Forex Market Commentary
USD unwinds as traders look ahead to 2016.
A general quiet and orderly retreat is the theme of the week as traders who bought the rumor decide to unwind on the fact. The US economy is showing signs of slowing down in tandem with Asia and Europe and therefore the requisites for further tentative US Fed Q.E. may become the next call in the 2 months ahead prior to Christmas 2015. Alarming as that may sound the implications for further US Q.E. would be a boon to stock and bond investors looking for higher prices. Notably the Dow closed higher yet again creeping up with growing optimism to close above the 17,000 mark on the back of a growing perception that the hands of the Fed are tied well into Q2 2016 concerning the official outlook over interest rate policy. Whether that is a good thing or not is subject to debate; for many economists share the view that the Fed should have raised the rate at least 50 basis points at the beginning of 2015; the reason being 1. the Fed has no maneuverability room on rate decisions and 2. the dangers of a cooling economy spiraling into a mild bout of asset deflation: learn the lessons of Japan in the 1990's.
USDX closes at the 94 mark and looks to test the support of the 92 very soon as traders are now looking to April 2016 as the next possible date for a rate hike. Net longs will unwind in the weeks ahead.
EUR/ USD closes higher due to short covering of Dollar longs / euro shorts. Market still heavily speculatively net short.
Crude Oil WTI closes high at 49. Peak buying season is just around the corner. Market at evens and longs should be re-entering at this opportunity.
Gold bullion closes above the 1150 mark with a possible test of the 1200 becoming more likely in the weeks ahead as physical seasonal demand picks up with jewellery sales.
Important data:
Equities:
Asia:Nikkei 225 18,438.67 + 297.50 (+1.64%)
SSE Composite 3,183.15 +39.79 (+1.27%)
Hang Seng 22,458.80 + 103.89 (+0.46%)
Europe:
DAX 10,096.60 + 103.53 (+1.04%)
CAC 40 4,701.39 + 25.48 (+0.54%)
USA:Dow 17,084.49 + 33.74 (+0.20%)
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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 below the 50 day m.at 95.5
EUR/ USD above the 50 day m.a at 1.13
Crude Oil WTI above the 50 day m.a. at 45
Gold above 50 day m.a. at 1135
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
94.876 -0.421 -0.54%
Support 93.805 Resistance 95.895
Forward 1 year - 93.270s.
94.876 -0.421 -0.54%
Support 93.805 Resistance 95.895
Forward 1 year - 93.270s.
EUR/USD
1.13580 +0.00887 +0.79%
Support 1.1240 Resistance 1.14640
Forward 1 year - 1.15310s.
1.13580 +0.00887 +0.79%
Support 1.1240 Resistance 1.14640
Forward 1 year - 1.15310s.
Crude Oil WTI
49.51 +0.08 +0.16%
Support 45.02 Resistance 51.96
Forward 1 year - 46.76s.
Forward 1 year - 46.76s.
Gold
1156.060 +13.775 +1.21%
Forward 1 year - 1,139.2s.
Pieter Bergli - DeLoren Trust Holdings
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