Forex Market Commentary
Its been a difficult week for global equities.
The shock of China left traders dismayed when on Friday 21st august China announced to the world the slowest manufacturing data since 2009. of course the PMOC knew this all along and last week's Yuan devaluations were supposed to be part of the cushion to stop the kind of capital flight which went and happened anyways with the SSE Composite nearly losing all this year's gains.
The problem really started not in so much as the Chinese date was really bad but more so because the last few years we have mistakenly built up this misperception that China is this engine which continues to roar agaisnt the laws of gravity. So when the data release came out last Friday nobody knew how to react and those that did first jammed the fire exit tight as the whole theater of dreams came tumbling down. Nevertheless, exactly 4 trading sessions later, the smart traders started wondering to themselves what on earth is all this panic about anyway? Europe with all it's Greek drama never pushed markets to and fro like this and is showing orderly ability to fashion shape from debt chaos. The US at near full employment mode and gentle inflation remains upbeat. The fundamentals of both USA and Europe look strong irrespective of this Chinese drama.
Overall, EUR/ USD has slipped a massive 500 pips to 1.11 with the market re-correction. USDX has come back strong to where it should be. Crude oil goes back up on inventory numbers being down and gold bullion stabilizes as a safe haven after the global equities rout.
Important Indicators:
Equities:
Dow Industrial 16,643.01 Down 11.76 (0.07%)
Euro STOXX50 3,286.59 Up 5.81(0.18%)
Nikkei 225 19,136.32 Up 561.88 (3.03%)
SSE Composite Index 3,232.35 Up 148.76(4.82%)
Hang Seng 21,612.39 Down 226.15 (1.04%)
Fixed Income Markets:
US Federal Reserve - +0.25%
ECB Base rate 0.050 %
Chinese interest rate PBC China 4.60 % (Down -0.25%)
Japanese interest rate (BoJ) 0.10 %
Important moving averages:
USDX below the 50 day m.at 96.5.
EUR/ USD above 50 day m.a at 1.11
Crude Oil WTI below 50 day m.a. at 48
Gold above 50 day m.a. at 1130
US - 30 DAY FED FUND at 50 day m.a. at 99.83
US - 10 YEAR T-NOTES above 50 day m.a at 127
Overall reflection: USDX, economy.
In speaking of moving averages; markets are not rational and daily price action volatile, but in the longer run trader expectation and negative sentiment can be collectively summed up through the 50 day moving average. 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
96.075 +0.310 +0.40%
Support 95.008 Resistance 96.918
Forward 1 year - 96.878s.
96.075 +0.310 +0.40%
Support 95.008 Resistance 96.918
Forward 1 year - 96.878s.
EUR/USD
1.1182 0.0000 0.00%
Support 1.10643 Resistance 1.13723
Forward 1 year - 1.12810s.
1.1182 0.0000 0.00%
Support 1.10643 Resistance 1.13723
Forward 1 year - 1.12810s.
Crude Oil WTI
45.22 +2.75 +6.07%
Support 40.18 Resistance 48.42
Forward 1 year - 51.56s.
Forward 1 year - 51.56s.
Gold
1133.540 +5.115 +0.45%
Forward 1 year - 1,139.2s.
Pieter Bergli - DeLoren Trust Holdings
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