Daily Market Commentary
EUR/USD Fights to Stay Above 1.40 and 7/29 Lows
EUR/USD is looking to recoup some of yesterday’s losses after ZEW Economic Sentiment data blew past expectations and registered expansion (50+). However, gains are being contained by weak PPI and housing data from the U.S. The S&P futures have also been under considerable downward pressure as investors cash in on overbought conditions. Europe’s impressive sentiment reflects the better than expected GDP data we saw last week. Therefore, EU economic prospects are improving as prices contract and expenses become more reasonable. Unfortunately, U.S. numbers are crashing the party and the S&P futures are back below 1000 again. Hence, the EUR/USD’s upward mobility could be limited until U.S. equities settle down.
Meanwhile, the EUR/USD has managed to avoid a retest of its highly psychological 1.40 level as sell-side volume remains on the tame side. The currency pair is balanced on our 1st tier uptrend line as it approaches an inflection point with our 1st tier downtrend line. Our 1st tier uptrend line carries some weight since it connects through July lows. Hence, a collapse of our 1st tier uptrend line could signal a retreat towards 1.40 and 7/29 lows. Fortunately for bulls, 1.38-1.40 has a lot of historical consolidation, meaning this trading zone should prove to be reliable if it is encountered. As for the upside, there are considerable barriers due to the EUR/USD’s recent deterioration. These include our 1st and 2nd tier downtrend lines along with intraday highs and the 1.4180-1.42 area.
The S&P futures could have some more room to go to the downside if they don’t make a solid effort to pop back above our 2nd tier uptrend line. Furthermore, crude has had a difficult time as of late. Therefore, the next two sessions will be important for the EUR/USD and its correlations to regain their footing in order to build a new base for a leg up. The EU will release some more PPI and current account data tomorrow. However, investors will likely look forward to Friday’s slew of PMI data along with U.S. Existing Home Sales. The breather could help the EUR/USD stabilize before Friday’s busy session.
Present Price: 1.4113
Resistances: 1.4120, 1.4138, 1.4155, 1.4164, 1.4180
Supports: 1.4108, 1.4092, 1.4070, 1.4060, 1.4043
Psychological: 1.40
GBP/USD Climbs Past 1.65 after Pricing Data
The Cable has popped nicely from Monday lows and is trading back above the psychological 1.65 level. Both Britain’s CPI and RPI indexes came in 3 basis points ahead of analyst expectations, contradicting fear over deflation caused by the BOE’s recent injection of liquidity to its QE package. The Pound is experiencing considerable relative strength today in reaction to the data since investors punished Britain’s currency in reaction to the BOE’s actions. The improvement in pricing gives investors hope that the BOE may cap its QE package from here on out. Furthermore, the liquidity will only improve inflation, putting the BOE in a position to tighten liquidity sooner rather than later should the global economy continue to recover.
Despite today’s recovery in the GBP/USD, the currency pair still faces challenging near-term obstacles to the upside. The Cable must deal with the lid of its 7/20-7/28 trading range, our 3rd tier downtrend line as well as 8/13 highs. Additionally, the S&P futures are experiencing sizable downward pressure due to today’s weak pricing and housing numbers along with last week’s disappointing consumption data. Hence, the GBP/USD’s barriers may prove challenging should the S&P futures not turn around due to their positive correlation. On the plus side, the Cable is back above our 1.65 and our 2nd tier uptrend line, meaning the Pound should prove resilient if U.S. equities continue their slide. Tomorrow Britain will release CBI Industrial Order Expectations along with the MPC’s Meeting Minutes. Should these data points impress investors, the GBP/USD could continue to experience some immediate-term upward mobility.
Present Price: 1.6533
Resistances: 1.6537, 1.6562, 1.6593, 1.6611, 1.6633
Supports: 1.6505, 1.6482, 1.6455, 1.6428, 1.6398
Psychological: 1.65
USD/JPY Stabilizes with Weak GDP Data
The USD/JPY bottomed out yesterday despite the pullback in U.S. equities since investors were reacting to weaker than expected GDP data from Japan. The setback in Japan’s GDP gave investors a good reason to halt the Yen’s appreciation and favor the Dollar. However, today’s pop has failed to breach the USD/JPY’s important 1st tier uptrend line. U.S. data has also come in below analyst expectations today, putting the economic comparison between the two nations in a deadlock. Therefore, it seems the USD/JPY could follow the S&P futures closely for the immediate-term, particularly to the downside. Further deterioration in U.S. equities could motivate traders to head for safety and favor the Yen. The USD/JPY should ultimately correlate to the performance of economic data. Disappointing U.S. data would likely knock equities lower and appreciate the Yen.
