottom limits of its yearly trading range. Since the S&P futures have rallied back towards 900, a large breakdown in the USD/JPY is probably out of the question for the near-term. The near-term goal to the upside for the USD/JPY is getting back above our 1st tier downtrend and uptrend lines. Otherwise, the currency pair will continue to trade around uncomfortable levels.
The BOJ will conclude its meeting late Tuesday/early Wednesday and announce any updates/revision to its present monetary policy. While the BOJ has little to work with concerning its benchmark rate, investors will be curious to see if there are any additions/alterations to its QE plan. Furthermore, investors will pay close attention to the BOJ’s economic sentiment and will look to see if the central bank provides any economic outlook.
Present Price: 92.85
Resistances: 93.28, 93.76, 94.45, 94.99, 95.73
Supports: 92.57, 91.96, 91.50, 91.03, 90.28
Psychological: 90, 95
Gold Pops with U.S. Equities
Gold got a nice pop yesterday with the S&P futures running back towards their psychological 900 level. Gold managed to build some space between price and its own $900/oz psychological level in the process. The precious metal skipped past what are now our 2nd tier and 3rd tier uptrend lines, and the rally appears to be buckling beneath July 7th highs. Yesterday’s movement higher came on standard volume, telling us it was likely not a technical breakout. There are many new downtrend lines we can construct above present price, including our fresh 4th tier downtrend line. Even if gold’s present rally should continue, the precious metal still has to deal with July 7th highs, July 1st highs, and the psychological $950/oz level. Therefore, we are not sold on the uptrend, although space between price and $900/oz is certainly comforting. Meanwhile, we are discussing the S&P and 900 again with crude hovering around $60/bbl. Therefore, gold is in an identity crisis along with the rest of the market. We are sitting a neutral position until we witness a convincing move directionally.
Present Price: $924.35/oz
Resistances: $925.79/oz, $927.14/oz, $929.00/oz, $930.18/oz, $934.22/oz
Supports: $922.59/oz, $920.57/oz, $918.88/oz, $917.20/oz, $915.34/oz
Psychological: $900/oz
Crude’s Rally Falls Short of our 1st Tier Uptrend Line
Crude futures bottomed yesterday as we anticipated and pieced together a decent rally on climbing volume. However, the rally was deflected by our 1st tier uptrend line today, and is hovering back around the psychological $60/bbl level. Crude futures are struggling to tack onto yesterday’s gains after OPEC said it expected global consumption of oil to increase by 0.6% in 2010, far lower than the IEA’s estimate of 1.7% growth. In addition to the news from OPEC, investors got some mixed economic data. Although retail sales came in two basis points above analyst expectations, the core number was two basis points below expectations. Additionally, the EU reported weak economic sentiment and worse than anticipated industrial production data. Hence, crude is being held down despite the S&P’s run to 900. On an interesting note, Nigeria released Henry Okah from jail, the leader of MEND who has been incarcerated since September 2007. Nigeria believes this could be the 1st step in repairing relations with MEND and ending the attacks on Nigeria’s oil operations. The prospect of peace in Nigeria could be applying further downward pressure on the price of crude, though it is uncertain how large of an impact Okah’s release will have on negotiations with MEND.
Technically speaking, July 9th highs and our 1st tier uptrend line serve as the two largest barriers hindering accelerated immediate-term gains in crude. The futures have edged back below our 1st tier downtrend line, and $60/bbl continues to have a noticeable psychological influence on movement. At least crude has created some space between price and the two key cushions to the downside, May 18th lows and our 1st tier uptrend line. Meanwhile, the Pound and Euro have gained back some ground on the Dollar, though neither currency pair has made a technical breakout to the upside. Additionally, the S&P futures are hanging around the highly psychological 900 level, telling us the markets are still in a state of directional confusion. Hence, despite this week’s stability and improvement, there remains a heavy downward momentum on price.
