Forex Market Commentary For FX traders
The main talking this week for FX traders has to be the strength of the US Dollar. All too fast traders started to short the US Dollar without grasping the fundamental understanding of economics 101. In the long run investors pile into low inflationary assets bearing currencies. So far we have only two economies in the entire G20 who could fit the description for global investors to obtain higher yields coupled with lower inflation: that is USA and the UK. This week the Dow surged past the 18,500 easily with SP 500 marching relentlessly and just shy of the all important psychological barrier 2200. The week before we saw how the world's largest economy saw the smallest amount of Americans filing for unemployment benefits at a 43-year low. with a post Brexit UK and Europe global fund managers have no alternative but to pile into US equities before the US Dollar appreciates any further. With the summer months yet to be accounted US economic growth could push the US Dollar even higher against other major currencies. In the wake of this face gold continues to slip after fury of Brexit has started to die down and crude oil has sunk to the 44 per barrel mark.
With currencies the EUR/ USD has now reached the 1.09 level with a push to the 1.05 an increasing likelihood. The correlation between GBP/USD AND EUR/USD should grow tighter as the GBP comes under further pressure with further economic uncertainty over the marriage to the EU. Only the Yen is able to appreciate versus the Dollar. But the Japanese government is looking at all ways to stimulate inflation in the Japanese economy since it appears that the recent bouts of quantitative easing has failed in Japan.
Current trade ideas of hedge funds include:
Short trades on EUR/USD to challenge the 1.0458 (16/03/2015 low) with fresh shorts initiated at every spike to the 1.11. Euro bond yields expected to grow more negative.
Short trades on GBP/USD at any spike to the 1.35 with a view to challenge the support at 1.2798 (06/07/2016 low). UK bond yields set to come down.
Short term bullish bias USD/JPY long term bearish bias to the end of this year. USD/JPY is in a peculiar situation and though there has been a recent surge to 106 but traders feel that higher spikes could lead to further short entry points as the government of japan would like to see the currency stable at around the 96 mark with support at 93.79 (13/06/2013 low).
Long USD/CHF because the deteriorating Swiss economy is leading to bond yield divergence as the outlook looks negative for the Swiss markets. Momentum is bullish. We are looking at a challenge of 0.9894 (12/07/2016
high) very soon.
Overall bullish USD for the remainder of this year except vs YEN and negative outlook on commodities that are quoted in USD.
With currencies the EUR/ USD has now reached the 1.09 level with a push to the 1.05 an increasing likelihood. The correlation between GBP/USD AND EUR/USD should grow tighter as the GBP comes under further pressure with further economic uncertainty over the marriage to the EU. Only the Yen is able to appreciate versus the Dollar. But the Japanese government is looking at all ways to stimulate inflation in the Japanese economy since it appears that the recent bouts of quantitative easing has failed in Japan.
Current trade ideas of hedge funds include:
Short trades on EUR/USD to challenge the 1.0458 (16/03/2015 low) with fresh shorts initiated at every spike to the 1.11. Euro bond yields expected to grow more negative.
Short trades on GBP/USD at any spike to the 1.35 with a view to challenge the support at 1.2798 (06/07/2016 low). UK bond yields set to come down.
Short term bullish bias USD/JPY long term bearish bias to the end of this year. USD/JPY is in a peculiar situation and though there has been a recent surge to 106 but traders feel that higher spikes could lead to further short entry points as the government of japan would like to see the currency stable at around the 96 mark with support at 93.79 (13/06/2013 low).
Long USD/CHF because the deteriorating Swiss economy is leading to bond yield divergence as the outlook looks negative for the Swiss markets. Momentum is bullish. We are looking at a challenge of 0.9894 (12/07/2016
high) very soon.
Overall bullish USD for the remainder of this year except vs YEN and negative outlook on commodities that are quoted in USD.
Please turn to Bloomberg for global bond yields:
http://www.bloomberg.com/markets/rates-bonds
USDX 97.339 +0.373 +0.48%
EUR/USD 1.097800 -0.004705 -0.43%
GBP/USD 1.310875 -0.011360 -0.86%
USD/JPY 106.1200 +0.2555 +0.24%
USD/CHF 0.986955 +0.001785 +0.18%
10 yr US T-Notes 132.140625 -0.093750 -0.07%
Crude Oil 44.27 -0.48 -1.08%
Gold 1322.245 -4.630 -0.35%
SP500 2175.03 +9.86 +0.46%
Dow 18570.85 +53.62 +0.29%
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 Candesticks 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
http://www.bloomberg.com/markets/rates-bonds
USDX 97.339 +0.373 +0.48%
EUR/USD 1.097800 -0.004705 -0.43%
GBP/USD 1.310875 -0.011360 -0.86%
USD/JPY 106.1200 +0.2555 +0.24%
USD/CHF 0.986955 +0.001785 +0.18%
10 yr US T-Notes 132.140625 -0.093750 -0.07%
Crude Oil 44.27 -0.48 -1.08%
Gold 1322.245 -4.630 -0.35%
SP500 2175.03 +9.86 +0.46%
Dow 18570.85 +53.62 +0.29%
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 Candesticks 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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