Meanwhile, bulls will attempt to build a new base above the psychological 95 level and get the USD/JPY back above our 1st tier uptrend line. However, it seems the downside has more momentum for the time being. The USD/JPY will look to our 1st tier uptrend line, May lows and March lows for support. The next data release having an impact on this currency pair will be U.S. weekly Unemployment Claims on Thursday.
Present Price: 94.70
Resistances: 94.95, 95.15, 95.44, 95.65, 96.08
Supports: 94.52, 94.36, 94.08, 93.88, 93.52
Psychological: 95
Gold’s Bounces Above July 29th Lows Following Large Selloff
Gold is finding support in our 2nd tier uptrend line as the precious metal avoided an encounter with 7/29 lows. We notice a similar development with the EUR/USD and its own 7/29 lows, telling us the EUR/USD may be a stronger immediate-term read on gold. The Greenback is balancing across the board following its swift appreciation, giving gold a boost due to its negative correlation with the Dollar. Remember that gold is following the Greenback more closely than U.S. equities these days, though the movement of the S&P does have a moderate influence on the direction of the precious metal. Therefore, present weakness in the S&P futures could limit upward mobility in gold as the Pound and Euro appreciate.
Consolidation could be the theme in markets over the next session or two as investors take a breath and digest the pullback in U.S. equities. Since this week’s economic data out of the EU and Britain have been positive, investors may be second-guessing their instinct to follow the negative tide of news surfacing from the U.S. However, near-term pressure does remain to the downside since we’ve noticed increasing sell-side activity along with a collapse of the psychological $950/oz level. Gold has something to prove to the upside, beginning with our 1st tier downtrend and 3rd tier uptrend lines along with 7/29 highs and the psychological $950/oz zone. As for the downside, the precious metal has technical cushions in our 2nd tier uptrend line, Monday lows and 7/29 lows.
Present Price: $936.85/oz
Resistances: $938.54/oz, $939.68/oz, $941.20/oz, $942.47/oz, $944.12/oz
Supports: $936.39/oz, $934.74/oz, $932.46/oz, $930.31/oz, $928.16/oz
Psychological: $950/oz
The S&P Futures Pop after Yesterday’s Swift Pullback
The S&P futures are locking and popping from Monday lows despite weaker than expected PPI and housing data today. Investors are more encouraged by the positive data coming from Britain and the EU. Inflationary pricing data from Britain is alleviating fears that the BOE’s recent injection of liquidity signaled increasing deflationary pressures. Meanwhile, EU Economic Sentiment blew by analyst expectations to register an expansionary reading (50+). As a result, bulls are jumping back in since the S&P’s pullback has been driven mostly by profit-taking. Despite today’s negative data from the U.S., yesterday’s long-term purchases and manufacturing data points were impressive. Therefore, the U.S. economy is sending mixed signals.
The surge in the Empire State Manufacturing Index was likely triggered by the ‘cash for clunkers’ program, while the improvement in long-term purchases signals foreign investors are picking up U.S. equities and bonds. However, investors should take notice that China just reported that July FDI dropped by -35% MoM as hot money exited the economy. Additionally, China trimmed its U.S. Treasury holdings in June by 3.1%. These are both negative developments for both the U.S. and China, and could impact U.S. equities over the next 24-48 hours. Recent setbacks in China’s economic recovery are concerning investors that stimulus measures may be beginning to top out. China has been driving the global economic recovery, and a cool-down in China could deliver a hefty blow to investor sentiment.
Regardless of mixed global signals and yesterday’s selloff on climbing volume, the S&P futures remain within striking distance of 1000, keeping the highly psychological level in play. Therefore, the S&P futures may choose to gravitate towards 1000 as investors digest recent market developments. However, momentum has shifted to the downside and investors will need multiple forms of clarification from economic data to clear the 1000 trading zone since 2nd quarter earnings are out of the way. The U.S. will be quiet on the data-front until Thursday’s weekly unemployment claims. A pop towards 600k could trigger another pullback in U.S. equities, whereas a surprising improvement in unemployment claims could alleviate consumption concerns created by last week’s low U of M reading and weak retail sales.
