Month: June 2009

By Fast Brokers – The USD/JPY is clawing back towards our 2nd tier uptrend line after dipping below for the 4th time in the past month.  However, volume cooled to the downside and bulls came to the defense of the currency pair.  Even though volume didn’t match the potential significance of the movement, this contraction below our 2nd tier was still larger than the previous three.  Therefore, we’ll keep a close eye on volume and price over the next 24 hours, especially since we have several trend lines approaching their respective inflection points.  In the mean time, Japan will release two more data points, including its corporate service price index and the nation’s trade balance.  Analysts are expected Japan’s trade balance to turn into a surplus for the first time since August 2008.  It will be interesting to see how exports fared since Japan’s economy is highly reliant on its manufacturing base.  Regardless, the USD/JPY has been trading at an abnormally low level, and the Yen’s strength is certainly taking its toll on Japan’s economy.

We maintain our negative outlook on the USD/JPY since it is positively correlated with U.S. equities and we spot trouble ahead for the S&P.  If the USD/JPY’s 2nd tier uptrend line doesn’t hold, we could witness a near-term pullback towards our 1st tier uptrend line, which is quite a ways off.  The USD/JPY has been stable for a while now, and any contraction beneath May lows would certainly be noteworthy.  The battle between the uptrend and the downtrend ensues as investors slug it out over a trend.  Therefore, investors should keep a close eye on the ability of the S&P futures to remain relatively close to their highly psychological 900 level.
Present Price: 95.70

Resistances: 95.82, 96.33, 96.90, 97.45, 97.58

Supports: 95.20, 94.45, 93.76, 93.32, 92.69

Psychological: 95, 100

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable declined on climbing volume earlier today, yet has balanced on our 1.6210 support once again.  The GBP/USD is rising back towards our 3rd tier downtrend line as investors hold onto their hope of a global economic stabilization.  We notice considerable strength in the EUR/USD today, indicating investors are supporting a near-term depreciation of the Dollar.  However, as with the EUR/USD, the GBP/USD has an important downtrend line bearing down on price.  Therefore, a near-term downward pressure remains while crude futures and U.S. equities struggle.  Regardless, today’s defense of the GBP/USD and EUR/USD is encouraging since the respective currency pairs are at a critical juncture as far as patterns are concerned.  With the global economic stabilization at a crossroads, investors are waiting to see if the optimistic signs grow into more substantial results, or at least begin to approach pre-crisis levels.  The markets are indicating investor hesitation, represented in the Cable by sideways movement over the past 10 sessions.

Meanwhile, the Pound remains in an advantageous position globally since its economic data continues to outperform.  Britain’s BBA mortgage approvals came in above expectations, supporting the rise in British home prices we’ve seen recently.  Additionally, unemployment is declining and the British manufacturing and service sectors are rebounding.  Hence, even though there have been a couple hiccups in Britain’s economic data, the Pound maintains its comparative strength globally.  Favoritism of the Pound is exemplified by the repeated defense of our 1.6210 support while ignoring near-term weakness in U.S. equities and crude.  Regardless, should U.S. equities stumble into a more protracted decline the Cable would unwillingly follow suit due to their positive correlation.  A weak U.S. economy implies a decrease in demand for British goods and services, causing further troubles for Britain’s economy due to economic coupling.  Since U.S. equities seem overpriced and a global economic recovery isn’t written in stone, we maintain our negative outlook on the GBP/USD trend-wise.  However, even if the Cable should struggle in the near-term, the currency pair’s medium-term uptrend is well intact with several technical and psychological supports in place.

