Forex Market Commentary For FX traders
this week was largely about a hiccup on the USD but in coming to terms with what happened FX traders need to understand that economic data comes out in time lags and what reactions occur in the present do not actually necessarily define the current economic conditions.
The U.S. economy showed us this week data for the Spring season however we are in full swing within the Summer season which has totally different dynamics than the Spring economy.
Traders got spooked by poor data and reacted in a US Dollar sell off with a knee-jerk reaction. The Commerce Department said on Friday that the GDP grew at 1.2% annual rate in the April-June quarter and that was way below the 2.6% GDP growth rate that economists had expected. Day traders leapt on this information and shorted USD fast. However, the perceived sluggishness maybe a false reaction to actuality. Nevertheless traders move in blocks and groups and when they move down they move down in union. Thus across the board against the Euro, GBP, CHF and YEN the USD lost ground this week. However interest rate fundamentals need to be considered as all 4 counter-parties mentioned are at cycles in their economies heading for a down-turn unlike the USA which is expanding. with the Bank of Japan, England. Switzerland and the ECB all looking to cut interest rates the downward pressure on the USD is a temporary hiatus. Low inflation, monetary and fiscal easing are the key notes versus the US fed watch over tightening the market place for money.
Two keynotes struck my attention this week. Firstly the SP500 slowly but surely grinding towards the 2200 mark. That's a big number demonstrating the quiet underlying strength of the US economy. Secondly, crude oil WTI cash market plunging from 45 to 41 in a week. Moreover 3 weeks ago we were looking at 51 Dollars. Overall the concern once again is China. when there are 70 tanker vessels sitting outside the port of Qingdao in a queue and only 2 vessels coming in to offload per day that there tells you the entire story: SATURATION GLUT.
Watch this week for GBP testing the 1.34, the Euro the 1.13, the Yen 100 and CHF 95. crude oil should find strong support at 40 and a sideways grinding next week as the market is now oversold.
Look out for your key reversal patterns on your daily candlestick charts for any solid confirmation of a reversal and new trend.
The U.S. economy showed us this week data for the Spring season however we are in full swing within the Summer season which has totally different dynamics than the Spring economy.
Traders got spooked by poor data and reacted in a US Dollar sell off with a knee-jerk reaction. The Commerce Department said on Friday that the GDP grew at 1.2% annual rate in the April-June quarter and that was way below the 2.6% GDP growth rate that economists had expected. Day traders leapt on this information and shorted USD fast. However, the perceived sluggishness maybe a false reaction to actuality. Nevertheless traders move in blocks and groups and when they move down they move down in union. Thus across the board against the Euro, GBP, CHF and YEN the USD lost ground this week. However interest rate fundamentals need to be considered as all 4 counter-parties mentioned are at cycles in their economies heading for a down-turn unlike the USA which is expanding. with the Bank of Japan, England. Switzerland and the ECB all looking to cut interest rates the downward pressure on the USD is a temporary hiatus. Low inflation, monetary and fiscal easing are the key notes versus the US fed watch over tightening the market place for money.
Two keynotes struck my attention this week. Firstly the SP500 slowly but surely grinding towards the 2200 mark. That's a big number demonstrating the quiet underlying strength of the US economy. Secondly, crude oil WTI cash market plunging from 45 to 41 in a week. Moreover 3 weeks ago we were looking at 51 Dollars. Overall the concern once again is China. when there are 70 tanker vessels sitting outside the port of Qingdao in a queue and only 2 vessels coming in to offload per day that there tells you the entire story: SATURATION GLUT.
Watch this week for GBP testing the 1.34, the Euro the 1.13, the Yen 100 and CHF 95. crude oil should find strong support at 40 and a sideways grinding next week as the market is now oversold.
Look out for your key reversal patterns on your daily candlestick charts for any solid confirmation of a reversal and new trend.
Please turn to Bloomberg for global bond yields:
http://www.bloomberg.com/markets/rates-bonds
USDX 95.579 -1.080 -1.39%
EUR/USD 1.117300 +0.009380 +0.85%
GBP/USD 1.32290 +0.00366 +0.28%
USD/JPY 102.0850 -1.5610 -1.51%
USD/CHF 0.969865 -0.009415 -0.96%
10 yr US T-Notes 133.109375 +0.546875 +0.41%
Crude Oil 41.46 +0.32 +0.78%
Gold 1351.005 +14.260 +1.07%
SP500 2173.60 +3.54 +0.16%
Dow 18432.24 -24.11 -0.13%
1. Always use your own better judgment as an FX trader and try to build a picture of trade logic combining both technical and fundamental understanding of the Forex markets.
2. Use Day Charts Japanese Candlesticks as the preferred interpretation of daily price action.
3. Use FX trading as 50% of your trading plans and balance with safe conservative wealth building plans. Please read:
Consistent Wealth Building Program
Proper Planning Prevents Poor Performance.
Do not rush but plan out your Forex trading career to consistently become profitable and successful.
Pieter Bergli - Trader X16
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