Global FX Economy 12th Nov 2015. Bullion slides again. Markets, news and analysis.

Forex Market Commentary  

Mixed signals everywhere in the US economy.

Is the US economy at the peak of it's economic upswing? Yes; the economy is at technical full employment and headline inflation at the ceiling limit of tolerance. But conflicting signs are appearing which demonstrate that the US economy may be heading for a down turn as one after one US corporates start to miss their earnings targets. What caught my eye in particular was the Macys Inc. earnings which was really awful and sent the stock down 13% in today's session. November earnings are supposed to reflect the high end of Q3 sales with the glorious ending of summer spending. That didn't happen. Even the nice weather did not encourage consumers to go out there and spend even on gardening tools and equipment. This is a worrying mark. However, Chinese Alibaba had a very good reporting in contrast, but their sales are more international in comparison to Macy's Inc. Equities traders should be very nervous; the portents are not good for the Dow if retailers are showing weakness.

The US is not all that. We may have missed a golden opportunity to have US rates over 50 basis points by now. Yesterday the German council of wise men issued a statement contrary to the ECB chief Draghi hinting that they do not want to see more QE and highlighted the dangers of negative interest rates. The US Fed would be wise to hear these words. Without any wiggle room the US Fed may have trapped itself in a corner if the US economy starts to slow down. We already know that the energy sector is floored and manufacturing wobbling on it's knees due to the strength of the US Dollar. Should retail sales start showing some red flags then the US fed would be really caught in a bind; hence the need to listen to the German economic council and their worries over deflation in Europe. of the four large economic blocks: USA, EU, China and Japan; only China has sufficient room to implement quantitative easing should the need arise. China had its scare in Q2. We all knew that this was coming and the steam needed to be let out of the pressure cooker sooner than later; but to the credit of the PBOC there is enough room for their central bank to move from it's current rate of 4.35%. Although the Shenzen composite has recovered now from it's losses and stands at 3,650, China would not want to see a slow down in the US or Europe either or it's export sector could face loss of income. With moderate commodity prices China has done very well to calm their equities markets and avert a monetary disaster successfully for the short term but needs USA and Europe to grow. deflation in Europe and a slow down in USA would be a perilous prospect for the global economy.

EUR/ USD lacks the conviction to test the 1.05 with some traders contemplating a push back up to 1.09 should US retail earnings come out worse than expected. Commercial banks are big buyers in the 1.06 and the push down really depends on how many large specs are willing to take a position short at 1.07? Not many at all! Small traders look for longs in the 1.06 area expecting a bounce to high 1.07. Conflicting US data does not support a big push down. USDX looks to slide to 97; the march to 100 is aborted for now. Crude oil slips to 43 and gold loses 5 points more confirming a slide to 1050 as the next short target.


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 
98.826     -0.379 -0.49% 
Support 97.848     Resistance 101
Forward 1 year - 101.67s.

EUR/ USD
1.074710     -0.001015 -0.09%
Support   1.06107        Resistance 1.09987
Forward 1 year - 1.0990s.  

Crude Oil  WTI

43.50     -0.42 -0.95%

Support 42.30 Resistance 46.40
Forward 1 year - 47.27s.

Gold

1086.375     -5.975 -0.55%

Support  1,080.5    Resistance 1,100.7
Forward 1 year  - 1,101.0s.

Pieter Bergli - DeLoren Trust Holdings

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