Present Price: 1.6349

Resistances: 1.6371, 1.6412, 1.6498, 1.6574, 1.6624

Supports: 1.6315 1.6263, 1.6210, 1.6151, 1.6102

Psychological: 1.65, 1.60

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The EUR/USD has taken a step up from the inflection point of our 2nd tier uptrend and downtrend lines despite unexciting economic data.  Most of the PMI numbers from the EU today came in at or below analyst expectations while Germany’s consumer confidence surprised to the upside.  The EU’s manufacturing and service sectors are still contracting since global demand has yet to pick up to pre-crisis levels.  Overall, the data over the past 48 hours hasn’t been encouraging, yet the Euro is outperforming across the board.  Therefore, the Euro’s appreciation may be a result of oversold conditions.  It seems the EUR/USD may fluctuate between our 2nd tier uptrend and 3rd tier downtrend lines in a sign that investors aren’t willing to give up yet on the currency pair’s medium-term uptrend.  This is good news for the bulls and the prospect of a global economic recovery since the EUR/USD managed to ignore a pullback in gold and equities while avoiding a technical downturn of its own.  However, the EUR/USD finds itself facing the psychological 1.40 level once again, and our 3rd tier downtrend line could prove to be a worthy foe should it be tested.  Hence, a near-term downtrend force remains despite the encouraging pop taking place.  Investors should keep track of volume to see if the EUR/USD can register volume of 6000+ on a 4-hour up-bar.  High volume to the upside could be an indicator of a changing tide in market sentiment from negative to positive.

Meanwhile, investors will be interested in the housing and durable goods data coming in from the U.S. over the next two trading sessions.  Should the numbers disappoint, the Dollar may experience a rapid near-term appreciation across the board.  Furthermore, markets will be paying close attention to the results of the Fed meeting ending on Wednesday.  Investors will be interested in language from the Fed concerning its quantitative easing program and outlook for inflation.  However, we don’t expect the Fed to make any surprise moves, and will likely state that inflation isn’t a worry at present due to rising unemployment and weak CPI data.  On the other hand, we expect Bernanke & Co. reassure the market that the Fed will unwind its liquidity policies when the economy is stable enough to handle rising interest rates.  However, if the Fed does suggest a rate hike in the near future and/or another form of liquidity constraint, the Dollar would likely appreciate rapidly.

Regardless of the outcome of the Fed meeting and upcoming economic data, we maintain our negative near-term outlook on the EUR/USD trend-wise due to the discouraging economic data from the EU today.  Furthermore, U.S. equities are under selling pressure and are trading below the psychological 900 level.  Additionally, we believe gold me an important downward movement technically during yesterday’s session.  Hence, there remains a negative tone in the market and the EUR/USD should exercise its positive correlation with U.S. equities.  Meanwhile, a medium-term uptrend is at play, meaning there are several reliable defenses on the way down should the EUR/USD reverse course.

Present Price: 1.3989

Resistances: 1.4019, 1.4052, 1.4112, 1.4147, 1.4198

Supports: 1.3947, 1.3847, 1.3807, 1.3759

Psychological: 1.40, 1.35

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By CountingPips.com

U.S. Existing Homes sales increased for the second month in a row in May according to the monthly report produced by the National Association of Realtors. The NAR report showed that existing-home sales including single family homes, co-ops and townhouses increased 2.4 percent in May to a seasonally adjusted annual rate of 4.77 million units. Today’s data follows a revised 2.4 percent gain in April and marks the first consecutive monthly increase since September 2005.

Economic forecasts were predicting an increase of 3.0 percent to a 4.82 million unit sales pace for the month. On an annual basis, May’s existing-homes sales are 3.6 percent lower than the May 2008 sales pace of 4.95 million units. The median sales price for existing homes was $173,000 in May while total housing inventory showed a decrease of 3.5 percent in the month to a total of 3.80 million homes available.

NAR chief economist Lawrence Yun commented on May’s increase saying, “Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates.” Yun furthered, “First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.”

US Dollar mixed in Forex Trading today.

The U.S. dollar has been mixed today in forex trading against the other major currencies since the start of the day at 00:00GMT. The American currency has been trading lower versus most of the major currencies but is paring losses in the morning of the U.S. trading session.

The euro had advanced sharply this morning versus the dollar before cooling off some as the EUR/USD has gained from its 1.3862 opening at 00:00 GMT to trading at 1.3995 in the U.S. trading session at 10:46am EST according to currency data from Oanda.

The British pound has declined against the USD as the GBP/USD has fallen from its 1.6322 opening exchange rate to trading at 1.6289 usd per gbp. The dollar has advanced slightly versus the Japanese yen and trades at 95.34 after opening at the day at the 95.26 exchange rate.

The dollar has gained versus the Canadian loonie as the USD/CAD trades at the exchange rate of 1.1559 after opening the day at 1.1537.

