Daily Market Commentary
EUR/USD Edges Lower as Investors Lock in Profits
The EUR/USD has topped out at our 3rd tier downtrend line, just beneath the psychological 1.45 level. The currency pair is consolidating with a downward slope after U.S. employment and non-manufacturing PMI data came in below analyst expectations. Investors have been waiting for an opportunity to lock in some profits, and they are jumping at the opportunity. Despite today’s pullback, the upward momentum is still intact with volume declining to the downside. Though economic data from the U.S. missed the mark, the data is not too disconcerting, and by no means derails the concept of an economic recovery. Today’s setback in employment and non-manufacturing PMI is likely a symptom of a slow return to growth. Countering these negative data points are equally positive numbers across the board from Britain. Therefore, the economic data today is bittersweet.
Meanwhile, investors are looking beyond today’s pullback towards tomorrow’s ECB meeting. It is difficult to believe the ECB will lower rates or increase its alternative liquidity package due to the impressive recovery taking place globally. However, the EU’s economic data has been underperforming as of late compared to that of Britain, China, and the U.S. Furthermore, the ECB has a little flexibility monetarily since its benchmark rate is still at 1%. The ECB has also been prone to administer monetary shocks in order dislodge the currency’s pattern. An appreciating Euro is undoubtedly applying pressure to the EU’s strained manufacturing sector. Therefore, now would be an opportune time for the ECB to administer a monetary shock in an effort to depreciate the Euro since most analysts are expecting the ECB to stand pat on its monetary policy. However, it is likely the ECB will keep its policy as is in the belief that a recovery in global consumption and demand will compensate for the Euro’s rapid appreciation.
As for the immediate-term, the EUR/USD may experience a little more selling pressure with investors cashing in on mixed global data. Therefore, we wouldn’t be surprised to see the currency pair duck down towards our 3rd tier uptrend line. Speaking of which, the EUR/USD is trading above all three of our uptrend lines with only a makeshift 3rd tier downtrend line clamping down the currency pair. The EUR/USD remains comfortably above June 3rd and July 28th highs. Hence, the uptrend is clearly in control in the moment, and it would take a large technical downward movement to dislodge the EUR/USD’s upward momentum.
Our 3rd tier downtrend line and the psychological 1.45 level appear to be the only near-term barriers separating the EUR/USD from a retest of December 18th highs. The other factor capping the EUR/USD’s upward mobility is the S&P’s interaction with 1000. The 1000 area should prove to be a challenging obstacle. The S&P’s ability to leapfrog 1000 should play an important role in the EUR/USD’s ability to overcome its own barriers to the topside. Therefore, investors should keep a close eye on U.S. equities along with tomorrow’s central bank meetings.
Present Price: 1.4372
Resistances: 1.4391, 1.4441, 1.4476, 1.4506, 1.4546
Supports: 1.4348, 1.4305, 1.4266, 1.4242, 1.4225
Psychological: 1.45
GBP/USD Backs Away from 1.70 Amidst Profit-Taking
The GBP/USD is consolidating below the psychological 1.70 level as investors lock in profits in reaction to weaker than expected employment and non-manufacturing PMI data from America. However, the Pound is exerting a relative strength after more encouraging British economic data. Britain’s services PMI, manufacturing production, and Halifax HPI numbers all indicate a faster than expected return to growth in the UK. Possibly the most positive development today is the better than expected services PMI data. The services industry, particularly financial, makes up a large part of Britain’s GDP. Hence, the upward trend and 50+ reading in the services PMI data point is key, reinforced by a better than expected earnings release from Lloyd’s Bank. Today’s data confirms the theme of a substantial recovery in manufacturing and Britain’s housing market. Britain’s economy is hitting on all cylinders considering unemployment is declining as well. This week’s wave of positive economic data adds weight to our belief that the BOE will not increase funding to its QE package tomorrow. Investors will be paying close attention to the result of tomorrow’s BOE meeting, searching for clues as to the central bank’s attitude regarding future monetary policy.
