31st August 2015 Currency markets, news and analysis

Forex Market Commentary  

The rout being said and done now comes the erosion.

The drama is over down and up we went as the Chinese precipitated the worst global equities crisis in 3 years. But are we out of the woods yet? Most probably not. yes the drama is gone but now a new emotion has crept into global equities: Fear.

An old Chinese proverb says: "Never catch a falling knife!"

When something drops it usually drops like a stone and then it starts skidding and sliding until it's momentum becomes exhausted. Overall, we're not entirely done with global equities in the months to come.
 
The drama over and done; now comes the hard part: gradual, grinding, toiling slippage. Bit by bit we can see very little to cheer global equities to Christmas. Yesterday the Dow closed down 114 points to 16528.03. Lurking in the minds of the traders is the US Fed and talks of a rate hike. Still! In spite of the China avalanche the US economy is relatively unshaken. 

For currencies EUR/USD still holding at the 1.12 but is only holding because of US Labor day  after which we should see a mild decline once again fi the worst of the China crisis has passed. However on the other side, Europe has emerged from this crisis as a safe haven with low inflation in the zone at 0.2% and stability which is a plus factor propping up the Euro currency.

Read on Bloomberg:

http://www.bloomberg.com/news/articles/2015-08-31/euro-yen-correlation-reach-highest-since-2007 

Crude oil has risen dramatically to the 47 mark on the cash WTI on the back of storage flexibility appearing. Consumer demand maybe falling somewhat but production is caught within a trap of a time lag. Manufacturing is always ante planned and at least 6 months behind subtle changes in consumer demand in the present. In reality economic equilibrium boils down to this 6 month gap at its very best with production trying to meet demand. In saying that; today's production decisions are based upon consumer facts at least 6 months old. Thus far China production in the present is meeting international and domestic demand figures from yesterday. But 6 months down the road by Spring next year we will really see how manufacturing in China slows down and that can affect demand for crude oil and inventory stockpiling and keep crude oil at a more stable and less volatile price range of 40-50 USD.

Read on Reuters:

http://www.reuters.com/article/2015/08/31/us-markets-oil-idUSKCN0R006K20150831

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
95.759     -0.167 -0.21% 
Support 95.008     Resistance 96.918
Forward 1 year - 96.878s.

EUR/USD
1.12265     -0.00087 -0.08%
Support   1.10643          Resistance 1.13723
Forward 1 year - 1.12810s.  

Crude Oil  WTI

47.43     -1.77 -3.90%

Support 40.18  Resistance  48.42
Forward 1 year - 51.56s.

Gold

1135.195     +0.410 +0.04%

Support  1,115.0     Resistance 1,149.2
Forward 1 year  -  1,139.2s.

Pieter Bergli - DeLoren Trust Holdings

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