The dollar has declined against the Swiss franc as the USD/CHF trades at 1.0737 after opening at 1.0860 today while the dollar has also been weaker against the Australian dollar and New Zealand dollar. The AUD/USD trades at 0.7860 after a 0.7843 opening while the NZD/USD trades at 0.6328 today after opening at the exchange rate of 0.6279.

EUR/USD Chart – The Euro advancing sharply today versus the US dollar in forex trading and increased for eight straight hourly periods before slowing down.

Source: ForexYard

The US Dollar has made some solid gains this week following news from the World Bank (WB) that economic forecasts for growth in 2009 are showing a 2.9% contraction, as opposed to the previous forecasts of 1.7%. As political turmoil in Iran and the show-down with North Korea continue, investors have felt a slight drop in confidence in markets lately and pulled their investments back into safe-havens such as the USD and JPY, which explains their sudden rise in value yesterday. This move back to less risky investments appears to be continuing today.

Economic News

USD – USD Gains on Return to Risk Aversion

The U.S. Dollar gained against its riskier counterparts Monday after the World Bank issued a poor forecast for 2009. Renewed concerns over the state of the global economic recovery combined with unfolding instability in Iran and North Korea brought back an air of pessimism pushing investors to safer currencies. The Dollar was at $1.3856 per EUR following a 0.5% gain since Friday and at 95.99 Yen down from 96.23.

The World Bank predicted Monday that the global economy will shrink 2.9% in 2009, much deeper than the previous estimate of 1.7%. Doubts were also raised that developing countries will be able to spur global economic recovery as their GDP is expected to grow only 1.2% in 2009. The prospect for world economic recovery is expected to be slow and shallow. The report led to a decline in equity markets and commodities which further helped strengthen the Dollar.

The biggest risk to the Dollar this week is the highly anticipated Federal Open Market Committee (FOMC) meeting that is set to begin today and concludes Wednesday with a policy statement. Existing Home Sales are set to be released at 2:00 GMT; however, most of the focus will still be on the outcome of the FOMC meeting as investors await announcements regarding the Fed’s Treasury buying program and direction of interest rates.

EUR – EUR Loses against Most Currency Pairs

The EUR lost against its major currency pairs Monday as investors returned to risk aversion after a disappointing report from the World Bank. The EUR traded at $1.3856 Monday down from $1.3948 and at 133.05 Yen down from 134.22 Friday.

Additional pressure to the EUR came after European Central Bank (ECB) President Jean-Claude Trichet stated that he has no intention of offering stimuli to the Euro-Zone economy. A slightly stronger than expected rise in the German Ifo Business Climate had a very short and mild effect on the EUR considering Germany’s budget deficit shortfalls made this boost in optimism appear muted.

Despite some interesting economic data set to be released today, including the German Flash Manufacturing PMI and the German Flash Services PMI, both to be released at 7:30 GMT, the markets are awaiting the FOMC meeting statement and ECB’s one-year refinancing operation, both due on Wednesday.

JPY – Political Turmoil Benefits JPY

The Japanese Yen gained against most major currencies Monday as risk aversion returned amid political unrest in Iran and a gloomy report from the World Bank regarding expected global recovery. The report stated that the recession will be deeper than previously forecasted, pushing investors to safer currencies, such as the Dollar and Yen.

The Yen traded at 132.87 per EUR following a 0.9% increase yesterday and was at 95.86 per Dollar, after rising 0.4%. Economic data released earlier showed an improvement in the business sentiment index as well as an improvement in the services sector, providing a brighter outlook for Japan’s economic state. As the world turmoil continues, it is likely the Yen will extend its gains during today’s session as well.

Crude Oil – Crude Oil Drops below $67 a Barrel

The price of Crude Oil dropped more than $2 a barrel yesterday after the World Bank estimated the world economy will contract 2.9% in 2009. A rebounding Dollar also put pressure on Oil as investors moved away from riskier assets and into safe-haven currencies.

Declining expectations of a recovery in U.S summer gasoline demand along with reports of sharp increases in inventories snapped Crude’s recent rally. Gasoline demand usually peaks during the summer in the U.S, but in light of the continuing recession and growing unemployment there are less commuters and fewer vacation plans. Furthermore, since refiners are operating at roughly 86% of capacity, even with a sharp increase in demand, gasoline supplies are unlikely to tighten further. There is expectation that the U.S. gasoline inventories will keep rising.

