Daily Market Commentary
EUR/USD Rallies Nicely Despite Slight Contraction in Headline CPI
The EUR/USD is registering a sizeable pop following Tuesday’s consolidation. The upward movement comes sans abnormal volume, and we’ve yet to witness sizable action to the upside, perhaps today? Investors are likely hesitating after this week’s economic data failed to impress. Though today’s headline EU CPI met analyst expectations, CPI has turned negative for the first time since the beginning of the crisis. Additionally, the EU released disappointing economic sentiment and industrial production numbers yesterday. Therefore, although the EUR/USD is heading north today in reaction to upbeat earnings from Intel, investors seem reluctant to put all of their chips on the table. However, the EUR/USD has managed to climb past 1.40 and July 9th highs, our two immediate-term barriers. We’ve adjusted our trend lines accordingly to give investors an idea of the technical obstacles separating the EUR/USD from a more substantial breakout to the upside. Our 2nd and 3rd tier downtrend lines appear to be the last line of defense for the near-term since they run through June and July highs, respectfully. It would likely take a large volume shock to break through our downtrend lines, so investors should pay close attention to today’s buy-side activity.
Meanwhile, gold and the S&P futures have made encouraging movements to the upside, showing the correlations are on the same page. We’ve witness quite a positive development across the board so far this week. Now is an important juncture in determining whether the rally tops out and subsides to consolidation, or busts through to the upside with a technical progression. From our view at the moment, it appears the rally could settle down since the powerful volume required just isn’t there. However, we will need to see how the rest of the session unfolds for the market can be quite volatile. Even if today’s rally should cool off, it would be nice to see the EUR/USD begin to build a new base above the psychological 1.40 level and our 2nd tier uptrend lines. The EU will be relatively quiet on the data front for the remainder of the week, leaving the show up to U.S. data and earnings.
Present Price: 1.4088
Resistances: 1.4091, 1.4109, 1.4132, 1.4145, 1.4166
Supports: 1.4061, 1.4043, 1.4015, 1.3998, 1.3973
Psychological: 1.40
GBP/USD Moves Higher on Better Than Expected CCC Report
Britain’s CCC number came in below analyst expectations as we figured, and the Pound is experiencing relative strength in reaction to the news. The GBP/USD is running higher with gold while crude and the S&P futures try to break out of their chains. Additionally, we notice the 30 Year T-Bond futures are tanking again, indicating investors are jumping back into riskier assets. The Cable has proceeded to leap through our 2nd tier downtrend line, and is currently facing our 3rd tier uptrend line. We’ve yet to witness abnormal volume on the buy side in either the Cable or the EUR/USD, which is a little intriguing/discouraging as far as the sustainability of the present rally is concerned. Regardless, the topside progression is impressive, and bulls are trying to make a statement after Intel’s earnings report blew away analyst expectations after the bell yesterday. The GBP/USD is back in the thick of the June trading ranging, meaning if the currency pair doesn’t break out of the lid of the range soon, it could duck and revert to another period of consolidation. We’ve readjusted our 3rd tier downtrend line accordingly, running it through June highs. Meanwhile, the 1.65 level should serve as a temporary psychological barrier should it be reached.
The large drop in the CCC sends the data point to a more respectable level, showing Britain’s labor market continues to improve. In addition to the CCC report, the average earnings index came in two basis points above analyst expectations at 2.3%. The rise in average earnings along with a declining CCC indicates British citizens may feel more comfortable increasing their level of consumption. Therefore, all is good this week on the British front after a shaky couple weeks. Britain’s done on the economic data front for the week, meaning the Pound should continue to enjoy relative strength for the next few sessions. Investors should keep an eye on volume since a lack of considerable action on the buy side could prevent the rally from achieving a large technical breakout.
Present Price: 1.6444
Resistances: 1.6459, 1.6485, 1.6522, 1.6548, 1.6589
Supports: 1.6423, 1.6405, 1.6366, 1.6342, 1.6301
Psychological: 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.
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 announced it is holding its benchmark rate at 0.1% as we anticipated while continuing its alternative liquidity measures. The Japanese economy has been under considerable pressure due to the decline in demand for exports coupled with an appreciation of the Yen. Therefore, the BOJ will likely pump in liquidity until external demand shows more signs of stability.
