Daily Market Commentary
EUR/USD Propels Past Previous July Highs
The EUR/USD is experiencing an energetic breakout to the upside, leaping from our 3rd tier uptrend line past July highs. We notice similar aggressive movements in gold and the Cable, indicating broad-based market optimism. The Dollar’s weakness against the Euro and Pound could imply a forthcoming breakout in the S&P futures as well. Investors are making a larger commitment to risk after CIT announced a $3 billion agreement with bondholders, allowing the company to avert bankruptcy for the time being. In addition to the CIT news, Goldman’s chief U.S. investment strategist David Kostin upped his year-end outlook for the S&P from 940 to 1060. These two headlines are clearing immediate-term skepticism that remained after the last week’s impressive show on the earnings-front, allowing the EUR/USD to make a bullish confirmation move.
Investors are ignoring negative data from the EU again. Germany reported a much weaker than expected PPI number this morning (-0.1% vs. 0.5%). Today’s negative PPI data goes hand-in-hand with last week’s disappointing economic sentiment and industrial production data points. However, we do notice the EUR/GBP is taking a dip, though nothing earth-shattering. The EUR/USD continues its charge higher regardless of the row of disconcerting news on the economic data front. While the EUR/USD is making another noticeable technical progression to the upside, the data points could come back to bite the EUR/USD in the near-term should they continue to underperform analyst expectations. Fortunately for the bulls, data releases from the EU and U.S. will be quiet until Wednesday’s industrial new orders from the EU. Hence, the EUR/USD could enjoy its upswing for a couple more days unless 2nd quarter earnings start coming in weak.
Technically speaking, separating itself from previous July highs was a key near-term move for the EUR/USD. The currency pair is creating space between price and our trend lines in the process. Meanwhile, 1.40 is fading into the rearview, and the EUR/USD is setting its sights on June highs. Though we haven’t seen a confirmation in buy-side volume yet, it seems more investors may feel comfortable to jump on board soon. However, a little immediate-term consolidation after such an aggressive daily move would not be surprising. We expect volatility to continue for the next few sessions because there’s large spacing between our support and resistance levels.
Present Price: 1.4233
Resistances: 1.4240, 1.4247, 1.4269, 1.4290, 1.4314
Supports: 1.4224, 1.4211, 1.4197, 1.4183, 1.4157
Psychological: 1.40, 1.45
GBP/USD Rallies with Improving Investor Sentiment
The Cable sprang from our 2nd tier uptrend line, only to be deflected from our 3rd tier uptrend line once again. The GBP/USD continues to jog between these two trend lines as the currency participates with a broad-based improvement in investor optimism. The Cable is floating around the psychological 1.65 level we eyed previously, yet gains could accelerate should the currency pair manage to clear our 3rd tier downtrend line. Meanwhile, the EUR/USD and gold are breaking out of their respective 3rd tier downtrend lines, indicating the possibility of a bullish move in U.S. equities.
However, the Pound continues to experience an overall relative weakness after the IMF issued a bleak report concerning the financial status of Britain. The IMF cautioned that Britain needs to get its budget balance under control, or the Pound may experience large downward pressure in the medium-term. The IMF estimated British government debt could hit 100% of GDP in five years should Britain not curb its massive public spending program. Despite the resoundingly negative news from the IMF, investors are more focused on near-term optimism than medium-term pessimism. Should U.S. equities rally higher, the Cable would likely follow suit due to their strong positive correlation.
Investors are putting one leg into the risk pool after CIT announced it reached an agreement with bondholders, receiving $3 billion in funding to cover near-term costs. The concept of a CIT bankruptcy was a large drag on U.S. equities last week. Investors now have little immediate reason to be pessimistic with the CIT issue brushed aside unless 2nd quarter earnings turn sour. All is quiet on the economic data front until Britain releases the CBI industrial order expectations on Wednesday. Ben Bernanke is delivering a highly anticipated testimony before congress on Tuesday and Wednesday, though we don’t expect the Fed chairman to disclose anything that we send the markets lower.
The Cable could have some near-term issues with 1.65 and the dense June trading range since the IMF news should create a drag on price. However, momentum is shifting to the bulls’ corner as the downtrend losses its influence. Meanwhile, investors should keep an eye on volume to see if there’s an awakening from the dull action as of late.
