Forex Market Commentary
Buy the rumor; sell the fact.
The old adage teaches us that gossip moves markets and reality snaps it back like a rubber band. The EUR/ USD upwards push over the last few weeks has all but come to a grinding halt as Euro equities are seen to fare just as bad as US equities when it comes to earnings and the role of the value of their respective currencies. Stark reality is that a strong Euro or a strong Dollar hurts domestic corporations that are geared to the export market like a Volkswagen or a General Electric. The Dow once again looks like it is tottering as the euphoria of a September rate slumber party dies down and nerves return to the fore. The Dow was down 41 points modestly to close at 17581.43 on the back of trader jitters. Read on Bloomberg how the jitters in the equities market is solidifying into a fact as corporate earnings slump:
http://www.bloomberg.com/news/articles/2015-10-25/the-dollar-ate-our-profit-is-lament-of-delta-mattel-whirlpool
What is driving the Dollar spike the last couple of days is not only economic fundamentals of divergent economic cycles between the pair EuR/ USd but also the resurfacing once again of the rumor mill; this time with all eyes on the November FOMC. Will they wont they?
Read on Bloomberg the analysis on the next rate discussion:
http://www.bloomberg.com/news/articles/2015-10-27/fed-s-quest-to-keep-december-options-open-decision-day-guide
The US economy has already reached the twin parameters for a rate hike: unemployment at 5% - currently 5.1% - and core inflation at 2% - currently 1.9%. It's got to be now or never. although new home sales look a little soft in the US markets; existing home sales are upwards and growing which suggests that American home owners are becoming increasingly upwardly mobile seeking to upgrade their style of living by purchasing a new home at about 20% a higher valuation than their existing status. that is the feel good factor. No matter what goes on on Wall street with corporate earnings home sales are strong and retail sales equally positive as consumers are looking to take advantage of growing disposable income. US consumers are saving more and spending more; that speaks volumes and is a clear signal to the Fed that a 25 basis rate hike will not do anything at all to hurt the growth of US economy.
EUR/ USD shorts in play if > 1.12 and longs in play if < 1.08
USDX longs at > 92 and shorts at > 98
Crude Oil WTi reflects excess in the market: logistics issues of over-production, full storage and needs to remain within the Dollar 40 -50 range bound rest of the year sans political news shocks.
Read on Reuters the crude oil price slide:
http://www.reuters.com/article/2015/10/26/us-markets-oil-idUSKCN0SK02O20151026
Gold : the push to 1200 was a false breakout and support around 1140 sought to consolidate a softening price.
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
96.990 +0.085 +0.11%
Support 94.213 Resistance 97.993
Forward 1 year - 95.259s.
96.990 +0.085 +0.11%
Support 94.213 Resistance 97.993
Forward 1 year - 95.259s.
EUR/ USD
1.10470 -0.00031 -0.03%
Support 1.09173 Resistance 1.14393
Forward 1 year - 1.14600s.
1.10470 -0.00031 -0.03%
Support 1.09173 Resistance 1.14393
Forward 1 year - 1.14600s.
Crude Oil WTI
43.36 +0.16 +0.37%
Support 42.63 Resistance 48.31
Forward 1 year - 52.07s.
Forward 1 year - 52.07s.
Gold
1167.210 +3.180 +0.27%
Forward 1 year - 1,186.5s.
Pieter Bergli - DeLoren Trust Holdings
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