Daily Market Commentary
EUR/USD Hopes to Settle Above our 3rd Tier Downtrend Line
The EUR/USD managed to build a temporary base above 1.40 earlier today, and has proceeded to propel off of our 2nd tier uptrend line after JPMorgan’s 2nd quarter earnings blew away analyst expectations. Volume seems to be picking up, and we could finally view a technical breakout should sufficient buy-side action persist. The EUR/USD has cruised past our 3rd tier downtrend line, a key near-term barrier since it runs through July highs. We’d like to see momentum keep price comfortably above our downtrend lines for the immediate term to avoid the possibility of a retracement. If the EUR/USD can’t stay above our 3rd tier downtrend line we may see a small pullback with the possibility of consolidation. This rally could have legs since we’ve seen very positive earnings results so far this week. IBM and Google will report later today, and if they surpass analyst expectations this may be enough juice to send the EUR/USD over the top. Meanwhile, 1.40 is fading into the rearview mirror, meaning previous July highs may be taken down next. We’re out of downtrend line formations for the time being, a positive signal for the near-term. We still need to see how the EUR/USD builds off of today’s momentum. However, with U.S. unemployment claims coming in well below analyst expectations for the second week in a row, there’s more positive than negative news today.
On a cautionary note, CIT isn’t having any breakthroughs with their negotiations for another shot of liquidity, meaning the business lender may file for bankruptcy on Friday. Though some analysts state the failure of CIT wouldn’t pose any systemic risks, it remains to seen what impact a pending bankruptcy could have on the U.S. economy and its currency. However, investors seem to be brushing the CIT news aside, and are focusing on the encouraging earnings reports. It’s interesting how the Euro is exhibiting a relative strength, as seen in the EUR/GBP, since this week’s economic data from the EU underperformed. When banking on the concept of a global economic recovery, investors may opt to invest in the Euro vs. lower interest rate currencies since the EU hasn’t made as large of a commitment to liquidity. An immediate-term key for the EUR/USD will be taking a leg up from our 3rd tier uptrend line. Meanwhile, keep an eye on the currency pair’s interaction July 1st highs should they be reached. Once again, with the EU’s economic data out of the way for the week, the EUR/USD’s performance should rely heavily upon 2nd quarter earnings reports and U.S. equities. Even though the S&P futures are off slightly pre-market, the EUR/USD’s performance to the upside could be good news for the U.S. markets.
Present Price: 1.4140
Resistances: 1.4145, 1.4166, 1.4183, 1.4201. 1.4224
Supports: 1.4126, 1.4106, 1.4091, 1.4071, 1.4055
Psychological: 1.40
GBP/USD Edges Towards 1.65 on Light Volume
The Cable has deflected twice from our 3rd tier uptrend line as the psychological 1.65 level looms overhead. The Cable continues to underperform against the EUR/USD, exemplified by an upturn in the EUR/GBP. The Pound’s relative weakness comes despite a better than expected CCC and average earnings data as compared to the Euro’s disconcerted showing in economic sentiment and industrial production. Meanwhile, the Cable has fallen into a pattern of consolidation over the past 24 hours. The GBP/USD is struggling with the dense June trading range as we anticipated. The Cable’s large near-term technical obstacles could be adding to the Pound’s relative weakness. Volume has been pretty tame to the upside. The GBP/USD likely needs a shot of considerable buy-side volume to vault the currency pair past our 3rd tier uptrend line and 1.65. Even if the Cable should make it beyond these barriers, the GBP/USD still needs to deal with our 3rd tier downtrend line and June highs. Hence, the Cable has its work cut out for it to the upside.
Second quarter earnings continue to come in better than analyst expectations. JPMorgan joined the pack today by eclipsing analyst estimates with tech heavyweights IBM and Google reporting later on. Investors have been highly anticipating the 2nd quarter earnings season to get a better picture of the state of corporate performance among the global economic stabilization taking place data-wise. If earnings should continue to outperform estimates, the Dollar should continue to depreciate against both the Pound and Euro barring any external shock. Speaking of which, investors should monitor the CIT situation to see whether a bankruptcy would have systemic implications. Any large systemic shock could have a destabilizing effect on the GBP/USD’s uptrend. However, any CIT predictions at this point are merely speculation, and the concrete data and earnings of this week are spinning the GBP/USD’s story in a positive light. Investors should also keep an eye on the interaction of the S&P futures with their July 1st highs since the two investment vehicles are positive correlated.
