Forex Market Commentary
US bonds markets are bid as traders doubt rate hike.
In the fixed income markets both the 30 day Fed Fund and the 10 year Note suggest a flattening forward yield curve as sentiment on the US economy becomes tempered. 30 day Fed Fund trading at 99.85 is firm bid above the 50 day MA and the US 10 yr Note is trading off highs at 129 suggesting that a
zero rates policy could continue well into 2016. Bond markets are bid when inflation benign and sentiments dovish on policy maker's key rate decisions. This sentiment thus feeds off into the equities and forex and commodities markets.
1. The Dow closes in positive territory again at 16,790.19 and is now consolidating firmly but still closely shy of the 50 day MA 16800. further consolidation is likely to spell the end of a collapse as traders look ahead keenly to a fresh challenge of the peak at the 18,300 region of last Feb - May 15.
2. USDX is slipping closely to the 92 mark as traders see soft rates till Q1 next 2016.
3. In the commodities markets crude oil gains on soft dollar with WTI gaining ground to the 49 mark in a rapid ascent and gold is trying to retrace from the 1100 mark since its fall from 1300 back in Jan 15.
A very important piece of reporting comes in at Reuters describing how the banks have stepped in to give fresh credit to the beleaguered commodity houses. traders pop up your ears because generally commodities prices are inverse to US Dollar in periods of benign US inflation and so why would the banks issue such fresh credit unless they felt that the US Dollar was going to slide over the next 6 months? Banks never extended credit to Bear Stearns and Lehman's and so readers learn to read in between the lines; somethings afoot! This is a game changer event taking shape in equities and commodities to forex.
Read on Reuters here:
http://www.reuters.com/article/2015/10/06/us-commodity-traders-idUSKCN0S01WK20151006
This all goes into play with the general setting that interest rate smay official extend to zero officially way into Q1 or Q2 2016 and that the USDx should come under severe threat beyond the 92 mark considering USD across the board is considered to be overbought.
Cheaper money is dampening the dollar and lifting the Dow given that most the global market equities has gone through the worst. Read on Bloomberg once again the Goldman Sachs expectation of a hold on interest rate policy:
http://www.bloomberg.com/news/articles/2015-10-06/goldman-sachs-says-fed-may-delay-rate-increase-well-into-2016
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
95.372 -0.091 -0.12%
Support 95.805 Resistance 96.895
Forward 1 year - 96.270s.
95.372 -0.091 -0.12%
Support 95.805 Resistance 96.895
Forward 1 year - 96.270s.
EUR/USD
1.126695 +0.007670 +0.69%
Support 1.11140 Resistance 1.12640
Forward 1 year - 1.14310s.
1.126695 +0.007670 +0.69%
Support 1.11140 Resistance 1.12640
Forward 1 year - 1.14310s.
Crude Oil WTI
49.14 +0.61 +1.32%
Support 43.02 Resistance 47.96
Forward 1 year - 44.76s.
Forward 1 year - 44.76s.
Gold
1148.450 +11.375 +1.00%
Forward 1 year - 1,133.2s.
Pieter Bergli - DeLoren Trust Holdings
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