Technically speaking, the S&P’s barriers to the upside are July 30th highs and our 2nd tier uptrend line along with the highly psychological 1000 level. As for the downside, the S&P futures have intraday lows, our 1st tier uptrend line, and July 29th lows serving as technical cushions.
Price: 986.50
Resistances: 987.50, 993.75, 1001.50, 1006.50
Supports: 981, 976.25, 969.25, 963.50
Psychological: 1000
Crude Futures Rally with the Pound and EU Economic Sentiment
Crude futures are popping back above their important 2nd tier uptrend line as the Dollar depreciates heavily against the Pound. Investors are also encouraged by much better than expected EU Economic Sentiment data. A weaker Dollar and prospects of an uptick in demand from the EU are helping crude futures avoid a retest of their psychological $65/bbl level. We also can’t ignore yesterday’s surge in the Empire State Manufacturing Index. The increase in global production and shipment of goods are helping buoy the price of crude. The U.S. will release weekly inventories tomorrow, and it will be interesting to see if there is a larger than expected surplus once more. However, investors have been disregarding recent inventory surpluses with crude futures locked on the prospect of future consumption.
Meanwhile, crude futures are trading back above our 2nd tier uptrend line, which carriers some weight since it connects through July 30th lows. Another defeat of our 2nd tier uptrend line on rising volume could result in a retracement below crude’s psychological $65/bbl level. However, crude futures are back in their safety zone as investors determine whether to take the S&P’s pullback further. A larger leg down in the S&P futures would likely drag crude futures lower with them. Additionally, we notice the GBP/USD and EUR/USD are trading near their own psychological levels, 1.65 and 1.40, respectively. Hence, it seems the markets are at a critical juncture. Are we merely witnessing profit-taking, or the beginning of a more meaningful decline? For the time being, crude futures have our 1st and 2nd tier uptrend lines to rely on along with intraday lows. As for the upside, crude futures must deal with our 3rd tier uptrend line, July 27th highs, our 2nd tier downtrend line and of course their psychological $70/bbl level. Hence, the topside is riddled with obstacles.
Price: $67.88/bbl
Resistances: $68.17/bbl, $68.53/bbl, $68.96/bbl, $69.68/bbl
Supports: $67.41/bbl, $67.15/bbl, $66.76/bbl, $66.47/bbl, $66.13/bbl
Psychological: $70/bbl, $65/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 Fights to Stay Above 1.40 and 7/29 Lows
EUR/USD is looking to recoup some of yesterday’s losses after ZEW Economic Sentiment data blew past expectations and registered expansion (50+). However, gains are being contained by weak PPI and housing data from the U.S. The S&P futures have also been under considerable downward pressure as investors cash in on overbought conditions. Europe’s impressive sentiment reflects the better than expected GDP data we saw last week. Therefore, EU economic prospects are improving as prices contract and expenses become more reasonable. Unfortunately, U.S. numbers are crashing the party and the S&P futures are back below 1000 again. Hence, the EUR/USD’s upward mobility could be limited until U.S. equities settle down.
Meanwhile, the EUR/USD has managed to avoid a retest of its highly psychological 1.40 level as sell-side volume remains on the tame side. The currency pair is balanced on our 1st tier uptrend line as it approaches an inflection point with our 1st tier downtrend line. Our 1st tier uptrend line carries some weight since it connects through July lows. Hence, a collapse of our 1st tier uptrend line could signal a retreat towards 1.40 and 7/29 lows. Fortunately for bulls, 1.38-1.40 has a lot of historical consolidation, meaning this trading zone should prove to be reliable if it is encountered. As for the upside, there are considerable barriers due to the EUR/USD’s recent deterioration. These include our 1st and 2nd tier downtrend lines along with intraday highs and the 1.4180-1.42 area.
The S&P futures could have some more room to go to the downside if they don’t make a solid effort to pop back above our 2nd tier uptrend line. Furthermore, crude has had a difficult time as of late. Therefore, the next two sessions will be important for the EUR/USD and its correlations to regain their footing in order to build a new base for a leg up. The EU will release some more PPI and current account data tomorrow. However, investors will likely look forward to Friday’s slew of PMI data along with U.S. Existing Home Sales. The breather could help the EUR/USD stabilize before Friday’s busy session.