Present Price: $59.99/bbl
Resistances: $60.89/bbl, $61.29/bbl, $61.66/bbl, $62.22/bbl, $62.69/bbl
Supports: $60.01/bbl, $59.61/bbl, $58.94/bbl, $58.55/bbl, $58.23/bbl
Psychological: $55/bbl, $60/bbl
S&P Futures Climb Back to our Neckline and 900
The S&P futures logged encouraging gains yesterday, eclipsing our two downtrend lines on decent volume. However, the run has stalled at the psychological 900 level, right on the neckline of the head and shoulders pattern we created a little while ago. The S&P is giving the uptrend another shot, and it seems the bulls and bears are stuck in a dead heat now. Though the scales have tilted more in the bulls favor over the past 48 hours, we’d say the scale is balanced. We’d say Meredith Whitney’s remarks regarding the financial sector had a lot to do with the run since Goldman’s great earnings release today is having little to no impact. As a result, investors have placed the S&P in a position that reads ‘Where do we go from here?’ Investors will likely wait and see how more earnings reports pan out over the coming week before considering committing to one direction or the other. We can say this is an encouraging development for the bulls since last week momentum was clearly in favor of the downside.
The U.S. released some mixed economic data today. While the headline retail sales number came in two basis points ahead of consensus, the core number missed expectations by two basis points. This tells us that automobile sales picked up, likely due to heavy price cuts and discounts to attract buyers. However, consumption remains weak for discretionary goods, implying the U.S. citizen is cautions regarding their savings/consumption behavior due to uncertainty in the employment market. The U.S. also released PPI data that outpaced analyst expectations. Though analysts are attributing the boots in producer prices to surging gasoline prices, the PPI numbers did catch us a little off guard. Even though deflation tends to be the theme right now, any large number price wise does stoke the fear of inflation. However, we won’t dig any further than this. We will wait to see how tomorrow’s CPI data fares before jumping to any conclusions.
Present Price: 898.25
Resistances: 898, 903.5, 909.25, 914.75, 921.25
Supports: 892, 888.25, 884, 880.75, 875.5
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’s Rally Sputters after Weak Sentiment and IP Data
The EUR/USD is flat-lining after disappointing economic sentiment and industrial production data from the EU. Disappointing Eco data from both the EU and U.S. are taking the wind out of the rally’s sails. While we forewarned of expecting too much from industrial production, the reversal in economic sentiment delivers a slight blow to the concept of an economic recovery. Thought the German reading of 39.5 is below June’s 44.8 and the expectation of 48, investors will likely keep their emotions in check before seeing next month’s report. Investors are curious whether today’s setback represents a reversal to the downtrend, or a natural bump on the way towards expansion (50+). We notice a spike in volume to the downside on the 1-hour after the U.S. released mixed economic data of its own. The S&P futures registered a similar spike in sell-side volume as investors react negatively to the higher than anticipated PPI and lower than expected core retail sales data points. However, the EUR/USD is bouncing off of our 2nd tier uptrend line and the currency pair appears to be stabilizing right now. Unfortunately for the bulls, the negative EU numbers come as the currency pair battles the psychological 1.40 level. The EUR/USD could use all of the help it can get since there are quite a few barriers and trends weighing down on price.
The EUR/USD has yet to experience large volume to the upside coupled with a technical move. Therefore, it seems the near-term momentum remains in the downtrend’s corner. The EUR/USD faces challenging barriers to the upside, including 1.40, July 9th highs, and our 3rd tier downtrend line. Though the EUR/USD may continue to stabilize, our 3rd tier downtrend is drawing nearer, and the currency pair will need to make a directional decision sooner or later. As for the downside, any reversal below July 10th and/or July 8th lows on rising volume would raise a red flag. The EUR/USD has our 1st tier and 2nd tier uptrend lines to fall back on before these lows, so we don’t expect any trend-setting reversals for the time being. The EU will release its CPI reading tomorrow, and after that the EU will be quiet for the remainder of the week on the data front. This leaves the ball in America’s court both data and earnings-wise. Therefore, investors should keep a close watch on the S&P futures for any technical movement to either the upside or downside.
