Forex Market Commentary
USD weakness as NFP comes in as really, really bad.
The week ends on a negative note for the USD but overall cheer for US equities after the worst NFP data for 2015. Gold gains on the concerns that the US economy may start to stutter. Equities enjoy a surge to the relief that cheap money can go on just a little bit longer. Only a mere 142K jobs was added to the American Non-Farm payrolls,which was way below traders expectation of a 200k figure. This figure raises a whole bunch of red flags particularly as its supposed to be Q3 data and the peak of the annual economy with the summer drives, vacations and consumer spending. Not only that; the report also came out with a downward revision to the last month’s NFP, which was originally at +173k jobs added but is now revised downwards to +136 as corrected. Unemployment stays at 5.1%. This figure now throws into doubt any Fed action on interest rates and that is feeding off into a Dollar sell-off and flight to gold bullion for the weekend at least.
Within a macroeconomic sense the 4 main pillars of this study are - The USD, by virtue of being the 'international' currency of global choice, the 'Euro' being the second most trade-able currency, crude oil as a barometer of economic activity and gold as an economic store of value. These 4 pillars find interpretation though the daily price action in global equities and fixed income where investors anticipate corporate earnings and forward levels of interest rate to give us a broad sweep and understanding of the markets and how they work as a whole.
The USD remains on the uptrend in the long term against a basket of major currencies but more corrections can be seen in the short term in the weeks ahead in the light of some terrible NFP data to reflect a pause in the growth of the US economy. Overall traders may be inclined to wait till January 2016 before another major Dollar push to get the Xmas season out of the way and allow the Fed more time to mull over conflicting data on the economy. EUR/ USD holds at 1.12 in spite of a ECB Q.E program designed to pump liquidity into the Euro currency but overall we expect the Euro to be back peddling to the 1.08 mark given the divergence between the US and Euro zone economies. Crude Oil holds well at 45 for the time being although inventory pile ups can push it back to 40 by the end of this year unless geo-politics comes into play. crude oil should be back peddling to the 40 mark at least untill Q1 2016 where crude purchases should rise as output declines to restore a equilibrium in a market which is currently supply top side. Gold consolidates above the 1130 and may bode well with Xmas sales being the peak demand for physical gold. However there needs to be a consistent close above the 1150 to mount any serious top-side challenge to the 1200 mark. Given the receding effects of the China crisis a climb above the 1200 looks hard to achieve.
Important data:
Equities:
Asia:Nikkei 225 17,725.13 + 2.71 (+ 0.02%)
SSE Composite 3,052.78 + 14.64 (+0.48%)
Hang Seng 21,506.09 + 659.79 (+3.17%)
Europe:
DAX 9,553.07 + 43.82 (+0.46%)
CAC 40 4,458.88 + 32.34 (+0.73%)
USA:Dow 16,472.37 +200.36 (1.23%)
-----------------------
Fixed Income Markets:
US Federal Reserve - +0.25%
ECB Base rate 0.050 %
Chinese interest rate PBC China 4.60 %
Japanese interest rate (BoJ) 0.10 %
Important moving averages:
USDX at the 50 day m.at 96
EUR/ USD below day m.a at 1.12
Crude Oil WTI at 50 day m.a. at 45
Gold above 50 day m.a. at 1130
US - 30 DAY FED FUND above 50 day m.a. at 99.85
US - 10 YEAR T-NOTES above 50 day m.a at 129.29
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
95.910 -0.191 -0.25%
Support 95.805 Resistance 96.895
Forward 1 year - 96.270s.
95.910 -0.191 -0.25%
Support 95.805 Resistance 96.895
Forward 1 year - 96.270s.
EUR/USD
1.120890 +0.001000 +0.09%
Support 1.11140 Resistance 1.12640
Forward 1 year - 1.14310s.
1.120890 +0.001000 +0.09%
Support 1.11140 Resistance 1.12640
Forward 1 year - 1.14310s.
Crude Oil WTI
45.62 +0.88 +1.95%
Support 43.02 Resistance 47.96
Forward 1 year - 44.76s.
Forward 1 year - 44.76s.
Gold
1138.700 +25.450 +2.29%
Forward 1 year - 1,133.2s.
Pieter Bergli - DeLoren Trust Holdings
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