Forex Market Commentary
USD profit taking or an ominous sign of a market top? The Dow sank to 17826.30 thats -279.47 or -1.54% for the session close. USDX also retreated to the 97 mark with little enthusiasm to mount a serious challenge the the 100 mark an sustain that venture as a new formidable benchmark for the futures contract. Was it the clear division emerging in opinions shared by the US Federal reserve members, or was this something more akin to serious considerations on recent economic data as more than just a few blips that warrant serious attention?
Analysts will doubtless be pouring over the USDX ICE futures data this weekend for clues as the USDX makes its 2nd worst performance in the last 12 months plunging 1.8%. Moreover the USD made the 2nd worst slide against the EUR over the last 22 months. Yesterday we saw how the EUR/USD was now made up of a staggering 60% net shorts in the futures contract and surely the market will have to readjust itself as surely as a rubber band will snap back when market momentum loses traction.
A much needed boost for the EUR was voiced today as creditors worldwide demonstrated a rare vocal show of strength that they will not allow Greece to exit the EUR and allow a default and cause a temporary contagion in the bonds markets. Such strength of support from bonds traders has provided fresh impetus for the EUR to claw back a little of its lost value and find a new stability.
See on Bloomberg -
http://www.bloomberg.com/news/articles/2015-04-17/greek-creditors-search-for-scenarios-to-prevent-euro-exit
In the last 9 months the USD has made serious gains versus a basket of major currencies and as always, things that go up come back down and so the question is starting to nag in traders minds: surely the USD has climbed too high and too fast the last 9 months and more frighteningly: is it time for a key market reversal given the recent spate of economic data undershooting expectations? Quite simply; have we read to much into the glittering Dollar and thereby added to one of the greatest surges of Dollar strength since the presidency of Ronald Reagan in the 1980's? While headline CPI readings for March 2015 slipped back into negative territory at -0.1 percent and real average weekly earnings figures slipped from it's highs to just 2.2 percent, traders will now take a long hard look at the US economy with fundamental evidence that the economy is not as robust and therefore it's currency values over-shot and certainly speculative. Traders be wary of fresh EUR/USD shorts and data releases this week that can potentially trigger an upsetting reversal.
See on Bloomberg report on the Dow slip today on fears of strong inflation -
http://www.bloomberg.com/news/articles/2015-04-17/u-s-index-futures-retreat-before-ge-honeywell-report-earnings
Although the Dow made its slip Energy companies held their equities market was already factoring in crude oil at 40 dollars for the rest of the trading year, any slight changes in crude oil equilibrium to incremental prices would affect the prospects for us companies and their earnings growth.
A potentially alarming signal for US equities comes as OPEC calls for a return to quotas. In short the Saudi game plan has paid off and there's pointless continuity because US shale production has started to cut back, Venezuela and Nigeria are sinking with flagging sales, Iran is on its knees and the entire industry around OPEC is suffering. Saudi has made is point and won the price war to drive out non-competitive high cost firms in order to secure production dominance.the following OPEC cry is a dangerous prelude to commodity inflation, weaker equities and potential future USD weakness. So much for $20 oil fears as the US shale industry loses out to Saudi production strength. Crude longs on dips are becoming the market plays as speculators now look for an opportunity to swing the crude back up having driven it down from $100 last year. $55 benchmark seems to be consolidating as physical logistics and fundamental data birng crude back into demand.
Analysts will doubtless be pouring over the USDX ICE futures data this weekend for clues as the USDX makes its 2nd worst performance in the last 12 months plunging 1.8%. Moreover the USD made the 2nd worst slide against the EUR over the last 22 months. Yesterday we saw how the EUR/USD was now made up of a staggering 60% net shorts in the futures contract and surely the market will have to readjust itself as surely as a rubber band will snap back when market momentum loses traction.
A much needed boost for the EUR was voiced today as creditors worldwide demonstrated a rare vocal show of strength that they will not allow Greece to exit the EUR and allow a default and cause a temporary contagion in the bonds markets. Such strength of support from bonds traders has provided fresh impetus for the EUR to claw back a little of its lost value and find a new stability.
See on Bloomberg -
http://www.bloomberg.com/news/articles/2015-04-17/greek-creditors-search-for-scenarios-to-prevent-euro-exit
In the last 9 months the USD has made serious gains versus a basket of major currencies and as always, things that go up come back down and so the question is starting to nag in traders minds: surely the USD has climbed too high and too fast the last 9 months and more frighteningly: is it time for a key market reversal given the recent spate of economic data undershooting expectations? Quite simply; have we read to much into the glittering Dollar and thereby added to one of the greatest surges of Dollar strength since the presidency of Ronald Reagan in the 1980's? While headline CPI readings for March 2015 slipped back into negative territory at -0.1 percent and real average weekly earnings figures slipped from it's highs to just 2.2 percent, traders will now take a long hard look at the US economy with fundamental evidence that the economy is not as robust and therefore it's currency values over-shot and certainly speculative. Traders be wary of fresh EUR/USD shorts and data releases this week that can potentially trigger an upsetting reversal.
See on Bloomberg report on the Dow slip today on fears of strong inflation -
http://www.bloomberg.com/news/articles/2015-04-17/u-s-index-futures-retreat-before-ge-honeywell-report-earnings
Although the Dow made its slip Energy companies held their equities market was already factoring in crude oil at 40 dollars for the rest of the trading year, any slight changes in crude oil equilibrium to incremental prices would affect the prospects for us companies and their earnings growth.
A potentially alarming signal for US equities comes as OPEC calls for a return to quotas. In short the Saudi game plan has paid off and there's pointless continuity because US shale production has started to cut back, Venezuela and Nigeria are sinking with flagging sales, Iran is on its knees and the entire industry around OPEC is suffering. Saudi has made is point and won the price war to drive out non-competitive high cost firms in order to secure production dominance.the following OPEC cry is a dangerous prelude to commodity inflation, weaker equities and potential future USD weakness. So much for $20 oil fears as the US shale industry loses out to Saudi production strength. Crude longs on dips are becoming the market plays as speculators now look for an opportunity to swing the crude back up having driven it down from $100 last year. $55 benchmark seems to be consolidating as physical logistics and fundamental data birng crude back into demand.
Read on Reuters -
Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.
USDX
97.446 -0.247 -0.32%
Support 96.776 Resistance 98.496
EUR
1.080600 +0.004435 +0.41%
Support 1.06847 Resistance 1.09147
Crude Oil
57.66 -0.45 -0.78%
Support 56.01 Resistance 58.99
Gold
1204.500 +6.310 +0.53%
Support 1,191.8 Resistance 1,213.4
Pieter Bergli - DeLoren Trust Holdings
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