Forex Market Commentary
US rates unchanged, USD under pressure.
The Fed is not convinced. The China crisis has left it's mark on US markets. Unemployment stands at 5.1% at technical Full Employment, but core inflation is where the crunch lies and right now inflation is hovering at the 1.3% due to falling oil prices and that's way short of the Fed marker of 2%.
Consequently US rates remain officially unchanged as inflationary pressures are well contained to justify a current status quo. The Dow did not surge and holds at 16674.74 some -65.21on the day. The Fed just couldn't find it in their hearts to shake up wall Street and tell everyone that 7 years near zero interest rates is high time enough! Looks like a big political cop out and conceals the reality of interest rate economics: kicking the can down the road once again will not stave off a looming bubble and another round of equities sell-offs whilst the average Joe looses value in his 401k plan.
Modern Keynesian policies distort interest rate mechanics and causes bond market disequilibria. For half the global investment community this must be really disappointing to observe an inpet US Federal Reserve unable to restore the cyclical nature of boom and bust to maintain a 7 year economic flatline.
So for now USDX trading at the 94 mark and come Friday traders are likely to sell off and profit take to take the weekend for reflection. EUR/ USD is at the 1.14 but lacks the technical and fundamental will power to surge in strength past the 1.15. EUR/ USD consolidating at the 1.14 on friday would be a positive sign for the Euro currency that has lost considerable ground since last July falling from the 1.34 mark. A retracement to the 1.17-1.19 would clear out the latterly taken shorts since December last year and bring the market back to equilibrium with net shorts needing to shed some 10% more. Currently in the futures market the last set of COT data show large specs at 65% new short on the EUR/ USD and the market will restore balance in the weeks ahead. However fundamentals are not there for the Euro land. The ECB needs to push through a near trillion Euros in bond repurchase and that will send prices higher on the Bund and yield lower even to the point of zero and negative rates. Money will always flow to low inflationary/ incremental yield growing currency structure. Therefore a yield divergence and not convergence should allow the USD to resume its growth towards the parity mark with EUR/ USD in the future months ahead. Gold received a boost with investors pushing bullion up by 9 points and crude oil surprisingly did not sell off and maintained at the 47 mark on WTI cash.
Read on Bloomberg today:
http://www.bloomberg.com/news/articles/2015-09-17/fed-rate-increase-bets-shift-to-2016-money-markets-signal
and investors pile into gold for holding till a direction can emerge:
http://www.bloomberg.com/news/videos/2015-09-18/investors-turn-to-safe-havens-on-fed-decision
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
94.568 +0.032 +0.04%
Support 94.768 Resistance 95.888
Forward 1 year - 95.824s.
94.568 +0.032 +0.04%
Support 94.768 Resistance 95.888
Forward 1 year - 95.824s.
EUR/USD
1.140800 +0.010350 +0.92%
Support 1.12173 Resistance 1.14093
Forward 1 year - 1.14350s.
1.140800 +0.010350 +0.92%
Support 1.12173 Resistance 1.14093
Forward 1 year - 1.14350s.
Crude Oil WTI
47.06 -0.14 -0.29%
Support 43.17 Resistance 46.61
Forward 1 year - 50.28s.
Forward 1 year - 50.28s.
Gold
1129.32 +8.44 +0.75%
Forward 1 year - 1,107.9s.
Pieter Bergli - DeLoren Trust Holdings
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