Present Price: 1.6508
Resistances: 1.6522, 1.6548, 1.6589, 1.6621, 1.6632
Supports: 1.6485, 1.6459, 1.6423, 1.6405, 1.6366
Psychological: 1.65
USD/JPY Climbs Back Above our 1st Tier Uptrend Line
The USD/JPY has followed through with its bid to resurface into the comfort zone of our 1st tier uptrend line. The USD/JPY is following its positive correlations with gold, the GBP/USD, and EUR/USD. Meanwhile, the S&P futures are flirting with the concept of overtaking their psychological 950 level. All of these developments are positive news for a currency pair which was recently dangling over the face of a cliff. The USD/JPY has reacted accordingly, climbing back above our 1st tier uptrend line while making a move towards the psychological 95 area. Despite all of the negative economic data out of Japan lately, the concept of a brisk economic recovery in the U.S. bodes well for Japanese exporters. Yes, an appreciated Yen makes Japanese products less enticing, but a depreciating Yen with a recovering global economy could create a self-correcting environment. However, before getting too optimistic, we notice volume has been declining again to the upside. Furthermore, the 95 psychological level and our 2nd tier downtrend line hang overhead. Hence, it seems the USD/JPY could need an immediate-term boost in buy-side volume to surpass these upcoming obstacles.
Present Price: 94.35
Resistances: 94.49, 94.99, 95.73, 96.33, 96.83
Supports: 93.82, 93.28, 92.90, 92.39, 91.75
Psychological: 95
Gold Surges to $950/oz
Gold darted past $950/oz earlier this session on a rise in volume as the dollar depreciated against both the Pound and the Euro in a hurry. However, the precious metal is pulling back a bit right now as investors lock in profits. Therefore, it seems the psychological $950/oz could serve as an immediate-term technical breather as investors digest the bullish movements across the marketplace. Neither the EUR/USD nor the GBP/USD registered a similar climb in volume from Friday’s levels on the 12:00 4-hour bar, meaning gold has some added interest this morning. Gold is exercising its positive correlation with overall market sentiment, which is improving with 2nd quarter earnings and the news that CIT will get a $3 Billion lifeline from bondholders. Investors should also take into consideration the drop in TIC long-term purchases last week. With Chinese reserves hitting all-time highs, the decline in the TIC could indicate China is diversifying its reserves into alternative investment vehicles, such as gold.
Meanwhile, gold is making a very bullish move, and it will be interesting to see if buy-side volume can follow through during the remainder of the trading session. We’ve adjusted our trend lines to compensate for gold’s recent surge. The new technical barriers to the upside are June 10 highs, the psychological $950/oz level, and our 1st and 2nd tier downtrend lines. Meanwhile, gold has created an impressive support system, beginning with our 1st and 2nd tier uptrend lines.
Present Price: $951.45/oz
Resistances: $952.67/oz, $954.57/oz, $958.05/oz, $960.58/oz, $962.80/oz
Supports: $949.39/oz, $947.92/oz, $946.02/oz, $944.11/oz, $941.58/oz
Psychological: $950/oz
Crude Futures Face July 8th Highs and $65/bbl
Crude futures are turning away from July 8th highs and the psychological $65/bbl level as the S&P futures hesitate around their yearly highs. We still haven’t seen a significant movement to the upside in crude like one would expect with surging equities and a depreciating Greenback against the Pound and Euro. Additionally, the U.S. released lower than expected unemployment claims last week, usually a positive catalyst for crude due to the anticipation of higher consumption. The lack of enthusiasm of crude to the upside on withering volume is a bit disconcerting. After all, weekly inventories continue to decline and expected demand is rising, what is there not to like? Investors could be concerned about the disappointing manufacturing data from the U.S. last week. Additionally, MEND’s thirty day cease-fire soothes tensions in Nigeria for the time being.
However, crude’s quiet amongst the improvement in investor sentiment is mystifying. Since the fundamentals are improving in the EUR/USD, gold, and the S&P futures, we could witness a breakout in crude in the near-term. Crude’s immediate-term movement will likely depend on the S&P’s ability to surpass its current obstacles, which relies heavily upon the outcome of this week’s earnings releases. On the other hand, if the S&P’s rally sputters, crude could experience some near-term consolidation towards our 1st tier uptrend line and Friday lows. Technically speaking, the near-term obstacles separating crude from accelerated gains are July 8th highs, $65/bbl, and our 2nd tier downtrend line.
Present Price: $63.55/bbl
Resistances: $63.71/bbl, $63.97/bbl, $64.49/bbl, $64.86/bbl, $65.23/bbl
Supports: $63.24/bbl, $62.98/bbl, $62.63/bbl, $62.25/bbl, $62.01/bbl
Psychological: $65/bbl, $60/bbl
S&P Futures Stare Down 2009 Highs and 950
The S&P futures are on the cusp of a large near-term breakout should they decide to topple our 2nd tier uptrend line, the psychological 950 level, and 2009 highs. However, the futures are shedding earlier gains in consolidation amid psychological hesitation. Regardless, the S&P’s correlations are taking the lead with gold and the EUR/USD busting out from our previous downtrend lines on aggressive movements to the upside. Meanwhile, the 30 Year T-Bond futures continue their slide lower from their near-term uptrend line. Hence, it appears investors are gaining more confidence in the economic recovery, willing to put more money into higher-risk investment vehicles.