Present Price: 1.3975
Resistances: 1.3991, 1.4020, 1.4050, 1.4065, 1.4091
Supports: 1.3970, 1.3944, 1.3915, 1.3889, 1.3865
Psychological: 1.40
GBP/USD Bounces and Fades
The Cable continued to propel from our 1st tier downtrend line, gaining traction to the upside after Britain released data showing surveyors saw housing prices recovering at an encouraging rate. Additionally, although Britain’s CPI was a discouraging 1.8%, the number met analyst expectations and the Pound is being rewarded accordingly. Despite the Cable’s recent stability, the rally is fading in the face of insufficient buy-side volume, turning course after failing to surpass July 9th highs and our 3rd tier downtrend line. Could it be that another tight trading range is forming, similar to the one experienced in June? Such a progression would fall in line with the concept of summer doldrums. Correlation wise, the S&P and crude futures have recovered to comfortable levels, avoiding another large selloff for the time being. Therefore, the S&P and crude could be in for more consolidation as well with investors torn between mixed economic data and earnings reports, supporting a new trading zone for the GBP/USD.
British economic data is not done for the week, with the new claimant count change (CCC) and average earnings index on deck tomorrow morning. Analysts are expecting a slight increase in the CCC from 39.3k to 41.4k. However, we anticipate the CCC will continue its brisk decline and comfortably beat expectations. A lower than anticipated CCC number would likely result additional stability to the GBP/USD and provide relative near-term strength to the Pound across the board. The key near-term obstacles for the Cable continue to be July 9th highs and our 3rd tier downtrend line. Meanwhile, the currency pair has stacked additional cushions to the downside via its recent performance, most notably our 1st tier uptrend line, 2nd tier downtrend line, July 13th lows and the psychological 1.60 level. Therefore, it would take a large movement on abnormally high volume to send the Cable spinning back into its downtrend. Altogether, the GBP/USD is still searching for its near/medium-term directional identity, and it doesn’t seem the confusion will be solved today.
Present Price: 1.6276
Resistances: 1.6314, 1.6346, 1.6380, 1.6433, 1.6470
Supports: 1.6255, 1.6211, 1.6168, 1.6127, 1.6077
Psychological: 1.60, 1.65
USD/JPY Stabilizes Above July Lows
The USD/JPY continues its stabilization pattern on declining volume post-July 8th. The USD/JPY found a little strength in the S&P’s rally yesterday, though no substantial movements occurred. It seems the USD/JPY is attempting to form a new base amid a lack of trend identity across markets. However, the momentum remains to the downside considering we haven’t seen any noteworthy action to the upside for some time. Hence, it appears the USD/JPY could be lodged at depressed levels for a while longer, only inflicting further damage on a Japanese economy struggling with a bombing export economy.
We still believe a retest of 90 will occur, it’s just a matter of when. The key for the USD/JPY will be avoiding a retest of January lows, for a retracement beneath these levels could inflict considerable damage. The USD/JPY would likely need a large downturn in U.S. equities to test the bottom limits of its yearly trading range. Since the S&P futures have rallied back towards 900, a large breakdown in the USD/JPY is probably out of the question for the near-term. The near-term goal to the upside for the USD/JPY is getting back above our 1st tier downtrend and uptrend lines. Otherwise, the currency pair will continue to trade around uncomfortable levels.
The BOJ will conclude its meeting late Tuesday/early Wednesday and announce any updates/revision to its present monetary policy. While the BOJ has little to work with concerning its benchmark rate, investors will be curious to see if there are any additions/alterations to its QE plan. Furthermore, investors will pay close attention to the BOJ’s economic sentiment and will look to see if the central bank provides any economic outlook.
Present Price: 92.85
Resistances: 93.28, 93.76, 94.45, 94.99, 95.73
Supports: 92.57, 91.96, 91.50, 91.03, 90.28
Psychological: 90, 95
Gold Pops with U.S. Equities
Gold got a nice pop yesterday with the S&P futures running back towards their psychological 900 level. Gold managed to build some space between price and its own $900/oz psychological level in the process. The precious metal skipped past what are now our 2nd tier and 3rd tier uptrend lines, and the rally appears to be buckling beneath July 7th highs. Yesterday’s movement higher came on standard volume, telling us it was likely not a technical breakout. There are many new downtrend lines we can construct above present price, including our fresh 4th tier downtrend line. Even if gold’s present rally should continue, the precious metal still has to deal with July 7th highs, July 1st highs, and the psychological $950/oz level. Therefore, we are not sold on the uptrend, although space between price and $900/oz is certainly comforting. Meanwhile, we are discussing the S&P and 900 again with crude hovering around $60/bbl. Therefore, gold is in an identity crisis along with the rest of the market. We are sitting a neutral position until we witness a convincing move directionally.