Meanwhile, the GBP/USD should continue to enjoy its comparative strength since Britain’s economic data is encouraging across the board. The GBP/USD’s main barrier to further near-term gains is the S&P’s interaction with 1000. Therefore, investors should keep a close watch on U.S. equities and monitor the S&P’s ability to tackle 1000. Regardless, the GBP/USD has made considerable strides to the upside with medium-term momentum acting in the currency pair’s favor. Hence, the uptrend is alive and well despite today’s consolidation. The psychological 1.70 level and our 1st tier downtrend line serve as the Cable’s immediate-term obstacles. As for the downside, the currency pair has our fresh 1st and 2nd tier uptrend lines along with Tuesday’s lows to fall back on.
Present Price: 1.6954
Resistances: 1.6969, 1.7005, 1.7040, 1.7077, 1.7104
Supports: 1.6945, 1.6910, 1.6884, 1.6864, 1.6837
Psychological: 1.70
USD/JPY Walks Along our 1st Tier Uptrend Line
The USD/JPY is following our 1st tier uptrend line higher in a sluggish manner. The currency pair continues to gravitate towards the psychological 95 level. We’ve yet to see a decisive move in the USD/JPY, though the currency pair’s recovery to our 1st tier uptrend line is a relief compared to its state earlier this month. The slow recovery of America’s economy is no more evident than in the performance of the USD/JPY. Investors are still not willing to fully commit to a stable U.S. economy. Otherwise, we’d likely witness a rapid rise in the USD/JPY with the expectation that the Fed will be able to tighten its monetary policy down the road. Investors may be more willing to pile into the USD/JPY if the S&P can overcome its psychological 1000 barrier in a forceful fashion. Therefore, investors should keep a close eye on U.S. equities and their reaction to tomorrow’s central bank meeting and economic data releases.
Technically speaking, the USD/JPY has cushions in our 1st tier uptrend and 2nd tier downtrend lines along with our 94.49 support. The currency pair has build up a solid base during this consolidation period. As for the upside, the psychological 95 level continues to have an impact on price. Beyond here, the USD/JPY must overcome July 31st highs and our 3rd tier downtrend line.
Present Price: 94.96
Resistances: 95.41, 95.73, 96.33, 96.77, 96.96
Supports: 94.99, 94.49, 93.82, 93.28, 92.90
Psychological: 95
Gold Pulls Back from August Highs with Dollar’s Appreciation
Gold has backed away from $970/oz after mixed/negative economic data releases from the U.S. The data points resulted in a slight appreciation of the greenback as well, showing investors are comfortable with cashing in some profits. Gold is trading back around June 10th highs as the S&P futures duck back beneath their highly psychological 1000 level. Since economic data is done for the day, we wouldn’t be surprised to see the precious metal continue its consolidation as the S&P deals with 1000. The bulls have been on a huge run lately, so it’s only healthy that the markets experience some profit taking and consolidation. Regardless, momentum is clearly in favor of the uptrend. All of gold’s correlations are confirming the precious metal’s breakout. The GBP/USD and EUR/USD both broke out to new 2009 highs this week, a positive development for gold considering its negative correlation with the Dollar. However, the S&P’s battle with 1000 could prove to be long-winded, taking some of the air out of gold’s sails.
Meanwhile, gold is trading back above August 8th highs and volume is decreasing to the downside. However, if the precious metal can’t hold our 2nd tier downtrend line, it may defect towards our 1st tier downtrend line and our bottom-end support. As for the topside, gold’s immediate barriers are our 3rd tier downtrend line and Tuesday’s highs. If the precious metal can get above these two obstacles, gold could accelerate towards $980/oz.