Present Price: 1.6430
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 Takes a Shot at our 1st Tier Uptrend Line
The USD/JPY made a concerted effort to get back above our 1st tier uptrend line in a bid to return to a safety zone. The USD/JPY showed some upward mobility, exercising its positive correlation with U.S. equities. The S&P futures logged considerable gains, and the USD/JPY was inclined to follow suit, tagging along with the concept of a global economic recovery. However, the currency pair was batted away by our 1st tier uptrend line due to insufficient volume. Regardless, it’s an encouraging progression since the USD/JPY was recently flirting with the idea of retesting the highly psychological 90 level. The USD/JPY is hovering back around our 1st tier downtrend line with the S&P futures trying to add onto yesterday’s gains. Should the S&P follow with its technical upside breakout, the USD/JPY should edge back into its uptrend. However, the USD/JPY is still trading in a dangerous zone and investors should exercise a bit of caution for the immediate-term.
Present Price: 93.65
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 Consolidates Below our 2nd tier Downtrend Line
Gold hit a speed bump at our 2nd tier downtrend line after the precious metal failed to garner the volume to send it past more near-term technical barriers. Gold still faces our 2nd and 3rd tier downtrend lines along with July 1st highs and the psychological $950/oz level. The fact gold hasn’t received large volume on the buy-side during its present run is a bit disconcerting. We will need to see a large technical movement above the aforementioned technical obstacles with considerable volume before we feel comfortable reinitiating our own uptrend call. However, the EUR/USD and GBP/USD have made promising developments to the upside along with U.S. equities, setting the stage for a greater commitment to the uptrend.
On a speculative note, the U.S. reported negative TIC Long-Term Purchases today despite a record gain in China’s reserves. Therefore, China may in fact be diversifying some of its new reserves from U.S. Treasuries to commodities such as gold. However, as we noted, this is purely speculation, yet the situation should be considered and deliberated. Should China’s reserves continue to grow healthfully while their central bank divests from U.S. Treasuries, this could provide relative strength to gold over the near to medium-term.
Present Price: $932.80/oz
Resistances: $934.05/oz, $935.57/oz, $937.26/oz, $939.28/oz, $941.13/oz
Supports: $932.54/oz, $930.51/oz, $928.83/oz, $927.48/oz, $925.46/oz
Psychological: $950/oz
Crude Fluctuates Around our 2nd Tier Uptrend Line
Crude futures dipped from our 2nd tier uptrend line after the U.S. released mixed economic data. Today’s contraction in Philly’s manufacturing index counters the positive showing from the Empire manufacturing index yesterday. Despite the setback in Philly’s number, the data still appears to be on an upward trajectory. In addition to the Philly data, the U.S. released a much better than expected unemployment claims number for the second week in a row. Altogether, the positives seem to outweigh the negatives since lower unemployment implies higher consumption, which should in effect improve the prospects of both manufacturing indexes. We can’t forget the U.S. reported shallow inventories again this week. On the earnings front, JPMorgan continued the theme of an optimistic 2nd quarter season. Finally, China reported a GDP number pretty much in line with expectations while industrial production showed a respectable increase. Correlation wise, the Euro and Pound have appreciated considerably against the greenback and the S&P futures are on a tear. Overall, Crude’s catalysts are implying a rising price and a healthy bottom may be in place at July 13th lows.
The near-term keys will be for crude futures to get past our 2nd tier uptrend and downtrend lines along with July 8th highs. If crude can accomplish these three feats, more aggressive gains may be in the picture. The next level of solid resistance would likely be July 7th highs and the psychological $65/bbl level. As for the downside, investors should keep an eye on intraday lows and the highly psychological $60/bbl level. Below here, July 13th and May 16th lows shore up the bottom-end defenses. IBM and Google are on deck today for earnings. If both companies blow away expectations this could fuel a solid near-term rally in crude.
Present Price: $61.64/bbl
Resistances: $62.25/bbl, $62.69/bbl, $63.10/bbl, $63.51/bbl, $64.17/bbl
Supports: $61.51/bbl, $61.17/bbl, $60.62/bbl, $60.27/bbl, $59.81/bbl
Psychological: $60/bbl
S&P Futures Move Sideways as Investors Digest News
The S&P futures are dangling beneath our 2nd tier uptrend line with investors taking in news from all different angles. The futures are also trading right at July highs, which we stated would be the next test to the upside. Starting with the Far East, China reported in line GDP and better than expected industrial production as we anticipated. With exports and manufacturing damaged, China has been injecting massive amounts of liquidity into infrastructure projects, more than making up for the losses encountered by new domestic demand for cement and steel. However, CPI and PPI actually came in below analyst expectations, raising a cautionary flag. One would expect inflation, not deflation with improvements in GDP and production. The pullback in prices is a bit disconcerting and shows China’s economic recovery may be powered by artificial stigma. Regardless, the upbeat GDP and industrial production numbers help keep the S&P’s new positive momentum intact.