Present Price: 92.85
Resistances: 93.76, 94.45, 94.99, 95.73, 96.33
Supports: 93.28, 92.57, 91.96, 91.50, 91.03
Psychological: 90, 95
Gold Jumps on Light Volume with Depreciating Dollar
Gold has added onto yesterday’s gains, bursting through July 7th highs as the greenback depreciates across the board. Upbeat earnings reports from the likes of Intel and Goldman have resulted in higher investor confidence. Investors are returning to equities and crude while exiting Treasuries. The result is a strong performance in gold as the precious metal makes full use of its positive correlations. Additionally, we notice China’s reserves topped $2 Trillion. Recalling the report earlier this year showing China has been adding to its stock of bullion over the past few years, we wouldn’t be surprised if China is diversifying some of its new reserves into gold in an effort to decrease its dependency on the greenback. However, as with the EUR/USD and Cable, we haven’t witnessed confirming volume on the buy-side yet in gold. Therefore, investors are showing hesitation in making a commitment to the uptrend. Gold now faces July 1st highs, the psychological $950/oz level, and our fresh 3rd and 4th tier downtrend lines. Hence, although the upwards movements in gold over the past couple sessions are certainly encouraging, the bulls shouldn’t get too confident just yet. As for the downside, gold has quite a few cushions to fall back on now, including several solid June support levels and our 2nd tier uptrend line.
Present Price: $938.15/oz
Resistances: $939.28/oz, $941.13/oz, $942.65/oz, $946.02/oz, $948.72/oz
Supports: $937.26/oz, $935.57/oz, $934.05/oz, $932.54/oz, $930.51/oz
Psychological: $950/oz
30 Year T-Bond Futures Dive with Improving Investor Sentiment
The 30 Year T-Bond futures are logging large declines today on rising volume after CPI came in line with analyst expectations and U.S. manufacturing and industrial production made noticeable improvements. It seems investors are making a return to risk, exemplified by another day of solid gains in the S&P coupled with a depreciation of the dollar against both the Pound and the Euro. Meanwhile, the 30 Year T-Bond futures are distancing themselves from our uptrend line and 1st and 2nd tier downtrend lines. Today’s action in the 30 Year is important because it signifies a more confident investor. However, should the selloff in the 30 Year futures accelerate from here, investors may grow concerned again about rising yields and the dampening impact this could have on a fragile U.S. economic recovery.
Present Price: 117 20.0
Resistances: 118.19, 118.59, 119.25, 120.02
Supports: 117.42, 116.75, 116.36, 115.53, 114.75
Crude’s Rally Wavers Despite Shallow Weekly Inventories
Crude futures have exited the gates strongly this morning as the S&P futures rally and the Dollar depreciates against the Pound and the Euro. A depreciating Greenback makes the dollar-based economy more attractive to importers, boosting price. U.S. equities are reacting positively to an upbeat earnings report from Intel after the bell yesterday. Additionally, the empire manufacturing index exceeded analyst expectations, and has almost returned to growth for the first time since August 2008. Furthermore, U.S. CPI came in a basis point above analyst expectations and industrial production outperformed by two basis points. The improvement in manufacturing and production implies a larger consumption of crude, giving a boost to the price of crude. Weekly crude inventories came in shallow of analyst expectations at -2.8 million barrels, just 100k more than last week’s -2.9 mill. Investors are sending crude lower despite all of the aforementioned positive catalysts. One development driving price lower could be Nigeria’s MEND agreeing to a 30 day cease-fire after the release of their leader, Henry Okah. Instability in Nigeria was sending crude hire earlier this month, so the futures could be struggling a little in the wake of the news.
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. We expected consolidation between $58-$61/bbl, and it looks like the prediction is materializing. However, should U.S. equities continue their ascent and the dollar its depreciation, crude futures should follow suit due to their positive correlations.