Present Price: 1.4113
Resistances: 1.4120, 1.4138, 1.4155, 1.4164, 1.4180
Supports: 1.4108, 1.4092, 1.4070, 1.4060, 1.4043
Psychological: 1.40
GBP/USD Climbs Past 1.65 after Pricing Data
The Cable has popped nicely from Monday lows and is trading back above the psychological 1.65 level. Both Britain’s CPI and RPI indexes came in 3 basis points ahead of analyst expectations, contradicting fear over deflation caused by the BOE’s recent injection of liquidity to its QE package. The Pound is experiencing considerable relative strength today in reaction to the data since investors punished Britain’s currency in reaction to the BOE’s actions. The improvement in pricing gives investors hope that the BOE may cap its QE package from here on out. Furthermore, the liquidity will only improve inflation, putting the BOE in a position to tighten liquidity sooner rather than later should the global economy continue to recover.
Despite today’s recovery in the GBP/USD, the currency pair still faces challenging near-term obstacles to the upside. The Cable must deal with the lid of its 7/20-7/28 trading range, our 3rd tier downtrend line as well as 8/13 highs. Additionally, the S&P futures are experiencing sizable downward pressure due to today’s weak pricing and housing numbers along with last week’s disappointing consumption data. Hence, the GBP/USD’s barriers may prove challenging should the S&P futures not turn around due to their positive correlation. On the plus side, the Cable is back above our 1.65 and our 2nd tier uptrend line, meaning the Pound should prove resilient if U.S. equities continue their slide. Tomorrow Britain will release CBI Industrial Order Expectations along with the MPC’s Meeting Minutes. Should these data points impress investors, the GBP/USD could continue to experience some immediate-term upward mobility.
Present Price: 1.6533
Resistances: 1.6537, 1.6562, 1.6593, 1.6611, 1.6633
Supports: 1.6505, 1.6482, 1.6455, 1.6428, 1.6398
Psychological: 1.65
USD/JPY Stabilizes with Weak GDP Data
The USD/JPY bottomed out yesterday despite the pullback in U.S. equities since investors were reacting to weaker than expected GDP data from Japan. The setback in Japan’s GDP gave investors a good reason to halt the Yen’s appreciation and favor the Dollar. However, today’s pop has failed to breach the USD/JPY’s important 1st tier uptrend line. U.S. data has also come in below analyst expectations today, putting the economic comparison between the two nations in a deadlock. Therefore, it seems the USD/JPY could follow the S&P futures closely for the immediate-term, particularly to the downside. Further deterioration in U.S. equities could motivate traders to head for safety and favor the Yen. The USD/JPY should ultimately correlate to the performance of economic data. Disappointing U.S. data would likely knock equities lower and appreciate the Yen.
Meanwhile, bulls will attempt to build a new base above the psychological 95 level and get the USD/JPY back above our 1st tier uptrend line. However, it seems the downside has more momentum for the time being. The USD/JPY will look to our 1st tier uptrend line, May lows and March lows for support. The next data release having an impact on this currency pair will be U.S. weekly Unemployment Claims on Thursday.
Present Price: 94.70
Resistances: 94.95, 95.15, 95.44, 95.65, 96.08
Supports: 94.52, 94.36, 94.08, 93.88, 93.52
Psychological: 95
Gold’s Bounces Above July 29th Lows Following Large Selloff
Gold is finding support in our 2nd tier uptrend line as the precious metal avoided an encounter with 7/29 lows. We notice a similar development with the EUR/USD and its own 7/29 lows, telling us the EUR/USD may be a stronger immediate-term read on gold. The Greenback is balancing across the board following its swift appreciation, giving gold a boost due to its negative correlation with the Dollar. Remember that gold is following the Greenback more closely than U.S. equities these days, though the movement of the S&P does have a moderate influence on the direction of the precious metal. Therefore, present weakness in the S&P futures could limit upward mobility in gold as the Pound and Euro appreciate.
Consolidation could be the theme in markets over the next session or two as investors take a breath and digest the pullback in U.S. equities. Since this week’s economic data out of the EU and Britain have been positive, investors may be second-guessing their instinct to follow the negative tide of news surfacing from the U.S. However, near-term pressure does remain to the downside since we’ve noticed increasing sell-side activity along with a collapse of the psychological $950/oz level. Gold has something to prove to the upside, beginning with our 1st tier downtrend and 3rd tier uptrend lines along with 7/29 highs and the psychological $950/oz zone. As for the downside, the precious metal has technical cushions in our 2nd tier uptrend line, Monday lows and 7/29 lows.
Present Price: $936.85/oz
Resistances: $938.54/oz, $939.68/oz, $941.20/oz, $942.47/oz, $944.12/oz
Supports: $936.39/oz, $934.74/oz, $932.46/oz, $930.31/oz, $928.16/oz
Psychological: $950/oz
The S&P Futures Pop after Yesterday’s Swift Pullback
The S&P futures are locking and popping from Monday lows despite weaker than expected PPI and housing data today. Investors are more encouraged by the positive data coming from Britain and the EU. Inflationary pricing data from Britain is alleviating fears that the BOE’s recent injection of liquidity signaled increasing deflationary pressures. Meanwhile, EU Economic Sentiment blew by analyst expectations to register an expansionary reading (50+). As a result, bulls are jumping back in since the S&P’s pullback has been driven mostly by profit-taking. Despite today’s negative data from the U.S., yesterday’s long-term purchases and manufacturing data points were impressive. Therefore, the U.S. economy is sending mixed signals.
The surge in the Empire State Manufacturing Index was likely triggered by the ‘cash for clunkers’ program, while the improvement in long-term purchases signals foreign investors are picking up U.S. equities and bonds. However, investors should take notice that China just reported that July FDI dropped by -35% MoM as hot money exited the economy. Additionally, China trimmed its U.S. Treasury holdings in June by 3.1%. These are both negative developments for both the U.S. and China, and could impact U.S. equities over the next 24-48 hours. Recent setbacks in China’s economic recovery are concerning investors that stimulus measures may be beginning to top out. China has been driving the global economic recovery, and a cool-down in China could deliver a hefty blow to investor sentiment.
Regardless of mixed global signals and yesterday’s selloff on climbing volume, the S&P futures remain within striking distance of 1000, keeping the highly psychological level in play. Therefore, the S&P futures may choose to gravitate towards 1000 as investors digest recent market developments. However, momentum has shifted to the downside and investors will need multiple forms of clarification from economic data to clear the 1000 trading zone since 2nd quarter earnings are out of the way. The U.S. will be quiet on the data-front until Thursday’s weekly unemployment claims. A pop towards 600k could trigger another pullback in U.S. equities, whereas a surprising improvement in unemployment claims could alleviate consumption concerns created by last week’s low U of M reading and weak retail sales.
Technically speaking, the S&P’s barriers to the upside are July 30th highs and our 2nd tier uptrend line along with the highly psychological 1000 level. As for the downside, the S&P futures have intraday lows, our 1st tier uptrend line, and July 29th lows serving as technical cushions.
Price: 986.50
Resistances: 987.50, 993.75, 1001.50, 1006.50
Supports: 981, 976.25, 969.25, 963.50
Psychological: 1000
Crude Futures Rally with the Pound and EU Economic Sentiment
Crude futures are popping back above their important 2nd tier uptrend line as the Dollar depreciates heavily against the Pound. Investors are also encouraged by much better than expected EU Economic Sentiment data. A weaker Dollar and prospects of an uptick in demand from the EU are helping crude futures avoid a retest of their psychological $65/bbl level. We also can’t ignore yesterday’s surge in the Empire State Manufacturing Index. The increase in global production and shipment of goods are helping buoy the price of crude. The U.S. will release weekly inventories tomorrow, and it will be interesting to see if there is a larger than expected surplus once more. However, investors have been disregarding recent inventory surpluses with crude futures locked on the prospect of future consumption.
Meanwhile, crude futures are trading back above our 2nd tier uptrend line, which carriers some weight since it connects through July 30th lows. Another defeat of our 2nd tier uptrend line on rising volume could result in a retracement below crude’s psychological $65/bbl level. However, crude futures are back in their safety zone as investors determine whether to take the S&P’s pullback further. A larger leg down in the S&P futures would likely drag crude futures lower with them. Additionally, we notice the GBP/USD and EUR/USD are trading near their own psychological levels, 1.65 and 1.40, respectively. Hence, it seems the markets are at a critical juncture. Are we merely witnessing profit-taking, or the beginning of a more meaningful decline? For the time being, crude futures have our 1st and 2nd tier uptrend lines to rely on along with intraday lows. As for the upside, crude futures must deal with our 3rd tier uptrend line, July 27th highs, our 2nd tier downtrend line and of course their psychological $70/bbl level. Hence, the topside is riddled with obstacles.
Price: $67.88/bbl
Resistances: $68.17/bbl, $68.53/bbl, $68.96/bbl, $69.68/bbl
Supports: $67.41/bbl, $67.15/bbl, $66.76/bbl, $66.47/bbl, $66.13/bbl
Psychological: $70/bbl, $65/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.