The U.S. released key economic data of its own today, which also sends a mixed message. Unemployment claims registered a large decline for the 2nd straight week, certainly a positive development. However, a negative Philly manufacturing index number offsets yesterday’s improvement in the Empire manufacturing index. Furthermore, a cause for concern is the negative TIC long-term purchases data. Though not fronting the headlines yet, a decline in the TIC number could reignite fears that foreign central banks are losing interest in America’s Treasuries. The data is particularly disconcerting since China just reported a record increase in its reserves, indicating China may be following through with its threat to diversify new reserves from the greenback and U.S. Treasuries. This would explain the swift pullback in the 30 Year T-Bond futures so far this week. Outside of mixed economic data 2nd quarter earnings reports continue to outperform analyst expectations. Corporations are faring better than anticipated as they benefit from preventative cost-cutting measures.
The S&P futures continue to distance themselves from our 2nd tier downtrend lines, 1st tier uptrend line and the psychological 900 level. Additionally, although we haven’t witnessed abnormal volume to the topside, buy-side volume has been solid. The EUR/USD, GBP/USD, and gold have made strong moves to the upside as well while the 30 Year T-Bond futures head south. Therefore, most of the S&P’s correlations are supporting the breakout in U.S. equities. However, crude futures continue to bounce around the psychological $60/bbl level and have failed to participate in the S&P’s recent run. Hence, not all of the S&P’s correlations are on board for the ride just yet. The S&P’s near-term barriers are July highs, our 1st tier uptrend line, and the topside of June’s trading range. If the S&P can climb through the first two obstacles a retest of June highs and the psychological 950 level seems imminent. As for the downside, the S&P futures have Wednesday lows, our 2nd tier downtrend line, and the psychological 900 level to fall back on.
Present Price: 926.50
Resistances: 930.5, 935, 940.5, 943.5, 947.5
Supports: 924, 920.5, 916, 911, 906.5
Psychological: 950, 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 Hopes to Settle Above our 3rd Tier Downtrend Line
The EUR/USD managed to build a temporary base above 1.40 earlier today, and has proceeded to propel off of our 2nd tier uptrend line after JPMorgan’s 2nd quarter earnings blew away analyst expectations. Volume seems to be picking up, and we could finally view a technical breakout should sufficient buy-side action persist. The EUR/USD has cruised past our 3rd tier downtrend line, a key near-term barrier since it runs through July highs. We’d like to see momentum keep price comfortably above our downtrend lines for the immediate term to avoid the possibility of a retracement. If the EUR/USD can’t stay above our 3rd tier downtrend line we may see a small pullback with the possibility of consolidation. This rally could have legs since we’ve seen very positive earnings results so far this week. IBM and Google will report later today, and if they surpass analyst expectations this may be enough juice to send the EUR/USD over the top. Meanwhile, 1.40 is fading into the rearview mirror, meaning previous July highs may be taken down next. We’re out of downtrend line formations for the time being, a positive signal for the near-term. We still need to see how the EUR/USD builds off of today’s momentum. However, with U.S. unemployment claims coming in well below analyst expectations for the second week in a row, there’s more positive than negative news today.
On a cautionary note, CIT isn’t having any breakthroughs with their negotiations for another shot of liquidity, meaning the business lender may file for bankruptcy on Friday. Though some analysts state the failure of CIT wouldn’t pose any systemic risks, it remains to seen what impact a pending bankruptcy could have on the U.S. economy and its currency. However, investors seem to be brushing the CIT news aside, and are focusing on the encouraging earnings reports. It’s interesting how the Euro is exhibiting a relative strength, as seen in the EUR/GBP, since this week’s economic data from the EU underperformed. When banking on the concept of a global economic recovery, investors may opt to invest in the Euro vs. lower interest rate currencies since the EU hasn’t made as large of a commitment to liquidity. An immediate-term key for the EUR/USD will be taking a leg up from our 3rd tier uptrend line. Meanwhile, keep an eye on the currency pair’s interaction July 1st highs should they be reached. Once again, with the EU’s economic data out of the way for the week, the EUR/USD’s performance should rely heavily upon 2nd quarter earnings reports and U.S. equities. Even though the S&P futures are off slightly pre-market, the EUR/USD’s performance to the upside could be good news for the U.S. markets.
