Forex Market Commentary
Well, everyone knows that global equities are inflated; from Shanghai to New York it's been a great 6 years of cheap credit. So what is surprising as the bond markets take a tumble as the forerunner of a deep shadow over equities? The last 2 weeks alone saw that stable of stable Bund increasing it's yield dramatically with the 30-year yielding around 1.22 percent, up from 0.436 percent since April 20 and then the German benchmark 10-year yield is now at 0.602 percent, which is an increase from 0.078 percent on April 20. When yields go up, prices go down and bond portfolio manages can't say they haven't enjoyed the ride these last 6 years in particular. With bond yields threatening to turn into negative territory why on earth would traders be asked to cough up their money to put into paper that pays negative rates? Thankfully for global bond traders reality is setting in and with the ECB Q.E program just starting to shrink that awful debt, and were about 95% of that target debt to go, Euro yields should start to rise once an expected Euro 1.1 trillion debt comes off the books.
All the bond action is playing into the fx markets. Currency traders are already over the gloom and doom surrounding the Euro zone and can measure several reasons why Euro rates should now start to rise and even perhaps narrow the differential on the 10yr Bund vs US Treasury. This is one reason at the moment why Dollar specs did not go long given last friday's unemployment good news in US markets. we are at this watershed point. Yes US rates may have to go up 25 basis points officially at some point this year but does rate rise expectations alone give justification to shorting a Euro currency that now seems to be pulling itself together and may even start the minute process of narrowing bond differentials? if specs are going to take another push with the USD i do not think for one that we will see the same kind of momentum that we need in the last 6 months, which was largely build upon one of its main trading partner the EU in a whole world of woe. If anything a next wave of dollar increases would be less dramatic and more incremental in tiny steps rather than leaps and bounds and certainly with the EUR/ USD differentials in rates to at least hold rather than widen, we would be meeting stiffer resistance should the USd push to parity.
This article today on Bloomberg will make you think twice about dollar long positions.
http://www.bloomberg.com/news/articles/2015-05-11/treasury-finds-demand-no-longer-insatiable-going-into-refunding
Mean time the slow down in the dollar rush is feeding into the commodities markets. Crude is holding nicely as inventories ease up and Dollar does not threaten prices anymore and Gold is finding reasons why the market need not go short anymore.
Please note that technical data should only be used as a guide but be aware that it is the fundamental data which becomes the trigger that pushes prices into equilibrium of demand and supply.
All the bond action is playing into the fx markets. Currency traders are already over the gloom and doom surrounding the Euro zone and can measure several reasons why Euro rates should now start to rise and even perhaps narrow the differential on the 10yr Bund vs US Treasury. This is one reason at the moment why Dollar specs did not go long given last friday's unemployment good news in US markets. we are at this watershed point. Yes US rates may have to go up 25 basis points officially at some point this year but does rate rise expectations alone give justification to shorting a Euro currency that now seems to be pulling itself together and may even start the minute process of narrowing bond differentials? if specs are going to take another push with the USD i do not think for one that we will see the same kind of momentum that we need in the last 6 months, which was largely build upon one of its main trading partner the EU in a whole world of woe. If anything a next wave of dollar increases would be less dramatic and more incremental in tiny steps rather than leaps and bounds and certainly with the EUR/ USD differentials in rates to at least hold rather than widen, we would be meeting stiffer resistance should the USd push to parity.
This article today on Bloomberg will make you think twice about dollar long positions.
http://www.bloomberg.com/news/articles/2015-05-11/treasury-finds-demand-no-longer-insatiable-going-into-refunding
Mean time the slow down in the dollar rush is feeding into the commodities markets. Crude is holding nicely as inventories ease up and Dollar does not threaten prices anymore and Gold is finding reasons why the market need not go short anymore.
Please note that technical data should only be used as a guide but be aware that it is the fundamental data which becomes the trigger that pushes prices into equilibrium of demand and supply.
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
US Dollar
95.086 +0.059 +0.08%
95.086 +0.059 +0.08%
Support 94.623 Resistance 95.583
Forward 1 year - 96.125. Flat line.
Forward 1 year - 96.125. Flat line.
EUR
1.11550 -0.00071 -0.06%
Support 1.10943 Resistance 1.12443
Forward 1 year - 1.12540. Flat line.
Crude Oil
59.23 -0.02 -0.03%
Support 58.18 Resistance 60.38
Forward 1 year - 63.39. Low growth positive line.
Forward 1 year - 63.39. Low growth positive line.
Gold
1183.830 -5.445 -0.46%
Support 1,171.1 Resistance 1,196.9
Forward 1 year - 1,188.6. Low growth line.
Pieter Bergli - DeLoren Trust Holdings
A non-profit commitment to provide education on the properties of currency markets
Forex market commentaries and media reports for free
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers
Pieter Bergli - DeLoren Trust Holdings
A non-profit commitment to provide education on the properties of currency markets
Forex market commentaries and media reports for free
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers