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 Surge from our Neckline after Upbeat Data and Earnings
The S&P futures are running from our neckline, or 1st tier uptrend line, in reaction to upbeat earnings from Intel coupled with encouraging economic data. The futures have eclipsed our 2nd tier downtrend line in the process, setting the S&P futures up for a retest of July highs. While CPI came in line with analyst expectations, industrial production and the empire state manufacturing index made noticeable improvements. The empire index is almost positive for the first time since August 2008, and industrial production has returned to a reasonable level after large contractions earlier in the year. Meanwhile, the S&P’s correlations have logged considerable gains. The EUR/USD, GBP/USD, and gold have all made sizable movements to the upside today. Additionally, the 30 Year T-Bond futures are sinking quickly on heavy volume. Therefore, investors are dipping their toes back into the water to check if it’s warm. Though investors haven’t jumped in, the fundamentals are suddenly tipping in favor of the bulls. However, even though a declining 30 Year is normally a positive sign for equities, investors should keep an eye on yield. If yield rises too quickly, fears of higher rates dampening the recovery could resurface. The next tests for the S&P futures will be July highs and our 2nd tier uptrend line. From here, it will be interesting to see how the S&P interacts with June consolidation and the psychological 950 level.
Attention will return to China late Wednesday as it releases key economic data including GDP, industrial production, CPI, FAI, and PPI. Analysts are expecting GDP to zoom towards 7.8% due to the apparent success of China’s stimulus package. Additionally, investors will be looking for industrial production growth to improve by six basis points to 9.5%. Furthermore, CPI is expected to remain relatively unchanged at -1.3%. While the GDP estimate looks about right, we believe industrial production and CPI may outperform analyst expectations since the predictions seem modest in light of such a swift recovery in GDP. Should the economic indicators from China outperform, this could provide another large boost to the S&P futures since the economic recovery will look brighter. On the other hand, disappointing data from China could have the opposite effect. While we are turning positive on the S&P futures trend-wise, they need to break through distance themselves from the aforementioned near-term barriers. However, the downtrend is still hanging around, and shouldn’t be forgotten until we see a large confirmation in volume to the upside.
Present Price: 919.00
Resistances: 921.25, 924.75, 929.75, 935, 940.5
Supports: 914.75, 909.25, 903.5, 898, 892
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 Rallies Nicely Despite Slight Contraction in Headline CPI
The EUR/USD is registering a sizeable pop following Tuesday’s consolidation. The upward movement comes sans abnormal volume, and we’ve yet to witness sizable action to the upside, perhaps today? Investors are likely hesitating after this week’s economic data failed to impress. Though today’s headline EU CPI met analyst expectations, CPI has turned negative for the first time since the beginning of the crisis. Additionally, the EU released disappointing economic sentiment and industrial production numbers yesterday. Therefore, although the EUR/USD is heading north today in reaction to upbeat earnings from Intel, investors seem reluctant to put all of their chips on the table. However, the EUR/USD has managed to climb past 1.40 and July 9th highs, our two immediate-term barriers. We’ve adjusted our trend lines accordingly to give investors an idea of the technical obstacles separating the EUR/USD from a more substantial breakout to the upside. Our 2nd and 3rd tier downtrend lines appear to be the last line of defense for the near-term since they run through June and July highs, respectfully. It would likely take a large volume shock to break through our downtrend lines, so investors should pay close attention to today’s buy-side activity.
Meanwhile, gold and the S&P futures have made encouraging movements to the upside, showing the correlations are on the same page. We’ve witness quite a positive development across the board so far this week. Now is an important juncture in determining whether the rally tops out and subsides to consolidation, or busts through to the upside with a technical progression. From our view at the moment, it appears the rally could settle down since the powerful volume required just isn’t there. However, we will need to see how the rest of the session unfolds for the market can be quite volatile. Even if today’s rally should cool off, it would be nice to see the EUR/USD begin to build a new base above the psychological 1.40 level and our 2nd tier uptrend lines. The EU will be relatively quiet on the data front for the remainder of the week, leaving the show up to U.S. data and earnings.