Present Price: 1.4140
Resistances: 1.4145, 1.4166, 1.4183, 1.4201. 1.4224
Supports: 1.4126, 1.4106, 1.4091, 1.4071, 1.4055
Psychological: 1.40
GBP/USD Edges Towards 1.65 on Light Volume
The Cable has deflected twice from our 3rd tier uptrend line as the psychological 1.65 level looms overhead. The Cable continues to underperform against the EUR/USD, exemplified by an upturn in the EUR/GBP. The Pound’s relative weakness comes despite a better than expected CCC and average earnings data as compared to the Euro’s disconcerted showing in economic sentiment and industrial production. Meanwhile, the Cable has fallen into a pattern of consolidation over the past 24 hours. The GBP/USD is struggling with the dense June trading range as we anticipated. The Cable’s large near-term technical obstacles could be adding to the Pound’s relative weakness. Volume has been pretty tame to the upside. The GBP/USD likely needs a shot of considerable buy-side volume to vault the currency pair past our 3rd tier uptrend line and 1.65. Even if the Cable should make it beyond these barriers, the GBP/USD still needs to deal with our 3rd tier downtrend line and June highs. Hence, the Cable has its work cut out for it to the upside.
Second quarter earnings continue to come in better than analyst expectations. JPMorgan joined the pack today by eclipsing analyst estimates with tech heavyweights IBM and Google reporting later on. Investors have been highly anticipating the 2nd quarter earnings season to get a better picture of the state of corporate performance among the global economic stabilization taking place data-wise. If earnings should continue to outperform estimates, the Dollar should continue to depreciate against both the Pound and Euro barring any external shock. Speaking of which, investors should monitor the CIT situation to see whether a bankruptcy would have systemic implications. Any large systemic shock could have a destabilizing effect on the GBP/USD’s uptrend. However, any CIT predictions at this point are merely speculation, and the concrete data and earnings of this week are spinning the GBP/USD’s story in a positive light. Investors should also keep an eye on the interaction of the S&P futures with their July 1st highs since the two investment vehicles are positive correlated.
Present Price: 1.6430
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 Takes a Shot at our 1st Tier Uptrend Line
The USD/JPY made a concerted effort to get back above our 1st tier uptrend line in a bid to return to a safety zone. The USD/JPY showed some upward mobility, exercising its positive correlation with U.S. equities. The S&P futures logged considerable gains, and the USD/JPY was inclined to follow suit, tagging along with the concept of a global economic recovery. However, the currency pair was batted away by our 1st tier uptrend line due to insufficient volume. Regardless, it’s an encouraging progression since the USD/JPY was recently flirting with the idea of retesting the highly psychological 90 level. The USD/JPY is hovering back around our 1st tier downtrend line with the S&P futures trying to add onto yesterday’s gains. Should the S&P follow with its technical upside breakout, the USD/JPY should edge back into its uptrend. However, the USD/JPY is still trading in a dangerous zone and investors should exercise a bit of caution for the immediate-term.
Present Price: 93.65
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 Consolidates Below our 2nd tier Downtrend Line
Gold hit a speed bump at our 2nd tier downtrend line after the precious metal failed to garner the volume to send it past more near-term technical barriers. Gold still faces our 2nd and 3rd tier downtrend lines along with July 1st highs and the psychological $950/oz level. The fact gold hasn’t received large volume on the buy-side during its present run is a bit disconcerting. We will need to see a large technical movement above the aforementioned technical obstacles with considerable volume before we feel comfortable reinitiating our own uptrend call. However, the EUR/USD and GBP/USD have made promising developments to the upside along with U.S. equities, setting the stage for a greater commitment to the uptrend.
On a speculative note, the U.S. reported negative TIC Long-Term Purchases today despite a record gain in China’s reserves. Therefore, China may in fact be diversifying some of its new reserves from U.S. Treasuries to commodities such as gold. However, as we noted, this is purely speculation, yet the situation should be considered and deliberated. Should China’s reserves continue to grow healthfully while their central bank divests from U.S. Treasuries, this could provide relative strength to gold over the near to medium-term.