Present Price: $924.35/oz
Resistances: $925.79/oz, $927.14/oz, $929.00/oz, $930.18/oz, $934.22/oz
Supports: $922.59/oz, $920.57/oz, $918.88/oz, $917.20/oz, $915.34/oz
Psychological: $900/oz
Crude’s Rally Falls Short of our 1st Tier Uptrend Line
Crude futures bottomed yesterday as we anticipated and pieced together a decent rally on climbing volume. However, the rally was deflected by our 1st tier uptrend line today, and is hovering back around the psychological $60/bbl level. Crude futures are struggling to tack onto yesterday’s gains after OPEC said it expected global consumption of oil to increase by 0.6% in 2010, far lower than the IEA’s estimate of 1.7% growth. In addition to the news from OPEC, investors got some mixed economic data. Although retail sales came in two basis points above analyst expectations, the core number was two basis points below expectations. Additionally, the EU reported weak economic sentiment and worse than anticipated industrial production data. Hence, crude is being held down despite the S&P’s run to 900. On an interesting note, Nigeria released Henry Okah from jail, the leader of MEND who has been incarcerated since September 2007. Nigeria believes this could be the 1st step in repairing relations with MEND and ending the attacks on Nigeria’s oil operations. The prospect of peace in Nigeria could be applying further downward pressure on the price of crude, though it is uncertain how large of an impact Okah’s release will have on negotiations with MEND.
Technically speaking, July 9th highs and our 1st tier uptrend line serve as the two largest barriers hindering accelerated immediate-term gains in crude. The futures have edged back below our 1st tier downtrend line, and $60/bbl continues to have a noticeable psychological influence on movement. At least crude has created some space between price and the two key cushions to the downside, May 18th lows and our 1st tier uptrend line. Meanwhile, the Pound and Euro have gained back some ground on the Dollar, though neither currency pair has made a technical breakout to the upside. Additionally, the S&P futures are hanging around the highly psychological 900 level, telling us the markets are still in a state of directional confusion. Hence, despite this week’s stability and improvement, there remains a heavy downward momentum on price.
Present Price: $59.99/bbl
Resistances: $60.89/bbl, $61.29/bbl, $61.66/bbl, $62.22/bbl, $62.69/bbl
Supports: $60.01/bbl, $59.61/bbl, $58.94/bbl, $58.55/bbl, $58.23/bbl
Psychological: $55/bbl, $60/bbl
S&P Futures Climb Back to our Neckline and 900
The S&P futures logged encouraging gains yesterday, eclipsing our two downtrend lines on decent volume. However, the run has stalled at the psychological 900 level, right on the neckline of the head and shoulders pattern we created a little while ago. The S&P is giving the uptrend another shot, and it seems the bulls and bears are stuck in a dead heat now. Though the scales have tilted more in the bulls favor over the past 48 hours, we’d say the scale is balanced. We’d say Meredith Whitney’s remarks regarding the financial sector had a lot to do with the run since Goldman’s great earnings release today is having little to no impact. As a result, investors have placed the S&P in a position that reads ‘Where do we go from here?’ Investors will likely wait and see how more earnings reports pan out over the coming week before considering committing to one direction or the other. We can say this is an encouraging development for the bulls since last week momentum was clearly in favor of the downside.
The U.S. released some mixed economic data today. While the headline retail sales number came in two basis points ahead of consensus, the core number missed expectations by two basis points. This tells us that automobile sales picked up, likely due to heavy price cuts and discounts to attract buyers. However, consumption remains weak for discretionary goods, implying the U.S. citizen is cautions regarding their savings/consumption behavior due to uncertainty in the employment market. The U.S. also released PPI data that outpaced analyst expectations. Though analysts are attributing the boots in producer prices to surging gasoline prices, the PPI numbers did catch us a little off guard. Even though deflation tends to be the theme right now, any large number price wise does stoke the fear of inflation. However, we won’t dig any further than this. We will wait to see how tomorrow’s CPI data fares before jumping to any conclusions.
Present Price: 898.25
Resistances: 898, 903.5, 909.25, 914.75, 921.25
Supports: 892, 888.25, 884, 880.75, 875.5
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.
