Daily Market Commentary
EUR/USD Looks to Continue its Run after Tuesday’s Key Movement
The EUR/USD is looking to wrestle free of its slight consolidative period following Tuesday’s important movement to the topside. As we explained in our previous analysis, the EUR/USD jumping past our previous 3rd tier downtrend line and August highs was a clear technical message in favor of the uptrend following heavy summer consolidation. However, volume has tailed off a bit since then, and investors are waiting for China’s economic data Thursday evening EST. Regardless of present consolidation, a fresh uptrend is alive and well, indicating China’s econ data will likely surpass analyst expectations. We can’t create any new downtrend lines besides connecting through weekly highs, a very positive sign for the EUR/USD. Therefore, we believe the EUR/USD has quite a lot of room left to go to the topside over the near-term. However, December 2008 highs should serve as an intermediate technical barrier to the topside should they be tested. Furthermore, the 1.45-1.50 range could prove to be sticky since the EUR/USD has quite a bit of historical trading in this zone dating back to 11/2008-03/2009 and 08/2009-09/2009. Hence, 1.50 represents a key psychological barrier as far as the EUR/USD’s medium-term uptrend is concerned.
As for the downside, we’ve obviously readjusted our uptrend lines to compensate for Tuesday’s breakout and 1.45 becomes a psychological support. France reported a setback in the recovery of the nation’s Industrial Production data, applying slight downward pressure on the EUR/USD. However, Germany printed a much better than expected Industrial Production number on Monday, so EU Industrial Production has clearly been counterbalanced. With EU economic data pretty much finished for the week, the one force that could alter the EUR/USD’s near-term upward trajectory would be disappointing Industrial Production data from China. However, China’s data should come in line since the government feels comfortable enough to tighten the gates a little on liquidity. We maintain our bullish near-term outlook on the EUR/USD even if the currency pair should gravitate to the psychological 1.45 level over the immediate-term.
Present Price: 1.4588
Resistances: 1.4590, 1.4606, 1.4639, 1.4672, 1.4710
Supports: 1.4550, 1.4534, 1.4518, 1.4506, 1.4483
Psychological: 1.45
GBP/USD Enjoys Inaction from the BOE
The Cable has reached the lid of the 8/13-8/21 trading range after the BOE kept its alternative liquidity package as is. Investors shrugged off a weaker than expected Halifax HPI number, instead opting to give the Pound a relative strength as highlighted by the large pullback in the EUR/GBP. The Halifax number is a bit surprising since Britain’s housing data has been stellar lately. Investors may take more notice if we receive another setback in housing data in the near future. Focus will return to the East tonight with China set to release a flood of economic data including Industrial Production. Therefore, the FX markets should remain volatile over the remainder of the week since the longevity of the growth story in China has been brought into question lately. Since China has been leading the charge of the global economic recovery, any setback in China’s economic data late Thursday PST could place some downward pressure on the Cable. However, since the Cable and EUR/USD experienced technical breakouts on Tuesday, we believe China’s economic data will likely come in ahead of expectations and help fuel the GBP/USD’s rally.
The GBP/USD is looking to get above the lid of the 8/13-8/21 range and create some more breathing room between present price and the psychological 1.65 level. Regardless, the Cable still has quite a bit of work to do to the topside due to the BOE’s large injection of liquidity a few weeks ago. The pullback from August highs paved a bumpy road for the uptrend, whereas the EUR/USD broke free of its August highs on Tuesday’s technical movement. Though lying in the distance, our new 2nd tier downtrend line should serve as a key barometer regarding the health of the GBP/USD’s medium-term uptrend. Since our 2nd tier downtrend line runs through August highs, an eclipse of the 2nd tier should indicate a large breakout to the topside. However, we will have to see the data from China before we get ahead of ourselves. Britain will also release its PPI data tomorrow and investors are expecting producer prices to grow by 0.9%. If data should disappoint over the next 24 hours, the GBP/USD has technical cushions in our three uptrend lines along with intraday lows and the psychological 1.65 level. We maintain our bullish near-term outlook on the GBP/USD regardless of any immediate-term pullbacks due to the overwhelming bullish message delivered on Tuesday.
Present Price: 1.6608
Resistances: 1.6608, 1.6635, 1.6657, 1.6668, 1.6701, 1.6722
Supports: 1.6589, 1.6570, 1.6552, 1.6511, 1.6481
Psychological: 1.65
USD/JPY Fights to Stabilize Back Above July Lows
The USD/JPY sank beneath July lows earlier today despite a much weaker than expected Core Machinery Orders number. The setback in Core Machinery Orders is a bit disconcerting for Japan’s economy, yet could help buoy the USD/JPY today as investors show a slight preference for the Dollar amid mixed global economic data. Ironically, the decline in Japan’s CMO coincides with a widening of America’s Trade Balance. The increase in U.S. imports would lead one to believe that Japanese exports are improving. However, the rapid of the appreciation of the Yen isn’t helping struggling Japanese exports too much. Regardless, the mixed global data is helping the USD/JPY bounce off of our 1st tier downtrend line.