Present Price: 1.4088
Resistances: 1.4091, 1.4109, 1.4132, 1.4145, 1.4166
Supports: 1.4061, 1.4043, 1.4015, 1.3998, 1.3973
Psychological: 1.40
GBP/USD Moves Higher on Better Than Expected CCC Report
Britain’s CCC number came in below analyst expectations as we figured, and the Pound is experiencing relative strength in reaction to the news. The GBP/USD is running higher with gold while crude and the S&P futures try to break out of their chains. Additionally, we notice the 30 Year T-Bond futures are tanking again, indicating investors are jumping back into riskier assets. The Cable has proceeded to leap through our 2nd tier downtrend line, and is currently facing our 3rd tier uptrend line. We’ve yet to witness abnormal volume on the buy side in either the Cable or the EUR/USD, which is a little intriguing/discouraging as far as the sustainability of the present rally is concerned. Regardless, the topside progression is impressive, and bulls are trying to make a statement after Intel’s earnings report blew away analyst expectations after the bell yesterday. The GBP/USD is back in the thick of the June trading ranging, meaning if the currency pair doesn’t break out of the lid of the range soon, it could duck and revert to another period of consolidation. We’ve readjusted our 3rd tier downtrend line accordingly, running it through June highs. Meanwhile, the 1.65 level should serve as a temporary psychological barrier should it be reached.
The large drop in the CCC sends the data point to a more respectable level, showing Britain’s labor market continues to improve. In addition to the CCC report, the average earnings index came in two basis points above analyst expectations at 2.3%. The rise in average earnings along with a declining CCC indicates British citizens may feel more comfortable increasing their level of consumption. Therefore, all is good this week on the British front after a shaky couple weeks. Britain’s done on the economic data front for the week, meaning the Pound should continue to enjoy relative strength for the next few sessions. Investors should keep an eye on volume since a lack of considerable action on the buy side could prevent the rally from achieving a large technical breakout.
Present Price: 1.6444
Resistances: 1.6459, 1.6485, 1.6522, 1.6548, 1.6589
Supports: 1.6423, 1.6405, 1.6366, 1.6342, 1.6301
Psychological: 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.
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 announced it is holding its benchmark rate at 0.1% as we anticipated while continuing its alternative liquidity measures. The Japanese economy has been under considerable pressure due to the decline in demand for exports coupled with an appreciation of the Yen. Therefore, the BOJ will likely pump in liquidity until external demand shows more signs of stability.
Present Price: 92.85
Resistances: 93.76, 94.45, 94.99, 95.73, 96.33
Supports: 93.28, 92.57, 91.96, 91.50, 91.03
Psychological: 90, 95
Gold Jumps on Light Volume with Depreciating Dollar
Gold has added onto yesterday’s gains, bursting through July 7th highs as the greenback depreciates across the board. Upbeat earnings reports from the likes of Intel and Goldman have resulted in higher investor confidence. Investors are returning to equities and crude while exiting Treasuries. The result is a strong performance in gold as the precious metal makes full use of its positive correlations. Additionally, we notice China’s reserves topped $2 Trillion. Recalling the report earlier this year showing China has been adding to its stock of bullion over the past few years, we wouldn’t be surprised if China is diversifying some of its new reserves into gold in an effort to decrease its dependency on the greenback. However, as with the EUR/USD and Cable, we haven’t witnessed confirming volume on the buy-side yet in gold. Therefore, investors are showing hesitation in making a commitment to the uptrend. Gold now faces July 1st highs, the psychological $950/oz level, and our fresh 3rd and 4th tier downtrend lines. Hence, although the upwards movements in gold over the past couple sessions are certainly encouraging, the bulls shouldn’t get too confident just yet. As for the downside, gold has quite a few cushions to fall back on now, including several solid June support levels and our 2nd tier uptrend line.
Present Price: $938.15/oz
Resistances: $939.28/oz, $941.13/oz, $942.65/oz, $946.02/oz, $948.72/oz
Supports: $937.26/oz, $935.57/oz, $934.05/oz, $932.54/oz, $930.51/oz
Psychological: $950/oz
30 Year T-Bond Futures Dive with Improving Investor Sentiment
The 30 Year T-Bond futures are logging large declines today on rising volume after CPI came in line with analyst expectations and U.S. manufacturing and industrial production made noticeable improvements. It seems investors are making a return to risk, exemplified by another day of solid gains in the S&P coupled with a depreciation of the dollar against both the Pound and the Euro. Meanwhile, the 30 Year T-Bond futures are distancing themselves from our uptrend line and 1st and 2nd tier downtrend lines. Today’s action in the 30 Year is important because it signifies a more confident investor. However, should the selloff in the 30 Year futures accelerate from here, investors may grow concerned again about rising yields and the dampening impact this could have on a fragile U.S. economic recovery.