Although some correction is expected, investors are awaiting the release of the U.S Crude Oil Inventories on Wednesday at 14:30 GMT and the FOMC statement to be released 18:15 GMT.

Technical News

EUR/USD

This pair appears to be consolidating towards the price of 1.3875 with what appears to be an impending volatile movement. The MACD on the hourly and 4-hour charts indicate bullish crosses, which support the price moving towards the convergence point and the Bollinger Bands on the hourly chart appear to be tightening, which indicates imminent volatility. Waiting for the breach and then riding the wave may be a wise choice today.

GBP/USD

This pair may be poised for an upward movement today. The MACD on the hourly chart is showing an imminent bullish cross. The Slow Stochastic on the 4-hour chart also shows a fresh bullish cross that has just formed. These two together support the notion of an impending upward movement. Going long may be a wise choice today.

USD/JPY

This pair’s recent downward movement has pushed many of the indicators on all charts into the over-sold territory, as well as generating a number of bullish crosses. The pair is currently testing the solid support level of 95.30. If a breach occurs, the downward movement may continue despite technical indicators. However, if the price fails to breach, there may likely be an upward correction throughout the day.

USD/CHF

This appear has been consolidating over the past few days towards the price level of 1.0850. As the MACD on the hourly chart shows a clear bearish cross, and the Bollinger Bands are tightening on the hourly chart, this pair could experience a sharp volatile movement after the impending downward move. Waiting for the breach and then riding the wave may be a solid strategy.

The Wild Card – EUR/NOK

The sustained upward movement for this pair has pushed many indicators into the over-bought territory and created bearish crosses across the board. However, the Parabolic SAR on all charts is still signaling for forex traders to buy. Without a clear downward correction today, this pair will likely continue upwards as the NOK loses value to the EUR. Today will either be the day this pair reverses, or continues to climb to record highs. Choosing the right one will earn big bucks today.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

After yesterdays relatively calm trading session, today the economic calendar is filled with high impact data that threatens to sow large volatility into the market. From the wide range of news reports, ForexYard advises its traders to pay special attention to the U.S Existing Home Sales and Europe Flash Manufacturing PMI.

8:00 GMT: European Flash Manufacturing PMI

· This indicator reflects the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry.

· This indicator is very important as it is likely to impact the EUR

· The survey expects to show a significant improvement from the previous month, thereby boosting hopes that the rate of decline in the Euro-Zone economy is now moderating.

· The reduced contraction in manufacturing activity in June will suggest that the sector is starting to benefit from the massive de-stocking that has taken place.

14:00 GMT: U.S Existing Home Sales

· This indicator reflects the annualized number of residential buildings that were sold during the previous month, excluding new construction.

· The release of the survey typically creates a volatile trading environment.

· A survey with a result greater than the forecasted value of 4.82 could send the EUR/USD below the 1.3750 mark.

Tips on Crude Oil

· Oil dropped off nearly 4% yesterday as renewed worries over the uncertain outlook for major economies sparked a sell-off across global equity markets.

· A rebounding Dollar also put pressure on Oil as investors moved away from riskier assets and into safe-haven currencies.

· Oil will probably range between $65 and $70 for the next few days.

Norway appears to be an active market player for the forex world lately. With a recent discovery of a sizeable oil well in the northern Norwegian Sea, the price of the black gold remains a serious factor for the NOK. As the USD gains strength from recent risk aversion, the price of Crude Oil has entered a slump which has weighed heavily on Norway’s economy, but the discovery will no doubt help future development and growth for their market share.

Also adversely affecting the NOK’s value is the recent decrease in Norway’s interest rates to 1.25%, a move which was expected by most market analysts, but carries the expectant impact of weakening the currency that was needed to help boost exports.

In Sweden, the Riksbank announced on June 10th that it will borrow up to 3 billion EUR to shore up its financial backing. This comes as no surprise since many banks are still under threat of losing substantial capital from the prospect of Latvia devaluing its currency, the Lat, due to the recent crisis in the Baltic States.

Since many of Sweden’s banks receive the bulk of their funding in foreign currencies, the banks will need to sufficiently back up their foreign reserves. This EUR-borrowing operation is intended to assist in this backing, but works as a way of devaluing the SEK, which many forex traders can now see quite clearly.