The optimism comes after CIT announced it has reached an agreement with bondholders, securing around $3 Billion dollars in liquidity for the struggling financier. The possibility of a CIT bankruptcy was capping gains amid last week’s impressive 2nd quarter earnings releases, giving investors one less reason to be pessimistic for the immediate-term. Furthermore, Goldman Sachs’ chief U.S. investment strategist, David Kostin, raised his year-end outlook on the S&P from 940 to 1060. These two positive news developments are overshadowing the IMF’s cautionary statement regarding Britain’s financial state. The IMF warned the Pound could be under selling pressure over the medium-term should Britain not shore up its budget balance. However, investors are more focused on the optimistic immediate-term developments than speculation of what may happen down the line. Therefore, the positives clearly outweigh the negatives at this point. The earnings picture will become clearer after this week since we’ll receive a large chunk of 2nd quarter earnings releases from the major S&P and Dow components.
Even though the today’s rally is fizzling right now, the S&P futures are in a fortunate position. The S&P’s correlations are supporting the environment of a near-term breakout. Meanwhile, we’re running out of near-term resistance levels on the S&P futures, often a positive sign. Furthermore, the psychological barriers are wearing thin. All the futures may need is another positive boost on large volume to get over the hump. Although analysts are leaving the S&P’s movement up to Bernanke, we believe his testimony may not be a market maker. We believe the Fed chairman will play his cards close to the chest while giving investors just enough clarity to be satisfied. After all, why would he choose to personal wreck the positive situation created by solid earnings thus far? We predict forthcoming earnings will play a larger role in the S&P’s movements. More better than expected 2nd quarter releases could be just what the doctor ordered. On the other hand, mixed/disappointing earnings could rattle the S&P’s rally.
Present Price: 941.50.50
Resistances: 943.5, 947.5, 950.75, 953.25
Supports: 939.75, 936.75, 931.75, 928.75, 923.5
Psychological: 950
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 Propels Past Previous July Highs
The EUR/USD is experiencing an energetic breakout to the upside, leaping from our 3rd tier uptrend line past July highs. We notice similar aggressive movements in gold and the Cable, indicating broad-based market optimism. The Dollar’s weakness against the Euro and Pound could imply a forthcoming breakout in the S&P futures as well. Investors are making a larger commitment to risk after CIT announced a $3 billion agreement with bondholders, allowing the company to avert bankruptcy for the time being. In addition to the CIT news, Goldman’s chief U.S. investment strategist David Kostin upped his year-end outlook for the S&P from 940 to 1060. These two headlines are clearing immediate-term skepticism that remained after the last week’s impressive show on the earnings-front, allowing the EUR/USD to make a bullish confirmation move.
Investors are ignoring negative data from the EU again. Germany reported a much weaker than expected PPI number this morning (-0.1% vs. 0.5%). Today’s negative PPI data goes hand-in-hand with last week’s disappointing economic sentiment and industrial production data points. However, we do notice the EUR/GBP is taking a dip, though nothing earth-shattering. The EUR/USD continues its charge higher regardless of the row of disconcerting news on the economic data front. While the EUR/USD is making another noticeable technical progression to the upside, the data points could come back to bite the EUR/USD in the near-term should they continue to underperform analyst expectations. Fortunately for the bulls, data releases from the EU and U.S. will be quiet until Wednesday’s industrial new orders from the EU. Hence, the EUR/USD could enjoy its upswing for a couple more days unless 2nd quarter earnings start coming in weak.
Technically speaking, separating itself from previous July highs was a key near-term move for the EUR/USD. The currency pair is creating space between price and our trend lines in the process. Meanwhile, 1.40 is fading into the rearview, and the EUR/USD is setting its sights on June highs. Though we haven’t seen a confirmation in buy-side volume yet, it seems more investors may feel comfortable to jump on board soon. However, a little immediate-term consolidation after such an aggressive daily move would not be surprising. We expect volatility to continue for the next few sessions because there’s large spacing between our support and resistance levels.