Present Price: $963.15/oz
Resistances: $963.81/oz, $965.26/oz, $966.91/oz, $968.60/oz, $970.04/oz
Supports: $962.24/oz, $961.00/oz, $959.34/oz, $958.12/oz, $956.32/oz
Psychological: $950/oz
Crude Stabilizes Above $70/bbl Despite Inventory Surplus
Crude futures have rebounded from session lows despite weekly crude inventories coming in above analyst expectations at 1.7 million vs. 0.9 million expected. Crude’s positive reaction to the news is a bit puzzling considering the ADP non-farm employment change number came in below analyst expectations. The setback in unemployment lowers the outlook for consumption and demand for crude. Perhaps investors are encouraged by the decline in inventories from last week’s surprise surplus of 5.1 million barrels. Additionally, the rapid depreciation of the Dollar against both the Pound and Euro increases export demand for U.S. crude, limiting downward movements in price. Either way, the resilience of crude is encouraging, giving the futures an opportunity to build a new base above the psychological $70/bbl level.
The medium-term momentum is clearly in crude’s favor with the economic recovery growing globally. However, crude faces some near-term headwinds in the form of our 3rd tier downtrend line and June 30th highs. Crude’s present obstacles to the upside coincide with the S&P’s battle with its highly psychological 1000 level. Therefore, further immediate-term downward sloping consolidation isn’t out of the question. Investors should also keep an eye on the GBP/USD and EUR/USD, monitoring the Dollar’s ability to depreciate further. On the other hand, if the S&P futures can overcome 1000 in a convincing manner, this may be enough to propel crude futures beyond their previous 2009 highs.
All eyes will be on the ECB and BOE monetary policy decisions tomorrow. If either actions appreciate/depreciate the Dollar, crude futures should act according to their positive correlation with both the EUR/USD and GBP/USD. Investors will also be looking for weekly U.S. unemployment claims to remain under the 600k mark. Any movement above 600k could place downward pressure on crude futures. As for the downside, crude has our 1st and 2nd tier uptrend lines along with the psychological $70/bbl to fall back on.
Present Price: $71.19/bbl
Resistances: $71.18/bbl, $71.61/bbl, $71.90/bbl, $72.27/bbl, $72.76/bbl
Supports: $70.60/bbl, $70.24/bbl, $69.91/bbl, $69.53/bbl, $69.09/bbl
Psychological: $70/bbl
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 Edges Lower as Investors Lock in Profits
The EUR/USD has topped out at our 3rd tier downtrend line, just beneath the psychological 1.45 level. The currency pair is consolidating with a downward slope after U.S. employment and non-manufacturing PMI data came in below analyst expectations. Investors have been waiting for an opportunity to lock in some profits, and they are jumping at the opportunity. Despite today’s pullback, the upward momentum is still intact with volume declining to the downside. Though economic data from the U.S. missed the mark, the data is not too disconcerting, and by no means derails the concept of an economic recovery. Today’s setback in employment and non-manufacturing PMI is likely a symptom of a slow return to growth. Countering these negative data points are equally positive numbers across the board from Britain. Therefore, the economic data today is bittersweet.
Meanwhile, investors are looking beyond today’s pullback towards tomorrow’s ECB meeting. It is difficult to believe the ECB will lower rates or increase its alternative liquidity package due to the impressive recovery taking place globally. However, the EU’s economic data has been underperforming as of late compared to that of Britain, China, and the U.S. Furthermore, the ECB has a little flexibility monetarily since its benchmark rate is still at 1%. The ECB has also been prone to administer monetary shocks in order dislodge the currency’s pattern. An appreciating Euro is undoubtedly applying pressure to the EU’s strained manufacturing sector. Therefore, now would be an opportune time for the ECB to administer a monetary shock in an effort to depreciate the Euro since most analysts are expecting the ECB to stand pat on its monetary policy. However, it is likely the ECB will keep its policy as is in the belief that a recovery in global consumption and demand will compensate for the Euro’s rapid appreciation.
As for the immediate-term, the EUR/USD may experience a little more selling pressure with investors cashing in on mixed global data. Therefore, we wouldn’t be surprised to see the currency pair duck down towards our 3rd tier uptrend line. Speaking of which, the EUR/USD is trading above all three of our uptrend lines with only a makeshift 3rd tier downtrend line clamping down the currency pair. The EUR/USD remains comfortably above June 3rd and July 28th highs. Hence, the uptrend is clearly in control in the moment, and it would take a large technical downward movement to dislodge the EUR/USD’s upward momentum.