USD/SEK 1-Hour Chart

• The above chart is the USD/SEK hourly chart by ForexYard.

• The indicators used are the Bollinger Bands, RSI, and MACD.

• Point 1: The price has just entered the over-bought territory on the RSI, signaling a downward movement may be in the making.

• Point 2: The MACD shows multiple bearish crosses which support the notion of a downward movement.

• Point 3: The Bollinger Bands on the chart appear to be tightening as foreshadowing of an impending sharp, volatile movement.

• Conclusion: This pair is either going to experience a downward movement before a volatile jump (direction is unclear for the jump), or the jump is going to be downward if the value of the USD takes a hit today. Either way, a downward movement is imminent; the size of that move is what is undetermined at this point.

This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world’s foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter’s FREE 60-page Deflation Survival Guide now.

The following article was adapted from Robert Prechter’s 2002 New York Times, Wall Street Journal and Amazon best-seller, Conquer the Crash – You Can Survive and Prosper in a Deflationary Depression.

By Robert Prechter, CMT

Seventy years of nearly continuous inflation have made most people utterly confident of its permanence. If the majority of economists have any monetary fear at all, it is fear of inflation, which is the opposite of deflation.

As for the very idea of deflation, one economist a few years ago told a national newspaper that deflation had a “1 in 10,000” chance of occurring. The Chairman of Carnegie Mellon’s business school calls the notion of deflation “utter nonsense.” A professor of economics at Pepperdine University states flatly, “Rising stock prices will inevitably lead to rising prices in the rest of the economy.” The publication of an economic think-tank insists, “Anyone who asserts that deflation is imminent or already underway ignores the rationale for fiat currency — that is, to facilitate the manipulation of economic activity.” A financial writer explains, “Deflation…is totally a function of the Federal Reserve’s management of monetary policy. It has nothing to do with the business cycle, productivity, taxes, booms and busts or anything else.” Concurring, an adviser writes in a national magazine, “U.S. deflation would be simple to stop today. The Federal Reserve could just print more money, ending the price slide in its tracks.” Yet another sneers, “Get real,” and likens anyone concerned about deflation to “small children.” One maverick economist whose model accommodates deflation and who actually expects a period of deflation is nevertheless convinced that it will be a “good deflation” and “nothing to fear.” On financial television, another analyst (who apparently defines deflation as falling prices) quips, “Don’t worry about deflation. All it does is pad profits.” A banker calls any episode of falling oil prices “a positive catalyst [that] will put more money in consumers’ pockets. It will benefit companies that are powered by energy and oil, and it will benefit the overall economy.” Others excitedly welcome recently falling commodity prices as an economic stimulus “equivalent to a massive tax cut.” A national business magazine guarantees, “That’s not deflation ahead, just slower inflation. Put your deflation worries away.” The senior economist with Deutsche Bank in New York estimates, “The chance of deflation is at most one in 50” (apparently up from the 1 in 10,000 of a couple of years ago). The President of the San Francisco Fed says, “The idea that we are launching into a prolonged period of declining prices I don’t think has substance.” A former government economist jokes that deflation is “57th on my list of worries, right after the 56th — fear of being eaten by piranhas.” These comments about deflation represent entrenched professional opinion.

As you can see, anyone challenging virtually the entire army of financial and economic thinkers, from academic to professional, from liberal to conservative, from Keynesian socialist to Objectivist free-market, from Monetarist technocratic even to many vocal proponents of the Austrian school, must respond to their belief that inflation is virtually inevitable and deflation impossible.

……….

For more on deflation, download Prechter’s FREE 60-page Deflation Survival Guide or browse various deflation topics like those below at www.elliottwave.com/deflation.

• Is deflation a precursor to depression?
• The case for deflation
• US deflation risk
• Can the Fed stop deflation?
• And much more in Prechter’s FREE Deflation Survival Guide.

By Fast Brokers – The collision between our 2nd tier trend lines is approaching today, indicating volatility could increase over the next few trading sessions.  Looking off towards the Dollar’s correlations, we notice gold made another decisive move south today once reaching an inflection point of its own.  Meanwhile, crude and the S&P futures are flirting with important trend lines.  We believe the Dollar could take its cue from gold and exercise their negative correlation, implying a decline in the EUR/USD.  As we mentioned in our previous analysis, the Dollar is at a T-Junction with the Euro, meaning we should see a trend statement soon.  That being said, the mentality seems to be shifting across the board.  From overbought equities to international tensions to expensive crude, the momentum appears to be shifting to the downside.  Markets were relatively quiet last week while patterns consolidated, reflecting investor indecisiveness.  However, it seems the FX markets could awaken as trend lines reach their respective inflection points.