Japan’s Trade Balance data later tonight will be overshadowed by China’s wave of data. China is the engine of growth for the global economic recovery. Therefore, the USD/JPY’s immediate-term path will likely depend on the broad-based reaction of the Dollar to China’s economic data, particularly Industrial Production. The slight improvement in American demand for China’s exports confirms our suspicion the red state’s data should outperform expectations. Tuesday was a key technical session across the board, highlighted by breakouts to the topside in both the EUR/USD and GBP/USD along with a dive beneath September lows in the USD/JPY. We expect these trends to continue over the near-term, meaning we could be talking about the psychological 90 level soon. However, even if the USD/JPY should weaken further, the currency pair has historical consolidation beneath present levels dating back to January and February trading ranges. Furthermore, the USD/JPY has the highly psychological 90 level to fall back on should the downturn pick up speed again. As for the topside, our 1st tier uptrend line is fading into the distance, a disconcerting technical development. For the time being, the USD/JPY must first get back above Tuesday highs.
Present Price: 91.88
Resistances: 91.96, 92.06, 92.27, 92.40, 92.54
Supports: 91.79, 91.64, 91.50, 91.41, 91.27
Psychological: 90
Gold Consolidates as Investors Await China’s Econ Data
Gold is bouncing back above our key 3rd tier downtrend line following a pullback after testing February highs. However, volume has been tailing off during the precious metal’s decline, indicating there is not a ton of weight behind the movement. The hesitation and pullback is not surprising considering the rapid pace with which gold tackled $1000/oz. That being said, near-term momentum is still in favor of the uptrend considering Tuesday’s corresponding technical breakout in the EUR/USD. Gold exhibits a strong negative correlation with the Dollar, and the key devaluation of the Dollar this week bodes well for the precious metal. It will be important for gold to fight back above our 3rd tier downtrend line since it runs through February highs. In succession, gold can position itself for more exciting near-term gains to the topside. Meanwhile, our 1st tier uptrend and downtrend lines are approaching their inflection point. Gold has been ahead of the ball thus far, so the collision of trends could take place as China releases its Industrial Production data. Recent movements in gold and the FX markets are in favor of strong Chinese data. If our prediction holds true, gold could continue its rapid ascent shortly. However, a setback in China’s Industrial Production data could result in appreciation of the Dollar and further profit taking in gold. Beyond February highs, gold next technical barrier is March 2008 highs.
Price: $990.90/oz
Resistances: $992.21/oz, $994.55/oz, $996.62/oz, $997.82/oz, $100.63/oz
Supports: $988.94/oz, $986.91/oz, $985.51/oz, $982.70/oz, $980.52/oz
Psychological: $1000/oz
The S&P Futures Knock at 2009 Highs
The S&P futures are playing around with 2009 highs as investors digest U.S. data while looking ahead to the wave of Chinese economic data coming this evening EST. Weekly Unemployment Claims registered a modest decline and the Trade Balance widened. The decline in the Trade Balance is fairly significant since it is the largest deficit in the past 6 months. The rise in imports obviously outpaced the gain in exports, indicative of an improvement in U.S. consumption. The rise in the Trade Balance’s deficit is particularly encouraging considering the recent depreciation of the Dollar. However, investors aren’t reading too far into the data since its uncertain how consumption will fair post-cash for clunkers. Meanwhile, the Dollar and gold are consolidating ahead of the important Chinese economic data approaching. Since China has been the engine of the global economic recovery, investors will be paying particularly close attention to Industrial Production to see if China’s economy is in fact cooling off as some analysts speculate. We believe China’s economic data will turn out well due to the indicators provided by recent activity in the Dollar and gold.
The EUR/USD, GBP/USD and gold have all experienced key technical breakouts to the topside following a summer full of erratic consolidation. We believe investors have finally chosen a direction for the next leg. The depreciation of the Dollar couple with a breakout in gold is normally a positive sign for the S&P futures due to correlations. Therefore, all signs are pointing to an optimistic turn of events on the horizon, and China’s upcoming economic data may serve as the trigger. However, any setback in China’s economic data could ignite uncertainty and result in a pullback in U.S. equities. Meanwhile, crude futures are experiencing multiple inflection points as they wait for investors to make a more solid directional commitment.
