Forex Market Commentary
The US NFP was very strong.
November NFP stood at 137k previous 180k forecast and 271k actual. Large Dollar spec positions accumulated within 15mins and the EUR/ USD dropped like a stone from 1.0840 to 1.0706. Commercials are still on the bid but the ante is very much a foregone conclusion; were going to the 1.05 drip by drip and not thru a full scale assault. Its going to be pretty tough but for the moment given that 25 basis points has been accounted for on rates then 1.07 is a fair reflection of where the EUR/ USD needs to stand. With the year running out one doesn't expect the full scale assault to smash through the 1.05 large barrier support towards parity. instead we can see a grinding action of bear shoving bull 200-300 pips from 1.06 - 1.03. That is unless a further 25 basis points takes US rates further up the scale. The USDX also rose dramatically to the 99 level just shy of the magic 100 whilst gold sunk below the 1100 mark. Manufacturing USA is really hurting now and a slow down on earnings will reflect next year as the Dow stalls on its upward march. Add to this the crude oil price equilibrium being achieved then Dollar cant rise too much more in spurts and Euro cannot fall too dramatically.
It has been a year now we have been discussing the currency markets from a global macro-economic point of view. We have monitored the movement of the USDX as a value of the USD against a basket of select major currencies, we have tracked the EUR/ USD as the major pair, we have watched crude oil as the chief commodity and gold as a store of value against inflation. These Four macro-economic indicators are taken in union in understanding the myriad complexity of the world economy. For the next year we will add on to our macro-economic study some technical aspects of trading the above mentioned four elements; chief of which will be the use of candlestick charts as an interpretation on past prices i distinguishing between markets which sideways track or move up and down in trends. For the position trader of course the old adage comes to the fore: the trend is your friend and day charts are the chief perspective for planning; and for the swing trader, channel trading on intra-day 15min charts becomes the chief arena for modus operandi. Long or swing; neither have merit nor demerit; it's merely a choice reflecting the lifestyle of the trader.
Important data:
Equities:
Asia:
Nikkei 225 19,265.60 + 149.19 (0.78%)
SSE Composite 3,590.03 + 67.21 (1.91%)
Hang Seng 22,867.33 - 83.71 (0.80%)
Europe:
DAX 10,986.02 + 98.28 (0.90%)
CAC 40 4,982.04 + 2.00 (0.04%)
USA:
Dow 17910.33 +46.90 (0.26%)
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 above the 50 day m.at 96
EUR/ USD below the 50 day m.a at 1.125
Crude Oil WTI below the 50 day m.a. at 46.
Gold low the 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 129.30
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
99.199 +0.051 +0.07%
Support 97.848 Resistance 100
Forward 1 year - 101.67s.
99.199 +0.051 +0.07%
Support 97.848 Resistance 100
Forward 1 year - 101.67s.
EUR/ USD
1.073850 -0.000715 -0.07%
Support 1.06107 Resistance 1.09987
Forward 1 year - 1.0990s.
1.073850 -0.000715 -0.07%
Support 1.06107 Resistance 1.09987
Forward 1 year - 1.0990s.
Crude Oil WTI
44.55 +0.26 +0.58%
Support 43.30 Resistance 46.40
Forward 1 year - 47.27s.
Forward 1 year - 47.27s.
Gold
1089.765 -0.045 -0.00%
Forward 1 year - 1,101.0s.
Pieter Bergli - DeLoren Trust Holdings
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