Present Price: 1.4233
Resistances: 1.4240, 1.4247, 1.4269, 1.4290, 1.4314
Supports: 1.4224, 1.4211, 1.4197, 1.4183, 1.4157
Psychological: 1.40, 1.45
GBP/USD Rallies with Improving Investor Sentiment
The Cable sprang from our 2nd tier uptrend line, only to be deflected from our 3rd tier uptrend line once again. The GBP/USD continues to jog between these two trend lines as the currency participates with a broad-based improvement in investor optimism. The Cable is floating around the psychological 1.65 level we eyed previously, yet gains could accelerate should the currency pair manage to clear our 3rd tier downtrend line. Meanwhile, the EUR/USD and gold are breaking out of their respective 3rd tier downtrend lines, indicating the possibility of a bullish move in U.S. equities.
However, the Pound continues to experience an overall relative weakness after the IMF issued a bleak report concerning the financial status of Britain. The IMF cautioned that Britain needs to get its budget balance under control, or the Pound may experience large downward pressure in the medium-term. The IMF estimated British government debt could hit 100% of GDP in five years should Britain not curb its massive public spending program. Despite the resoundingly negative news from the IMF, investors are more focused on near-term optimism than medium-term pessimism. Should U.S. equities rally higher, the Cable would likely follow suit due to their strong positive correlation.
Investors are putting one leg into the risk pool after CIT announced it reached an agreement with bondholders, receiving $3 billion in funding to cover near-term costs. The concept of a CIT bankruptcy was a large drag on U.S. equities last week. Investors now have little immediate reason to be pessimistic with the CIT issue brushed aside unless 2nd quarter earnings turn sour. All is quiet on the economic data front until Britain releases the CBI industrial order expectations on Wednesday. Ben Bernanke is delivering a highly anticipated testimony before congress on Tuesday and Wednesday, though we don’t expect the Fed chairman to disclose anything that we send the markets lower.
The Cable could have some near-term issues with 1.65 and the dense June trading range since the IMF news should create a drag on price. However, momentum is shifting to the bulls’ corner as the downtrend losses its influence. Meanwhile, investors should keep an eye on volume to see if there’s an awakening from the dull action as of late.
Present Price: 1.6508
Resistances: 1.6522, 1.6548, 1.6589, 1.6621, 1.6632
Supports: 1.6485, 1.6459, 1.6423, 1.6405, 1.6366
Psychological: 1.65
USD/JPY Climbs Back Above our 1st Tier Uptrend Line
The USD/JPY has followed through with its bid to resurface into the comfort zone of our 1st tier uptrend line. The USD/JPY is following its positive correlations with gold, the GBP/USD, and EUR/USD. Meanwhile, the S&P futures are flirting with the concept of overtaking their psychological 950 level. All of these developments are positive news for a currency pair which was recently dangling over the face of a cliff. The USD/JPY has reacted accordingly, climbing back above our 1st tier uptrend line while making a move towards the psychological 95 area. Despite all of the negative economic data out of Japan lately, the concept of a brisk economic recovery in the U.S. bodes well for Japanese exporters. Yes, an appreciated Yen makes Japanese products less enticing, but a depreciating Yen with a recovering global economy could create a self-correcting environment. However, before getting too optimistic, we notice volume has been declining again to the upside. Furthermore, the 95 psychological level and our 2nd tier downtrend line hang overhead. Hence, it seems the USD/JPY could need an immediate-term boost in buy-side volume to surpass these upcoming obstacles.
Present Price: 94.35
Resistances: 94.49, 94.99, 95.73, 96.33, 96.83
Supports: 93.82, 93.28, 92.90, 92.39, 91.75
Psychological: 95
Gold Surges to $950/oz
Gold darted past $950/oz earlier this session on a rise in volume as the dollar depreciated against both the Pound and the Euro in a hurry. However, the precious metal is pulling back a bit right now as investors lock in profits. Therefore, it seems the psychological $950/oz could serve as an immediate-term technical breather as investors digest the bullish movements across the marketplace. Neither the EUR/USD nor the GBP/USD registered a similar climb in volume from Friday’s levels on the 12:00 4-hour bar, meaning gold has some added interest this morning. Gold is exercising its positive correlation with overall market sentiment, which is improving with 2nd quarter earnings and the news that CIT will get a $3 Billion lifeline from bondholders. Investors should also take into consideration the drop in TIC long-term purchases last week. With Chinese reserves hitting all-time highs, the decline in the TIC could indicate China is diversifying its reserves into alternative investment vehicles, such as gold.
Meanwhile, gold is making a very bullish move, and it will be interesting to see if buy-side volume can follow through during the remainder of the trading session. We’ve adjusted our trend lines to compensate for gold’s recent surge. The new technical barriers to the upside are June 10 highs, the psychological $950/oz level, and our 1st and 2nd tier downtrend lines. Meanwhile, gold has created an impressive support system, beginning with our 1st and 2nd tier uptrend lines.
