Friday 24 July 2015

24th July 2015 Currency markets, news and analysis

Forex Market Commentary  



Gold has now broken below the 1.100 mark to reach new 5 year lows which is a far cry from the lofty heights of 1,900 in 2011.  What is very interesting this week is large spec movement on the short side of the bullion market. Given the volume of positions and the nature of hedge funds small traders should be aware that a push is about to appear very soon. Given hedge fund characteristics for quick profit we may see gold bullion fall to the 900 region in spectacular short fashio as with the last short action by large specs that occured last year in Q4 in the crude oil markets.

 Please see on Bloomberg the report on the gold market and hedge funds - 

 www.bloomberg.com/news/articles/2015-07-24/hedge-funds-hold-first-ever-net-short-position-in-gold


How much further will this bear market continue? All eyes to China once again and its thirst for commodities which drives the heart beat of inflation.

 On the equities front the Dow ended the week rather poorly slumping to 17568.53  or   -163.39  points to demonstrate concern over the strength of the Greenback and Euro Stoxx 50 closed at 3579.00 at - 52 points with Shanghai's SSE Composite in at 4070.91 down 53 points. The Chinese markets are of particular concern; for example Apple has a full 50% of its revenue growth from China but when the Chinese equities markets start to tumble it's full effect can be felt across the globe to Wall Street as companies like Apple and IBM take a tumble. Add to a potential forecast of falling demand for crude oil and the market turmoil can be felt across the commodities markets from crude oil, slipping to the 48 Dollar mark and even gold that breached the 1100 mark on friday.

 Coming back to currencies EUR/ USD has held up firm against all the negativity that Greece brings. Greek PM Tsipras is still struggling to contain dissension in his own party at austerity measures. But without the 86 billion Euros there is no hope for Greece. Even with USDX pushing towards the 98 mark the EUR/ USD holds its ground on the basis of the strength of the German and French economies and it's going to be tough for traders to push the USD to the 1.05 mark unless some other factor comes into the equation like the China equities crisis. Traders are now waiting for the FOMC outlook on interest rates on Wednesday for any key statements that may change trader sentiment with signs of hawks calling for a 50 bp increment given inflation at 1.7% and a tightening labor market with unemployment approaching 5%. On the EUR/ USD front traders would need to take note of what's happening in the bond markets especially within the backdrop of the ECB debt repurchase plan.

Please see on Bloomberg a discussion on a new Italian bonds issue which highlights  the future for European bond prices to go up thus putting pressure on yields thus putting pressure on its own Euro currency against all major pairs.

http://www.bloomberg.com/news/articles/2015-07-25/italy-s-bonds-spurred-by-investors-competing-amid-scant-supply 

On Reuters the following article appears explaining why crud eoil has fallen to its lowest price since march this year.
 
 
"Crude was already lower on concerns about the global economy and the rig count added to the negativity," according to Phil Flynn, analyst at Price Futures Group in Chicago. With the current crisis of confidence in the Chinese markets crude traders are nervous about factory demand which contracted in July for the largest amount over the last 15 months.

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
97.260     +0.064 +0.08%
Support 96.831 Resistance 97.829
Forward 1 year - 97.346s.

EUR  
1.09828     0.00000 0.00%
Support   1.09037      Resistance 1.10457
Forward 1 year - 1.10960s.

Crude Oil  
48.14     -0.37 -0.77%
Support 46.99   Resistance  49.61
Forward 1 year - 53.74s.

Gold
1099.130     +15.145 +1.38%
Support  1,057.6     Resistance 1,114.8
Forward 1 year  -  1,090.7s.




Pieter Bergli - DeLoren Trust Holdings

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