The S&P futures are gradually separating themselves from 1000 once again, a positive development psychological. However, the futures still need a follow through on substantial buy-side volume to escape the strong gravitational pool of the highly psychological 1000 level. Investors should make a late night of it and keep an eye on the wires for China’s economic data for we could be in for a volatile 24-48 hours.
Price: 1035.50
Resistances: 1036.25, 1039
Supports: 1028.5, 1023.5, 1020.5, 1014, 1010.5
Psychological: 1000
Crude Consolidates above $70/bbl
Crude futures are trading relatively unchanged since our previous analysis, consolidating above $70/bbl following an OPEC meeting unfolding as anticipated. OPEC kept production unchanged and the major oil producing nations seem comfortable with crude’s recent trading range. OPEC’s content with present price is almost a self-fulfilling prophecy since investors will anticipate OPEC to take whatever actions it deems necessary to kept price within a specific range. That being said, crude has shown little reaction to the multiple inflection points experienced by our trend lines. The non-reaction is a bit odd, yet we could see volatility pick up once China releases its Industrial Production data this evening EST. China’s strong level of production amid the economic crisis along with stockpiling as been a main driving force behind crude’s rapid recovery. Therefore, any important economic data coming from China should have a noticeable impact on the price of crude, particularly if the numbers surprise in either direction. The EUR/USD and Gold have experienced key technical breakouts to the topside recently. These aggressive movements are welcomed by crude bulls due to positive correlations. Furthermore, we received the second large shortage in weekly crude inventories in the past month. The large decline in supply coupled with strong Chinese data and further broad-based depreciation of the Dollar could help send crude beyond August highs.
Technically speaking, crude only has a few more tight uptrend lines to brave through before experiencing exciting movements to the topside. After all, crude is only a stone’s throw away from August highs and the psychological $75/bbl level. As for the downside, crude has our 1st tier uptrend line and the highly psychological $75/level to fall back on. We believe a breaking point is approaching, and thus far the behavior of crude’s correlations are in favor of its uptrend.
Price: $71.64/bbl
Resistances: $71.93/bbl, $72.43/bbl, $72.81/bbl, $73.17/bbl, $73.76/bbl
Supports: $71.19/bbl, $70.91/bbl, $70.62/bbl, $70.18/bbl, $69.82/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 Looks to Continue its Run after Tuesday’s Key Movement
The EUR/USD is looking to wrestle free of its slight consolidative period following Tuesday’s important movement to the topside. As we explained in our previous analysis, the EUR/USD jumping past our previous 3rd tier downtrend line and August highs was a clear technical message in favor of the uptrend following heavy summer consolidation. However, volume has tailed off a bit since then, and investors are waiting for China’s economic data Thursday evening EST. Regardless of present consolidation, a fresh uptrend is alive and well, indicating China’s econ data will likely surpass analyst expectations. We can’t create any new downtrend lines besides connecting through weekly highs, a very positive sign for the EUR/USD. Therefore, we believe the EUR/USD has quite a lot of room left to go to the topside over the near-term. However, December 2008 highs should serve as an intermediate technical barrier to the topside should they be tested. Furthermore, the 1.45-1.50 range could prove to be sticky since the EUR/USD has quite a bit of historical trading in this zone dating back to 11/2008-03/2009 and 08/2009-09/2009. Hence, 1.50 represents a key psychological barrier as far as the EUR/USD’s medium-term uptrend is concerned.
As for the downside, we’ve obviously readjusted our uptrend lines to compensate for Tuesday’s breakout and 1.45 becomes a psychological support. France reported a setback in the recovery of the nation’s Industrial Production data, applying slight downward pressure on the EUR/USD. However, Germany printed a much better than expected Industrial Production number on Monday, so EU Industrial Production has clearly been counterbalanced. With EU economic data pretty much finished for the week, the one force that could alter the EUR/USD’s near-term upward trajectory would be disappointing Industrial Production data from China. However, China’s data should come in line since the government feels comfortable enough to tighten the gates a little on liquidity. We maintain our bullish near-term outlook on the EUR/USD even if the currency pair should gravitate to the psychological 1.45 level over the immediate-term.
