9th September 2015 Currency markets, news and analysis

Forex Market Commentary  

Another yo-yo day!

Under normal circumstances traders eyeing ahead the all important Q3 September FOMC data would like to simmer down and prepare for a major direction headwind. Q3 is very important to traders as it includes all the summer data for the months July, August and September. US summers are inclusive of Labor day holidays, lazy summer drives and college kids finding summer temp jobs to boost main street and retail sales. It's counterpart is Q4 which covers Christmas retail sales and holidays and another bout of consumer spending over the cheerful period. However with these last 3 weeks, the run up to the September FOMC key decision on interest rates has been extraordinary and points to a massive market move whatever the outcome; should rates go up finally expect a Dollar surge and a Wall street meltdown, and should rates stay on hold, expect a massive surge in US equities and bonds prices. Either way we are looking to end this grueling sideways pit jostling in the extreme and run with the wind in the week to come.

Global equities had another reverse stormer.  Asia fared bad and the venerable Dow plunged -239.11 or -1.45% to end at 16,253.57. Investors piled into the Euro currency bid up Bund in flight to safety eschewing bullion as the shiny stuff fell yet again to the 1107 mark. Bullion is fast losing it's reason for becoming the store of value in times of crisis as traders look to the Euro now as the second important store of value in times of crisis; which is great testament to the Euro currency project given the crisis of it's own in Greece earlier this year.

Day traders be warned. With the run up to this all important FOMC global players are trigger-happy and likely to draw in any direction at a sudden whim. Sideways pit fights are for the giants. Swing traders brave enough to trade a day session and try to scalp some pips off this kind of volatility stand a 50-50 chance of a wipe-out with a sudden reversal no matter how strong the daily candle-stick charts may appear. Tornadoes can pop out from nowhere and naked open positions with trailing stops can be flung out. Yes there is opportunity in volatility but currencies are bought by huge commercials and speculated by huge hedge funds and amidst all that can you really afford to stand in front of an oncoming train? there's a 50% chance you can make something and a 50% chance you lose your shirt unless you hedge.

The sensibility of a Forex trader is to avoid the temptation of riding the wild swings and look for a longer term position of entry with a suitable hedge. it's been a wild 3 weeks. EUR/ USD has bounced again to the 1.12 with flight to Bunds as Asian investors piled out of Asian equities yet again. It's almost become a predictable knee jerk reaction for the last 3 weeks: Asian trader sells Asian equities buys EUR/USD; Dow plunges to complete the global 24hrs trading clock.

Thus to sum up all the nervous jostling; here are 2 articles on Bloomberg holding the 2 contrary opinions.

On the one hand the bets are on a rate rise of 25 basis points finally!

http://www.bloomberg.com/news/articles/2015-09-10/asian-stocks-follow-u-s-lower-as-jobs-data-fuel-rate-rise-bets

Should this article prove true then expect the Dow to swoon and dont try to stand and catch the falling knife till  it is firmly on the ground.

But then again here's what Deutsche Bank analysts have come up with:

http://www.bloomberg.com/news/articles/2015-09-09/seven-reasons-the-fed-won-t-raise-rates-next-week-deutsche-bank 

and if this should prove true then the the all important September clincher will become a Dow rocket to the moon. Either way we are looking for a major directional move next week and large traders are sensing this jostling for positions but equally changing their outlook on a dime as any squabble over in Asia touches European nerves and then lands as a storm in USA.

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
95.773     -0.173 -0.22%
Support 95.230     Resistance 97.100
Forward 1 year - 96.998s.

EUR/USD
1.121950     +0.002495 +0.22%
Support   1.10367          Resistance 1.12567
Forward 1 year - 1.12460s.  

Crude Oil  WTI

44.16     +0.01 +0.02%

Support 44.68  Resistance  47.92
Forward 1 year - 50.97s.

Gold

1107.295     -16.385 -1.46%

Support  1,106.2    Resistance 1,139.4
Forward 1 year  -  1,126.3s.

Pieter Bergli - DeLoren Trust Holdings

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