Thursday 24 September 2015

Global FX Economy 24th Sept 2015, Fed uncertainy leaves bullion bid. Currency markets, news and analysis.


Forex Market Commentary  



Bullion is bid when USD lacks direction.

Nothing can be worse than a ship lacking a helmsman. Today whilst equities became a mundane affair and USD a sluggish activity the world's investment community suddenly poured into bullion in protest at the overall lack of direction with the US economy. Yesterday, Bill Gross, founder of the largest bond fund in the world: PIMCO, became just another more voice in a string of high-profile figures to voice discontent on the growing distortion in the US credit markets where the market bid/ ask median point is way off the Fed's own interpretation of credit risk. In a  free market economy where currencies, being the largest vehicle of daily trade, have their values set by bank dealers, minute by minute, with a fluctuating bid/ask range, the sum of all bank bid/ask offers gives the investor and idea where a currency can stand. Add to this the dealers in Treasuries setting the daily price of 30 day Fed Funds through a bid/ ask market of voices an overall we have an idea where the price of money is and where the value of its currency lies. But when one leg of the free market structure becomes held down by a straight-jacket then what of the other leg? USDX priced at the 96 mark on the front end futures reflects the sum total of bid/ask on the short end of the yield curve in the credit markets at 25 basis points. Take this away through an official line of zero rate and then come to terms with the reason why the USDX cannot march beyond the 98 to the 100 mark. 

 Credit markets and derivative currency markets are rational on the basis of the mathematics of averages of market dealer participants. Interfere with the math and we end up with a disequlibria that convinces traders; enough is enough of this funny money; let's get into something more real like gold!

Gold has gained 9% in value this month September as a result of large specs losing faith in the US credit system to close at 1147. USDX at the 96 unchanged and Euro hasn't really got a leg to stand on though still sits at the 1.11 as a result of Dollar woes. Crude oil unmoved at the 45.

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
96.271     -0.033 -0.04%   
Support 93.569     Resistance 96.249
Forward 1 year - 95.534s.


EUR/USD
1.11735     -0.00066 -0.06%
Support   1.11853          Resistance 1.15673
Forward 1 year - 1.14840s.  


Crude Oil  WTI
45.08     +0.17 +0.38%
Support 42.53  Resistance  48.11
Forward 1 year - 50.46s.



Gold
1147.170     -3.830 -0.33%
Support  1,121.1    Resistance 1,150.1
Forward 1 year  -  1,138.1s.



Pieter Bergli - DeLoren Trust Holdings

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