Present Price: 1.4588
Resistances: 1.4590, 1.4606, 1.4639, 1.4672, 1.4710
Supports: 1.4550, 1.4534, 1.4518, 1.4506, 1.4483
Psychological: 1.45
GBP/USD Enjoys Inaction from the BOE
The Cable has reached the lid of the 8/13-8/21 trading range after the BOE kept its alternative liquidity package as is. Investors shrugged off a weaker than expected Halifax HPI number, instead opting to give the Pound a relative strength as highlighted by the large pullback in the EUR/GBP. The Halifax number is a bit surprising since Britain’s housing data has been stellar lately. Investors may take more notice if we receive another setback in housing data in the near future. Focus will return to the East tonight with China set to release a flood of economic data including Industrial Production. Therefore, the FX markets should remain volatile over the remainder of the week since the longevity of the growth story in China has been brought into question lately. Since China has been leading the charge of the global economic recovery, any setback in China’s economic data late Thursday PST could place some downward pressure on the Cable. However, since the Cable and EUR/USD experienced technical breakouts on Tuesday, we believe China’s economic data will likely come in ahead of expectations and help fuel the GBP/USD’s rally.
The GBP/USD is looking to get above the lid of the 8/13-8/21 range and create some more breathing room between present price and the psychological 1.65 level. Regardless, the Cable still has quite a bit of work to do to the topside due to the BOE’s large injection of liquidity a few weeks ago. The pullback from August highs paved a bumpy road for the uptrend, whereas the EUR/USD broke free of its August highs on Tuesday’s technical movement. Though lying in the distance, our new 2nd tier downtrend line should serve as a key barometer regarding the health of the GBP/USD’s medium-term uptrend. Since our 2nd tier downtrend line runs through August highs, an eclipse of the 2nd tier should indicate a large breakout to the topside. However, we will have to see the data from China before we get ahead of ourselves. Britain will also release its PPI data tomorrow and investors are expecting producer prices to grow by 0.9%. If data should disappoint over the next 24 hours, the GBP/USD has technical cushions in our three uptrend lines along with intraday lows and the psychological 1.65 level. We maintain our bullish near-term outlook on the GBP/USD regardless of any immediate-term pullbacks due to the overwhelming bullish message delivered on Tuesday.
Present Price: 1.6608
Resistances: 1.6608, 1.6635, 1.6657, 1.6668, 1.6701, 1.6722
Supports: 1.6589, 1.6570, 1.6552, 1.6511, 1.6481
Psychological: 1.65
USD/JPY Fights to Stabilize Back Above July Lows
The USD/JPY sank beneath July lows earlier today despite a much weaker than expected Core Machinery Orders number. The setback in Core Machinery Orders is a bit disconcerting for Japan’s economy, yet could help buoy the USD/JPY today as investors show a slight preference for the Dollar amid mixed global economic data. Ironically, the decline in Japan’s CMO coincides with a widening of America’s Trade Balance. The increase in U.S. imports would lead one to believe that Japanese exports are improving. However, the rapid of the appreciation of the Yen isn’t helping struggling Japanese exports too much. Regardless, the mixed global data is helping the USD/JPY bounce off of our 1st tier downtrend line.
Japan’s Trade Balance data later tonight will be overshadowed by China’s wave of data. China is the engine of growth for the global economic recovery. Therefore, the USD/JPY’s immediate-term path will likely depend on the broad-based reaction of the Dollar to China’s economic data, particularly Industrial Production. The slight improvement in American demand for China’s exports confirms our suspicion the red state’s data should outperform expectations. Tuesday was a key technical session across the board, highlighted by breakouts to the topside in both the EUR/USD and GBP/USD along with a dive beneath September lows in the USD/JPY. We expect these trends to continue over the near-term, meaning we could be talking about the psychological 90 level soon. However, even if the USD/JPY should weaken further, the currency pair has historical consolidation beneath present levels dating back to January and February trading ranges. Furthermore, the USD/JPY has the highly psychological 90 level to fall back on should the downturn pick up speed again. As for the topside, our 1st tier uptrend line is fading into the distance, a disconcerting technical development. For the time being, the USD/JPY must first get back above Tuesday highs.
Present Price: 91.88
Resistances: 91.96, 92.06, 92.27, 92.40, 92.54
Supports: 91.79, 91.64, 91.50, 91.41, 91.27
Psychological: 90
Gold Consolidates as Investors Await China’s Econ Data
Gold is bouncing back above our key 3rd tier downtrend line following a pullback after testing February highs. However, volume has been tailing off during the precious metal’s decline, indicating there is not a ton of weight behind the movement. The hesitation and pullback is not surprising considering the rapid pace with which gold tackled $1000/oz. That being said, near-term momentum is still in favor of the uptrend considering Tuesday’s corresponding technical breakout in the EUR/USD. Gold exhibits a strong negative correlation with the Dollar, and the key devaluation of the Dollar this week bodes well for the precious metal. It will be important for gold to fight back above our 3rd tier downtrend line since it runs through February highs. In succession, gold can position itself for more exciting near-term gains to the topside. Meanwhile, our 1st tier uptrend and downtrend lines are approaching their inflection point. Gold has been ahead of the ball thus far, so the collision of trends could take place as China releases its Industrial Production data. Recent movements in gold and the FX markets are in favor of strong Chinese data. If our prediction holds true, gold could continue its rapid ascent shortly. However, a setback in China’s Industrial Production data could result in appreciation of the Dollar and further profit taking in gold. Beyond February highs, gold next technical barrier is March 2008 highs.