If the EUR/USD should decide to make a game-changing move to the south as we anticipate, the currency pair could experience a swift pullback towards our 1st tier uptrend line and the 1.35-1.36 zone.  We can’t forget the EUR/USD previously broke below the neckline (3rd tier uptrend line) of our head and shoulders patter and the retest seems to have failed.  Large volume sessions have been dominated by the sell-side and volume is on the decline again.  Hence, investors should keep a close eye out for any large action to the downside, particularly any with the currency pair trading near June lows.  As for the upside, investors should look for a pop above 1.40 and our 3rd tier downtrend line on large volume before feeling comfortable.

The Euro continues to exhibit relative weakness with the EUR/GBP breaking below some important uptrend lines.  The weakness in the Euro comes despite a slightly better than expected German Ifo Business Climate number.  The data point remains well beneath 2007 highs, signifying it’s still too early to tell whether we’re experiencing a head-fake via improvement in economic data, or whether we’re witnessing a true technical bottom.  Therefore, despite the positivity inherent in today’s release, the EU region remains in a comparatively mixed state regarding its economic condition.  The headlines will remain relatively quiet on the economic data news front until the EU releases a slew of manufacturing and services PMI data points on Tuesday.  We maintain our negative outlook trend-wise for the near-term due to the aforementioned analysis.  However, we keep in mind that there is a medium-term uptrend in play, and it will take several fundamental movements to the downside to alter the currency pair’s ultimate path upward.

Present Price: 1.3855

Resistances: 1.3894, 1.3954, 1.4019, 1.4052, 1.4112

Supports: 1.3847, 1.3807, 1.3759, 1.3724, 1.3668

Psychological: 1.40, 1.35

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is giving into our 3rd tier downtrend line after last week’s push was blocked by our trend line and the psychological 1.65 level on declining volume.  Despite the GBP/USD’s willingness to head higher, the currency pair is giving into its positive correlation with gold and U.S. equities.  Market sentiment is turning sour due to a combination of international tension (Iran/N.Korea) and the World Bank reducing its outlook for global economic growth from -1.7% to -2.9%.  The possibility remains that present market stability is not a true bottom since we have not seen a complete recovery in economic data globally.  The Cable is also dealing with a struggling Euro as the EU currency depreciates strongly across the board.  Meanwhile, the Pound maintains its relative strength due to the fact that Britain’s economic data has been the most encouraging globally next to China’s.  The Cable continues to be resilient after last week’s CCC number reiterated the encouraging improvement taking place in Britain’s employment market.  Regardless, U.S. equities are treading water and the Cable’s positive correlation with the S&P should shine through at the end of the day.

Speaking of the S&P, the indicie’s futures are doing what they can to avoid a retest of the highly psychological 900 level.  Any significant pullback in the S&P futures would likely result in a corresponding downturn in the Cable.  In other correlation developments, gold has made an aggressive move to the downside after a period of tight consolidation.  Gold has had a negative correlation with the Dollar, implying the greenback could experience a swift appreciation soon.  The Cable’s inability to tackle previous June highs and the psychological 1.65 level is certainly discouraging.  We’ve noticed some interesting volume to the downside while volume tailed off during important moments of resistance.  Hence, we believe near-term momentum remains to the downside in the GBP/USD.  Fortunately for the bulls, the currency pair has constructed some nice supports along the way due to the Pound’s comparative strength globally.  Therefore, should the Cable head south, the currency pair has close defenses at our 3rd tier uptrend line and June 18 lows.  As for the upside, the key for the GBP/USD will be clearing our 3rd tier downtrend line and previous June highs on rising volume.   Should this happen, we could witness a nice near-term run.

Present Price: 1.6434

Resistances: 1.6498, 1.6574, 1.6624, 1.6712, 1.6851

Supports: 1.6412, 1.6371, 1.6315 1.6210, 1.6141

Psychological: 1.65, 1.60

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.