Present Price: $932.80/oz
Resistances: $934.05/oz, $935.57/oz, $937.26/oz, $939.28/oz, $941.13/oz
Supports: $932.54/oz, $930.51/oz, $928.83/oz, $927.48/oz, $925.46/oz
Psychological: $950/oz
Crude Fluctuates Around our 2nd Tier Uptrend Line
Crude futures dipped from our 2nd tier uptrend line after the U.S. released mixed economic data. Today’s contraction in Philly’s manufacturing index counters the positive showing from the Empire manufacturing index yesterday. Despite the setback in Philly’s number, the data still appears to be on an upward trajectory. In addition to the Philly data, the U.S. released a much better than expected unemployment claims number for the second week in a row. Altogether, the positives seem to outweigh the negatives since lower unemployment implies higher consumption, which should in effect improve the prospects of both manufacturing indexes. We can’t forget the U.S. reported shallow inventories again this week. On the earnings front, JPMorgan continued the theme of an optimistic 2nd quarter season. Finally, China reported a GDP number pretty much in line with expectations while industrial production showed a respectable increase. Correlation wise, the Euro and Pound have appreciated considerably against the greenback and the S&P futures are on a tear. Overall, Crude’s catalysts are implying a rising price and a healthy bottom may be in place at July 13th lows.
The near-term keys will be for crude futures to get past our 2nd tier uptrend and downtrend lines along with July 8th highs. If crude can accomplish these three feats, more aggressive gains may be in the picture. The next level of solid resistance would likely be July 7th highs and the psychological $65/bbl level. As for the downside, investors should keep an eye on intraday lows and the highly psychological $60/bbl level. Below here, July 13th and May 16th lows shore up the bottom-end defenses. IBM and Google are on deck today for earnings. If both companies blow away expectations this could fuel a solid near-term rally in crude.
Present Price: $61.64/bbl
Resistances: $62.25/bbl, $62.69/bbl, $63.10/bbl, $63.51/bbl, $64.17/bbl
Supports: $61.51/bbl, $61.17/bbl, $60.62/bbl, $60.27/bbl, $59.81/bbl
Psychological: $60/bbl
S&P Futures Move Sideways as Investors Digest News
The S&P futures are dangling beneath our 2nd tier uptrend line with investors taking in news from all different angles. The futures are also trading right at July highs, which we stated would be the next test to the upside. Starting with the Far East, China reported in line GDP and better than expected industrial production as we anticipated. With exports and manufacturing damaged, China has been injecting massive amounts of liquidity into infrastructure projects, more than making up for the losses encountered by new domestic demand for cement and steel. However, CPI and PPI actually came in below analyst expectations, raising a cautionary flag. One would expect inflation, not deflation with improvements in GDP and production. The pullback in prices is a bit disconcerting and shows China’s economic recovery may be powered by artificial stigma. Regardless, the upbeat GDP and industrial production numbers help keep the S&P’s new positive momentum intact.
The U.S. released key economic data of its own today, which also sends a mixed message. Unemployment claims registered a large decline for the 2nd straight week, certainly a positive development. However, a negative Philly manufacturing index number offsets yesterday’s improvement in the Empire manufacturing index. Furthermore, a cause for concern is the negative TIC long-term purchases data. Though not fronting the headlines yet, a decline in the TIC number could reignite fears that foreign central banks are losing interest in America’s Treasuries. The data is particularly disconcerting since China just reported a record increase in its reserves, indicating China may be following through with its threat to diversify new reserves from the greenback and U.S. Treasuries. This would explain the swift pullback in the 30 Year T-Bond futures so far this week. Outside of mixed economic data 2nd quarter earnings reports continue to outperform analyst expectations. Corporations are faring better than anticipated as they benefit from preventative cost-cutting measures.
The S&P futures continue to distance themselves from our 2nd tier downtrend lines, 1st tier uptrend line and the psychological 900 level. Additionally, although we haven’t witnessed abnormal volume to the topside, buy-side volume has been solid. The EUR/USD, GBP/USD, and gold have made strong moves to the upside as well while the 30 Year T-Bond futures head south. Therefore, most of the S&P’s correlations are supporting the breakout in U.S. equities. However, crude futures continue to bounce around the psychological $60/bbl level and have failed to participate in the S&P’s recent run. Hence, not all of the S&P’s correlations are on board for the ride just yet. The S&P’s near-term barriers are July highs, our 1st tier uptrend line, and the topside of June’s trading range. If the S&P can climb through the first two obstacles a retest of June highs and the psychological 950 level seems imminent. As for the downside, the S&P futures have Wednesday lows, our 2nd tier downtrend line, and the psychological 900 level to fall back on.
Present Price: 926.50
Resistances: 930.5, 935, 940.5, 943.5, 947.5
Supports: 924, 920.5, 916, 911, 906.5
Psychological: 950, 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.