Our 3rd tier downtrend line and the psychological 1.45 level appear to be the only near-term barriers separating the EUR/USD from a retest of December 18th highs. The other factor capping the EUR/USD’s upward mobility is the S&P’s interaction with 1000. The 1000 area should prove to be a challenging obstacle. The S&P’s ability to leapfrog 1000 should play an important role in the EUR/USD’s ability to overcome its own barriers to the topside. Therefore, investors should keep a close eye on U.S. equities along with tomorrow’s central bank meetings.
Present Price: 1.4372
Resistances: 1.4391, 1.4441, 1.4476, 1.4506, 1.4546
Supports: 1.4348, 1.4305, 1.4266, 1.4242, 1.4225
Psychological: 1.45
GBP/USD Backs Away from 1.70 Amidst Profit-Taking
The GBP/USD is consolidating below the psychological 1.70 level as investors lock in profits in reaction to weaker than expected employment and non-manufacturing PMI data from America. However, the Pound is exerting a relative strength after more encouraging British economic data. Britain’s services PMI, manufacturing production, and Halifax HPI numbers all indicate a faster than expected return to growth in the UK. Possibly the most positive development today is the better than expected services PMI data. The services industry, particularly financial, makes up a large part of Britain’s GDP. Hence, the upward trend and 50+ reading in the services PMI data point is key, reinforced by a better than expected earnings release from Lloyd’s Bank. Today’s data confirms the theme of a substantial recovery in manufacturing and Britain’s housing market. Britain’s economy is hitting on all cylinders considering unemployment is declining as well. This week’s wave of positive economic data adds weight to our belief that the BOE will not increase funding to its QE package tomorrow. Investors will be paying close attention to the result of tomorrow’s BOE meeting, searching for clues as to the central bank’s attitude regarding future monetary policy.
Meanwhile, the GBP/USD should continue to enjoy its comparative strength since Britain’s economic data is encouraging across the board. The GBP/USD’s main barrier to further near-term gains is the S&P’s interaction with 1000. Therefore, investors should keep a close watch on U.S. equities and monitor the S&P’s ability to tackle 1000. Regardless, the GBP/USD has made considerable strides to the upside with medium-term momentum acting in the currency pair’s favor. Hence, the uptrend is alive and well despite today’s consolidation. The psychological 1.70 level and our 1st tier downtrend line serve as the Cable’s immediate-term obstacles. As for the downside, the currency pair has our fresh 1st and 2nd tier uptrend lines along with Tuesday’s lows to fall back on.
Present Price: 1.6954
Resistances: 1.6969, 1.7005, 1.7040, 1.7077, 1.7104
Supports: 1.6945, 1.6910, 1.6884, 1.6864, 1.6837
Psychological: 1.70
USD/JPY Walks Along our 1st Tier Uptrend Line
The USD/JPY is following our 1st tier uptrend line higher in a sluggish manner. The currency pair continues to gravitate towards the psychological 95 level. We’ve yet to see a decisive move in the USD/JPY, though the currency pair’s recovery to our 1st tier uptrend line is a relief compared to its state earlier this month. The slow recovery of America’s economy is no more evident than in the performance of the USD/JPY. Investors are still not willing to fully commit to a stable U.S. economy. Otherwise, we’d likely witness a rapid rise in the USD/JPY with the expectation that the Fed will be able to tighten its monetary policy down the road. Investors may be more willing to pile into the USD/JPY if the S&P can overcome its psychological 1000 barrier in a forceful fashion. Therefore, investors should keep a close eye on U.S. equities and their reaction to tomorrow’s central bank meeting and economic data releases.
Technically speaking, the USD/JPY has cushions in our 1st tier uptrend and 2nd tier downtrend lines along with our 94.49 support. The currency pair has build up a solid base during this consolidation period. As for the upside, the psychological 95 level continues to have an impact on price. Beyond here, the USD/JPY must overcome July 31st highs and our 3rd tier downtrend line.
