Forex Market Commentary
Enough is enough; clamor growing against US Fed.
Bill gross founder of the largest bond fund in the world: PIMCO, becomes the latest high-profile figure to speak over this growing distortion in the US credit markets and his frustration in the entire policy of interference with the free market economy in pricing credit risk.
Asian markets started the day with tension but eased off as equities appear to be consolidating from Shanghai to Tokyo to bring back some stability to the Asian region and Emerging Markets equities, currencies and fixed income products as a whole. As a result all eyes are on Europe to take the lead and generate some consistent economic growth to reflect the overall strength and resilience of the US economy. The Dow closed yesterday at 16,279.89 at -50.58, -0.31%.
Two important articles appear on Bloomberg today:
Firstly:
http://www.bloomberg.com/news/articles/2015-09-23/gross-tells-fed-to-get-off-zero-now-as-economies-run-on-empty
and secondly:
http://www.bloomberg.com/news/articles/2015-09-24/china-s-218-billion-of-vanishing-debt-shows-rout-ending-to-hsbc
With the statements of former PIMCO founder Bill Gross, there is a huge concern amongst traders that the US Fed is not listening to the natural market process of equilibrium to identify the natural price for money as bid hits offer. This is very disconcerting given that the Fed is seen to be assisting "liability-based business models to survive" and generally speaking doing everything counter-productive for the capital markets to support the long term growth of healthy business models in the US economy.
Asian regional giant HSBC sees the flight of capital risks in China and the region to be of less importance now. The worst is over and excesses in the system needed corrective adjustment. Hopefully liquidity should restore itself when investors see the economic dead wood in China cast aside and recent PBOC activity expanding liquidity to promote stability and growth. However, China's rapid rise has led to wage increases and the loss of competitive edge and the World Bank sees the way ahead for China is to encourage the growth of domestic markets to raise real per capita income for the Chinese consumer.
Over to the USDX, against the backdrop of interest rate fundamentals the USDX holds at the 96 mark and the EUR/ USD has failed to penetrate the staunch 1.15 barrier and risks another slide to the 1.08 region until the next FOMC. The EUR/ USD was heavily over-sold but in the last few weeks much of the weaker shorts have been pushed out of the market. The recent rise of the EUR/ USD was much to do with short covering bounce and roll over of futures contracts rather than any per se indicatoor of exciting news of regional economic growth. crude oil WTI holds at the 44 seeing the worst off as the equities shakedown fades and gold bullion at the 1130.
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
96.144 -0.053 -0.07%
Support 93.569 Resistance 96.249
Forward 1 year - 95.534s.
96.144 -0.053 -0.07%
Support 93.569 Resistance 96.249
Forward 1 year - 95.534s.
EUR/USD
1.119295 +0.002915 +0.26%
Support 1.11853 Resistance 1.15673
Forward 1 year - 1.14840s.
1.119295 +0.002915 +0.26%
Support 1.11853 Resistance 1.15673
Forward 1 year - 1.14840s.
Crude Oil WTI
44.87 +0.39 +0.84%
Support 42.53 Resistance 48.11
Forward 1 year - 50.46s.
Forward 1 year - 50.46s.
Gold
1134.940 +2.150 +0.19%
Forward 1 year - 1,138.1s.
Pieter Bergli - DeLoren Trust Holdings
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