Forex Market Commentary
US equities had a strong day with the Dow Industrials closing at 17615.17 at +241.79 or +1.37% up whilst EuroSTOXX50 was up 42 points to close at 3,682.00. Given the mixed news with US data releases it is becoming harder to see the US Fed hike anything above a 25 basis point increment as the first official rate hike since 2008. It's not a question of when? Anymore; it's a given. The real question burning on every trader's mind is whether there is enough strength in the US economy with unemployment at near full employment to justify a second rate hike of 25 basis points. the equities markets do not buy the 2nd increment hence a storming session on Monday in New York. In the preceding Asian session Chinese stocks also fared well on the expectation that the Chinese policy makers will now start officially attempt devalue the Yuan. The Chinese Central bank officially lowered their currency value yesterday by 2% and was quick to point out to the media that this action was a "one-off depreciation".
Read on Bloomberg the new wave of Chinese optimism coming back to nervous traders:
But more worrying for the longer term is the impact that a Yuan devaluation will have on the US Dollar.
Read on Reuters:
The impact on the US Dollar is going to be seen in the coming weeks ahead with USDX with a possible relook at the 100 mark and EUR/ USD to challenge the 1.05 should any further mixed news comes out from Germany who is considered to be the anchor of the European zone. Still as yet the currency markets lack the killer punch as the Chinese central bankers failed to push the USD up against the Euro currency. But watch out ahead for Euro zone economic data. The news from Greece is encouraging that they will attempt to balance their budget for 2016 and may even record a surplus. Europe needs this kind of balance to be restored to Greece that almost tottered on the brink of bankruptcy last month.
Given the gradual restoration of confidence in China crude oil crept back up to the 44 mark on WTI futures bouncing off its one month lows.
But in the bonds markets former Fed Chairman Alan Greenspan issues a warning that the bond market party of the last 6 years with lower yields and higher prices is about to come to an abrupt end. However, his statement does not add considerable weight to a possible China Factor of more devaluations beyond the so-called "one-off depreciation".
Read on Bloomberg:
Gold bullion had a good day creeping back up to the 1100 as a result of price stability appearing in the commodity markets.
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
97.511 +0.324
Support 95.830 Resistance 98.530
Forward 1 year - 98.344s.
97.511 +0.324
Support 95.830 Resistance 98.530
Forward 1 year - 98.344s.
EUR/USD
Euro 1.097405 -0.20%
Support 1.08123 Resistance 1.12003
Forward 1 year - 1.10760s.
Euro 1.097405 -0.20%
Support 1.08123 Resistance 1.12003
Forward 1 year - 1.10760s.
Crude Oil
Crude Oil 44.59 -0.83%
Support 44.56 Resistance 48.40
Forward 1 year - 53.50s.
Forward 1 year - 53.50s.
Gold
1,101.105 +1.920 +0.17%
Forward 1 year - 1,101.4s.
Pieter Bergli - DeLoren Trust Holdings
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