Present Price: $951.45/oz
Resistances: $952.67/oz, $954.57/oz, $958.05/oz, $960.58/oz, $962.80/oz
Supports: $949.39/oz, $947.92/oz, $946.02/oz, $944.11/oz, $941.58/oz
Psychological: $950/oz
Crude Futures Face July 8th Highs and $65/bbl
Crude futures are turning away from July 8th highs and the psychological $65/bbl level as the S&P futures hesitate around their yearly highs. We still haven’t seen a significant movement to the upside in crude like one would expect with surging equities and a depreciating Greenback against the Pound and Euro. Additionally, the U.S. released lower than expected unemployment claims last week, usually a positive catalyst for crude due to the anticipation of higher consumption. The lack of enthusiasm of crude to the upside on withering volume is a bit disconcerting. After all, weekly inventories continue to decline and expected demand is rising, what is there not to like? Investors could be concerned about the disappointing manufacturing data from the U.S. last week. Additionally, MEND’s thirty day cease-fire soothes tensions in Nigeria for the time being.
However, crude’s quiet amongst the improvement in investor sentiment is mystifying. Since the fundamentals are improving in the EUR/USD, gold, and the S&P futures, we could witness a breakout in crude in the near-term. Crude’s immediate-term movement will likely depend on the S&P’s ability to surpass its current obstacles, which relies heavily upon the outcome of this week’s earnings releases. On the other hand, if the S&P’s rally sputters, crude could experience some near-term consolidation towards our 1st tier uptrend line and Friday lows. Technically speaking, the near-term obstacles separating crude from accelerated gains are July 8th highs, $65/bbl, and our 2nd tier downtrend line.
Present Price: $63.55/bbl
Resistances: $63.71/bbl, $63.97/bbl, $64.49/bbl, $64.86/bbl, $65.23/bbl
Supports: $63.24/bbl, $62.98/bbl, $62.63/bbl, $62.25/bbl, $62.01/bbl
Psychological: $65/bbl, $60/bbl
S&P Futures Stare Down 2009 Highs and 950
The S&P futures are on the cusp of a large near-term breakout should they decide to topple our 2nd tier uptrend line, the psychological 950 level, and 2009 highs. However, the futures are shedding earlier gains in consolidation amid psychological hesitation. Regardless, the S&P’s correlations are taking the lead with gold and the EUR/USD busting out from our previous downtrend lines on aggressive movements to the upside. Meanwhile, the 30 Year T-Bond futures continue their slide lower from their near-term uptrend line. Hence, it appears investors are gaining more confidence in the economic recovery, willing to put more money into higher-risk investment vehicles.
The optimism comes after CIT announced it has reached an agreement with bondholders, securing around $3 Billion dollars in liquidity for the struggling financier. The possibility of a CIT bankruptcy was capping gains amid last week’s impressive 2nd quarter earnings releases, giving investors one less reason to be pessimistic for the immediate-term. Furthermore, Goldman Sachs’ chief U.S. investment strategist, David Kostin, raised his year-end outlook on the S&P from 940 to 1060. These two positive news developments are overshadowing the IMF’s cautionary statement regarding Britain’s financial state. The IMF warned the Pound could be under selling pressure over the medium-term should Britain not shore up its budget balance. However, investors are more focused on the optimistic immediate-term developments than speculation of what may happen down the line. Therefore, the positives clearly outweigh the negatives at this point. The earnings picture will become clearer after this week since we’ll receive a large chunk of 2nd quarter earnings releases from the major S&P and Dow components.
Even though the today’s rally is fizzling right now, the S&P futures are in a fortunate position. The S&P’s correlations are supporting the environment of a near-term breakout. Meanwhile, we’re running out of near-term resistance levels on the S&P futures, often a positive sign. Furthermore, the psychological barriers are wearing thin. All the futures may need is another positive boost on large volume to get over the hump. Although analysts are leaving the S&P’s movement up to Bernanke, we believe his testimony may not be a market maker. We believe the Fed chairman will play his cards close to the chest while giving investors just enough clarity to be satisfied. After all, why would he choose to personal wreck the positive situation created by solid earnings thus far? We predict forthcoming earnings will play a larger role in the S&P’s movements. More better than expected 2nd quarter releases could be just what the doctor ordered. On the other hand, mixed/disappointing earnings could rattle the S&P’s rally.
Present Price: 941.50.50
Resistances: 943.5, 947.5, 950.75, 953.25
Supports: 939.75, 936.75, 931.75, 928.75, 923.5
Psychological: 950
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.