Present Price: 94.96
Resistances: 95.41, 95.73, 96.33, 96.77, 96.96
Supports: 94.99, 94.49, 93.82, 93.28, 92.90
Psychological: 95
Gold Pulls Back from August Highs with Dollar’s Appreciation
Gold has backed away from $970/oz after mixed/negative economic data releases from the U.S. The data points resulted in a slight appreciation of the greenback as well, showing investors are comfortable with cashing in some profits. Gold is trading back around June 10th highs as the S&P futures duck back beneath their highly psychological 1000 level. Since economic data is done for the day, we wouldn’t be surprised to see the precious metal continue its consolidation as the S&P deals with 1000. The bulls have been on a huge run lately, so it’s only healthy that the markets experience some profit taking and consolidation. Regardless, momentum is clearly in favor of the uptrend. All of gold’s correlations are confirming the precious metal’s breakout. The GBP/USD and EUR/USD both broke out to new 2009 highs this week, a positive development for gold considering its negative correlation with the Dollar. However, the S&P’s battle with 1000 could prove to be long-winded, taking some of the air out of gold’s sails.
Meanwhile, gold is trading back above August 8th highs and volume is decreasing to the downside. However, if the precious metal can’t hold our 2nd tier downtrend line, it may defect towards our 1st tier downtrend line and our bottom-end support. As for the topside, gold’s immediate barriers are our 3rd tier downtrend line and Tuesday’s highs. If the precious metal can get above these two obstacles, gold could accelerate towards $980/oz.
Present Price: $963.15/oz
Resistances: $963.81/oz, $965.26/oz, $966.91/oz, $968.60/oz, $970.04/oz
Supports: $962.24/oz, $961.00/oz, $959.34/oz, $958.12/oz, $956.32/oz
Psychological: $950/oz
Crude Stabilizes Above $70/bbl Despite Inventory Surplus
Crude futures have rebounded from session lows despite weekly crude inventories coming in above analyst expectations at 1.7 million vs. 0.9 million expected. Crude’s positive reaction to the news is a bit puzzling considering the ADP non-farm employment change number came in below analyst expectations. The setback in unemployment lowers the outlook for consumption and demand for crude. Perhaps investors are encouraged by the decline in inventories from last week’s surprise surplus of 5.1 million barrels. Additionally, the rapid depreciation of the Dollar against both the Pound and Euro increases export demand for U.S. crude, limiting downward movements in price. Either way, the resilience of crude is encouraging, giving the futures an opportunity to build a new base above the psychological $70/bbl level.
The medium-term momentum is clearly in crude’s favor with the economic recovery growing globally. However, crude faces some near-term headwinds in the form of our 3rd tier downtrend line and June 30th highs. Crude’s present obstacles to the upside coincide with the S&P’s battle with its highly psychological 1000 level. Therefore, further immediate-term downward sloping consolidation isn’t out of the question. Investors should also keep an eye on the GBP/USD and EUR/USD, monitoring the Dollar’s ability to depreciate further. On the other hand, if the S&P futures can overcome 1000 in a convincing manner, this may be enough to propel crude futures beyond their previous 2009 highs.
All eyes will be on the ECB and BOE monetary policy decisions tomorrow. If either actions appreciate/depreciate the Dollar, crude futures should act according to their positive correlation with both the EUR/USD and GBP/USD. Investors will also be looking for weekly U.S. unemployment claims to remain under the 600k mark. Any movement above 600k could place downward pressure on crude futures. As for the downside, crude has our 1st and 2nd tier uptrend lines along with the psychological $70/bbl to fall back on.
Present Price: $71.19/bbl
Resistances: $71.18/bbl, $71.61/bbl, $71.90/bbl, $72.27/bbl, $72.76/bbl
Supports: $70.60/bbl, $70.24/bbl, $69.91/bbl, $69.53/bbl, $69.09/bbl
Psychological: $70/bbl
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.