Price: $990.90/oz
Resistances: $992.21/oz, $994.55/oz, $996.62/oz, $997.82/oz, $100.63/oz
Supports: $988.94/oz, $986.91/oz, $985.51/oz, $982.70/oz, $980.52/oz
Psychological: $1000/oz
The S&P Futures Knock at 2009 Highs
The S&P futures are playing around with 2009 highs as investors digest U.S. data while looking ahead to the wave of Chinese economic data coming this evening EST. Weekly Unemployment Claims registered a modest decline and the Trade Balance widened. The decline in the Trade Balance is fairly significant since it is the largest deficit in the past 6 months. The rise in imports obviously outpaced the gain in exports, indicative of an improvement in U.S. consumption. The rise in the Trade Balance’s deficit is particularly encouraging considering the recent depreciation of the Dollar. However, investors aren’t reading too far into the data since its uncertain how consumption will fair post-cash for clunkers. Meanwhile, the Dollar and gold are consolidating ahead of the important Chinese economic data approaching. Since China has been the engine of the global economic recovery, investors will be paying particularly close attention to Industrial Production to see if China’s economy is in fact cooling off as some analysts speculate. We believe China’s economic data will turn out well due to the indicators provided by recent activity in the Dollar and gold.
The EUR/USD, GBP/USD and gold have all experienced key technical breakouts to the topside following a summer full of erratic consolidation. We believe investors have finally chosen a direction for the next leg. The depreciation of the Dollar couple with a breakout in gold is normally a positive sign for the S&P futures due to correlations. Therefore, all signs are pointing to an optimistic turn of events on the horizon, and China’s upcoming economic data may serve as the trigger. However, any setback in China’s economic data could ignite uncertainty and result in a pullback in U.S. equities. Meanwhile, crude futures are experiencing multiple inflection points as they wait for investors to make a more solid directional commitment.
The S&P futures are gradually separating themselves from 1000 once again, a positive development psychological. However, the futures still need a follow through on substantial buy-side volume to escape the strong gravitational pool of the highly psychological 1000 level. Investors should make a late night of it and keep an eye on the wires for China’s economic data for we could be in for a volatile 24-48 hours.
Price: 1035.50
Resistances: 1036.25, 1039
Supports: 1028.5, 1023.5, 1020.5, 1014, 1010.5
Psychological: 1000
Crude Consolidates above $70/bbl
Crude futures are trading relatively unchanged since our previous analysis, consolidating above $70/bbl following an OPEC meeting unfolding as anticipated. OPEC kept production unchanged and the major oil producing nations seem comfortable with crude’s recent trading range. OPEC’s content with present price is almost a self-fulfilling prophecy since investors will anticipate OPEC to take whatever actions it deems necessary to kept price within a specific range. That being said, crude has shown little reaction to the multiple inflection points experienced by our trend lines. The non-reaction is a bit odd, yet we could see volatility pick up once China releases its Industrial Production data this evening EST. China’s strong level of production amid the economic crisis along with stockpiling as been a main driving force behind crude’s rapid recovery. Therefore, any important economic data coming from China should have a noticeable impact on the price of crude, particularly if the numbers surprise in either direction. The EUR/USD and Gold have experienced key technical breakouts to the topside recently. These aggressive movements are welcomed by crude bulls due to positive correlations. Furthermore, we received the second large shortage in weekly crude inventories in the past month. The large decline in supply coupled with strong Chinese data and further broad-based depreciation of the Dollar could help send crude beyond August highs.
Technically speaking, crude only has a few more tight uptrend lines to brave through before experiencing exciting movements to the topside. After all, crude is only a stone’s throw away from August highs and the psychological $75/bbl level. As for the downside, crude has our 1st tier uptrend line and the highly psychological $75/level to fall back on. We believe a breaking point is approaching, and thus far the behavior of crude’s correlations are in favor of its uptrend.
Price: $71.64/bbl
Resistances: $71.93/bbl, $72.43/bbl, $72.81/bbl, $73.17/bbl, $73.76/bbl
Supports: $71.19/bbl, $70.91/bbl, $70.62/bbl, $70.18/bbl, $69.82/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.
