Forex Market Commentary
The Fed took on a hawkish tone today with its monthly but stated that the US economy was "nearly balanced". This was not the kind of call for action that large specs were anticipating having already pushed the EUR/ USD from 1.35 last year down to 1.05 where it trades now in the 1.10 range. Any signs of momentum yesterday were half-hearted at best which can be summed up best by the general lack of anxiety in the US equities markets as the Down slipped a mere 5 points to flat out the day's session at 17, 745.98. Effectively whilst the Fed tries to talk tough the market doesn't buy it and doesn't really see the justification for the official rate hike till the Q4 figures on GDP come out by Feb 2016. The Fed July statement once again emphasizes the necessity of watching labor market conditions and the target inflation rate of 2%. Whist the fed maintains that GDP is growing annually at 2% several economists are starting to cast doubts over this figure and maintain that reality is more likely to be a 1% growth rate for 2015.
Euro Stoxx50 posted modest gains of 17 points to come in at 3589.00 and the SSE Composite shaved a mere 335 points to close at 3671.74 to reinforce the market opinion that the fed won't boost rates this year.
Markets goes up and down and a clearing of a bubble presents an opportunity to buy. Some major funds already see the end of the distress in the Chinese equities markets:
http://www.bloomberg.com/news/articles/2015-07-31/when-chinese-stocks-crash-this-top-ranked-fund-steps-in-to-buy
Grexit has come and gone, China tumbled and the dust seems to be settling into a period of consolidation and signs of weakness in the Euro economy are not there with the only factor of the ECB bond repurchase program being the unknown quantity as the ECB may choose to increase it's purchasing commitment. Still, the driving fundamentals are not there for the large specs to take note and make a dramatic big push as it did last year with the EUR/ USD and crude oil on the short side and gold bullion this month on the short side.
Please turn to this very important article on Bloomberg today which may help you understand why large specs are not driving the USDX to the 100 mark.
http://www.bloomberg.com/news/articles/2015-07-30/the-u-s-economy-s-top-speed-has-probably-been-overestimated-for-years
Small traders need to be wary that the next 5 months to close the year will see half-hearted thrusts at the 1.05 level for the EUR/ USD and the 100 mark for the USDX. Given this scenario crude oil looks set to stay within the $45-55 channel on the upper end given that Q3 and Q4 should see a pick up in demand for crude oil.
Read on Reuters today:
http://www.reuters.com/article/2015/07/30/us-russia-opec-idUSKCN0Q41OS20150730
Bullion has nowhere to go on the back of a weak commodity market and may drift lower to the 1000 mark until Q4 where traditional gold sales sees a pick up in consumer demand. The Bloomberg Commodity Index lost some 9.8 percent in July, and that's the most since September 2011 with a new 13-year low.
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
97.414 -0.073 -0.09%
Support 96.831 Resistance 97.829
Forward 1 year - 97.346s.
97.414 -0.073 -0.09%
Support 96.831 Resistance 97.829
Forward 1 year - 97.346s.
EUR
1.09460 -0.00198 -0.18%
Support 1.09037 Resistance 1.10457
Forward 1 year - 1.10960s.
1.09460 -0.00198 -0.18%
Support 1.09037 Resistance 1.10457
Forward 1 year - 1.10960s.
Crude Oil
48.23 -0.29 -0.59%
Support 51.32 Resistance 55.78
Forward 1 year - 55.31s.
Forward 1 year - 55.31s.
Gold
1088.750 -7.025 -0.64%
Forward 1 year - 1,090.7s.
Pieter Bergli - DeLoren Trust Holdings
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