Forex Market Commentary
One out of Two isn't really bad at all now isn't it? For the world's largest economy there's only 2 things that the American consumer really wants: 1. The American Dream home, and 2. A decent 401k plan to spend the golden years of retirement in that dream home. Now what does this all have to do with Forex? Bear with me.
The American property market is doing very nicely indeed. With interest rates almost near zero percent it has take a good amount of time to clear the excesses in the US property market since 2008. American corporations are now leaner, meaner and hiring once again as domestic income grows and global market share increases to increase the value of global investments. A healthy 5.3% unemployment rate coupled with increasing first time purchases in the real estate market is exactly the kind of domestic strength that the Fed needs to see in consideration of its over-whelming international problem in dealing with the Chinese equities nightmare to come and to a lesser extent the Greek fiasco.
US house pruces are nearly 20% up since their 2011 lows and most interesting is the statistic that first time buyers comprise 32% of all US house sales, which is the highest rate since September 2012.
So 1. the American dream looks like a healthy bet finally after years of toil since 2008. But 2. the 401k plan? Any politician worth his salt in an election year truly knows that when you mess with Wall Street and you mess up American equities which form the core framework of the average Joe's retirement plan; then you are playing with fire; for equities to perform in today's global flux then US corporates need cheap money and a cheap US dollar. All eyes back to the Fed.
Today, the Dow closed at 17,548.62 which is a slight rise of 33 points since yesterdays outage which may have helpfully served to prevent an even bigger drop as investors get more and more nervous about the Shanghai markets. But this is not what the average Joe wants to see. With US corporates concerned with a higher interest rate hurting US exports and hurting US market share overseas, the Fed is going to have a tough time on keeping its eye on core inflation and the labor rate to justify any increase beyond 25 basis points. China crisis has already shaved 10 dollars of the crude oil market in a dramatic turn around as crude traders ponder the future that once shone over the 65 Dollar horizon just 2 weeks ago. US shale producers are hurting bad now and this can be reflected in the energy sector component of the Dow. The Fed needs Shanghai and international investors to calm down so that US energy companies like Exxon and Chevron can pick up steam again and grow in value. Thus with a nervous US equities market the Fed has every reason to find an excuse to keep interest rates down and slow down the appreciation of the US Dollar. Should the Euro currency hold down its fort, dig deep and increase open market operations to purchase more bonds on the long end of the yield curve, the eventual short term drop in Euro value to 1.05 would eventually play out to stronger Euro equities as cheap credit helps Euro companies to steam ahead with their contribution to local GDP. Thus for the short term, we may see the Euro trade down to 1.08 and even 1.05, and because of the china problem, we may see crude oil settle at 50-55 US Dollars, but the short term gain in the US Dollar will eventually be offset as the stimulus of cheap money assists Europe and China to regain their feet and see their own bond yields rise to narrows the spreads with US Treasuries.
See on Bloomberg today how closely events in China and Greece affect the value of the US dollar -
http://www.bloomberg.com/news/articles/2015-07-09/u-s-index-futures-mirror-global-rally-on-china-rebound-greece
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
96.140 -0.128 -0.16%
96.140 -0.128 -0.16%
Support 93.653 Resistance 97.343
Forward 1 year - 95.943. Low growth positive line.
Forward 1 year - 95.943. Low growth positive line.
EUR
1.109380 +0.000610 +0.06%
1.109380 +0.000610 +0.06%
Support 1.08430 Resistance 1.15030
Forward 1 year - 1.13770. Low growth positive line
Crude Oil
53.25 +0.47 +0.91%
Support 51.32 Resistance 55.78
Forward 1 year - 61.31. Low growth positive line.
Forward 1 year - 61.31. Low growth positive line.
Gold
1161.95 +2.40 +0.21%
Support 1,150.5 Resistance 1,174.3
Forward 1 year - 1,186.2 Low growth line.
Pieter Bergli - DeLoren Trust Holdings
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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