Present Price: 117 20.0
Resistances: 118.19, 118.59, 119.25, 120.02
Supports: 117.42, 116.75, 116.36, 115.53, 114.75
Crude’s Rally Wavers Despite Shallow Weekly Inventories
Crude futures have exited the gates strongly this morning as the S&P futures rally and the Dollar depreciates against the Pound and the Euro. A depreciating Greenback makes the dollar-based economy more attractive to importers, boosting price. U.S. equities are reacting positively to an upbeat earnings report from Intel after the bell yesterday. Additionally, the empire manufacturing index exceeded analyst expectations, and has almost returned to growth for the first time since August 2008. Furthermore, U.S. CPI came in a basis point above analyst expectations and industrial production outperformed by two basis points. The improvement in manufacturing and production implies a larger consumption of crude, giving a boost to the price of crude. Weekly crude inventories came in shallow of analyst expectations at -2.8 million barrels, just 100k more than last week’s -2.9 mill. Investors are sending crude lower despite all of the aforementioned positive catalysts. One development driving price lower could be Nigeria’s MEND agreeing to a 30 day cease-fire after the release of their leader, Henry Okah. Instability in Nigeria was sending crude hire earlier this month, so the futures could be struggling a little in the wake of the news.
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. We expected consolidation between $58-$61/bbl, and it looks like the prediction is materializing. However, should U.S. equities continue their ascent and the dollar its depreciation, crude futures should follow suit due to their positive correlations.
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 Surge from our Neckline after Upbeat Data and Earnings
The S&P futures are running from our neckline, or 1st tier uptrend line, in reaction to upbeat earnings from Intel coupled with encouraging economic data. The futures have eclipsed our 2nd tier downtrend line in the process, setting the S&P futures up for a retest of July highs. While CPI came in line with analyst expectations, industrial production and the empire state manufacturing index made noticeable improvements. The empire index is almost positive for the first time since August 2008, and industrial production has returned to a reasonable level after large contractions earlier in the year. Meanwhile, the S&P’s correlations have logged considerable gains. The EUR/USD, GBP/USD, and gold have all made sizable movements to the upside today. Additionally, the 30 Year T-Bond futures are sinking quickly on heavy volume. Therefore, investors are dipping their toes back into the water to check if it’s warm. Though investors haven’t jumped in, the fundamentals are suddenly tipping in favor of the bulls. However, even though a declining 30 Year is normally a positive sign for equities, investors should keep an eye on yield. If yield rises too quickly, fears of higher rates dampening the recovery could resurface. The next tests for the S&P futures will be July highs and our 2nd tier uptrend line. From here, it will be interesting to see how the S&P interacts with June consolidation and the psychological 950 level.
Attention will return to China late Wednesday as it releases key economic data including GDP, industrial production, CPI, FAI, and PPI. Analysts are expecting GDP to zoom towards 7.8% due to the apparent success of China’s stimulus package. Additionally, investors will be looking for industrial production growth to improve by six basis points to 9.5%. Furthermore, CPI is expected to remain relatively unchanged at -1.3%. While the GDP estimate looks about right, we believe industrial production and CPI may outperform analyst expectations since the predictions seem modest in light of such a swift recovery in GDP. Should the economic indicators from China outperform, this could provide another large boost to the S&P futures since the economic recovery will look brighter. On the other hand, disappointing data from China could have the opposite effect. While we are turning positive on the S&P futures trend-wise, they need to break through distance themselves from the aforementioned near-term barriers. However, the downtrend is still hanging around, and shouldn’t be forgotten until we see a large confirmation in volume to the upside.
Present Price: 919.00
Resistances: 921.25, 924.75, 929.75, 935, 940.5
Supports: 914.75, 909.25, 903.5, 898, 892
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.
