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DOLLAR: Apparently seeing a host of international equity markets forging gains overnight has dented the US Dollar from a flight to quality perspective. Critical support in the Dollar is seen at 82.42 this morning, but it is possible that the Dollar will be at least temporarily undermined by the decline in the US Leading Indicators report this morning but recently the currency markets have not paid that much attention to the regularly scheduled US data flow. The October 14th Commitment of Traders with Options report for US Dollar showed the Non-commercial position to be net long 25,349 contracts, with the Non-reportable position net long 811 contracts and that made the “combined” spec and fund position net long 26,160 contracts as of early last week. On the other hand, with the US Dollar climbing another 2 points in the wake of the COT report mark off, we suspect that the magnitude of the net spec long positioning is understated into the opening today. Given a short period of financial sector calm, that could open up the door for a temporary corrective slide in the Dollar. Initial support levels into the opening this morning are pegged at 82.42, 82.31 and then again at 82.21.
EURO: While the Euro seems to have a slightly positive bias in the early going today, the market still looks somewhat range bound. In fact, if the market were poised for a distinct run up today, we suspect that the slightly hotter than expected German PPI report released overnight would have provided the Euro with the capacity to rise above close-in resistance of 135.12 in the December Euro contract. The October 14th Commitment of Traders with Options report for Euro showed the Non-commercial position to be net short 34,732 contracts, with the Non-reportable position also net short 6,577 contracts and that made the “combined” spec and fund position net short 41,309 contracts as of early last week. Furthermore, with the Euro falling almost 2 additional points in the wake of the COT report mark off early last week, we suspect that the net spec short positioning in the Euro was understated into the opening today and that could provide the Euro with the capacity to rise back into a range bound by 135.33 to 136.00.
YEN: With global equity markets showing initial strength today it would appear that anxiety is somewhat on the decline. Therefore, the Yen which has recently been seen as one of the primary flight to quality instruments, would seem to be destined to give some ground. Near term downside targeting is seen at 96.00 and then again down at the 97.54 level basis the December contract. In fact, as long as calm reigns in the stock market, one might assume that the path of least resistance in the Yen is pointing down.
SWISS: The Swiss remains in a vulnerable status on the charts with the 88.00 level potentially a critical pivot point today. However, given that the Swiss on Thursday was hammered sharply lower and ultimately rejected the 87.00 level, the Swiss appears to have already liquidated a good portion of the weak handed longs. In fact, unless the US stock market mounts a very strong rally this morning, we doubt that the December Swiss will fall below the 87.80 level.
POUND: The Pound is exhibiting a short covering action in the early going today and that appears to be the result of coordinated efforts to unfreeze the credit markets. In our opinion, the Pound needs to see the Libor market soften for the Pound to mount a quick run back up to the 177.50 level. However, given the magnitude of the oversold condition in the Pound around the recent October spike low, it would not be surprising for the Pound to make a run at the 50% retracement level off the September/October slide which is seen up at 177.04 in the action today.
CANADIAN DOLLAR: The Canadian Dollar is another currency that is extensively oversold and perhaps one currency that has factored in the most significant slowing of the global economy. While it might be premature to downplay the magnitude of the slowing expected in the global economy, it is possible that shorts in the Canadian will be uncomfortable in their positions today and that could allow for a temporary recovery bounce back above the 86.00 level on the charts.
Daily Currency Market Commentary – 2008.10.20
by Dave Hightower on October 20, 2008
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets, visit futures-research.com for your free 2 week trial!
DOLLAR: Apparently seeing a host of international equity markets forging gains overnight has dented the US Dollar from a flight to quality perspective. Critical support in the Dollar is seen at 82.42 this morning, but it is possible that the Dollar will be at least temporarily undermined by the decline in the US Leading Indicators report this morning but recently the currency markets have not paid that much attention to the regularly scheduled US data flow. The October 14th Commitment of Traders with Options report for US Dollar showed the Non-commercial position to be net long 25,349 contracts, with the Non-reportable position net long 811 contracts and that made the “combined” spec and fund position net long 26,160 contracts as of early last week. On the other hand, with the US Dollar climbing another 2 points in the wake of the COT report mark off, we suspect that the magnitude of the net spec long positioning is understated into the opening today. Given a short period of financial sector calm, that could open up the door for a temporary corrective slide in the Dollar. Initial support levels into the opening this morning are pegged at 82.42, 82.31 and then again at 82.21.
EURO: While the Euro seems to have a slightly positive bias in the early going today, the market still looks somewhat range bound. In fact, if the market were poised for a distinct run up today, we suspect that the slightly hotter than expected German PPI report released overnight would have provided the Euro with the capacity to rise above close-in resistance of 135.12 in the December Euro contract. The October 14th Commitment of Traders with Options report for Euro showed the Non-commercial position to be net short 34,732 contracts, with the Non-reportable position also net short 6,577 contracts and that made the “combined” spec and fund position net short 41,309 contracts as of early last week. Furthermore, with the Euro falling almost 2 additional points in the wake of the COT report mark off early last week, we suspect that the net spec short positioning in the Euro was understated into the opening today and that could provide the Euro with the capacity to rise back into a range bound by 135.33 to 136.00.
YEN: With global equity markets showing initial strength today it would appear that anxiety is somewhat on the decline. Therefore, the Yen which has recently been seen as one of the primary flight to quality instruments, would seem to be destined to give some ground. Near term downside targeting is seen at 96.00 and then again down at the 97.54 level basis the December contract. In fact, as long as calm reigns in the stock market, one might assume that the path of least resistance in the Yen is pointing down.
SWISS: The Swiss remains in a vulnerable status on the charts with the 88.00 level potentially a critical pivot point today. However, given that the Swiss on Thursday was hammered sharply lower and ultimately rejected the 87.00 level, the Swiss appears to have already liquidated a good portion of the weak handed longs. In fact, unless the US stock market mounts a very strong rally this morning, we doubt that the December Swiss will fall below the 87.80 level.
POUND: The Pound is exhibiting a short covering action in the early going today and that appears to be the result of coordinated efforts to unfreeze the credit markets. In our opinion, the Pound needs to see the Libor market soften for the Pound to mount a quick run back up to the 177.50 level. However, given the magnitude of the oversold condition in the Pound around the recent October spike low, it would not be surprising for the Pound to make a run at the 50% retracement level off the September/October slide which is seen up at 177.04 in the action today.
CANADIAN DOLLAR: The Canadian Dollar is another currency that is extensively oversold and perhaps one currency that has factored in the most significant slowing of the global economy. While it might be premature to downplay the magnitude of the slowing expected in the global economy, it is possible that shorts in the Canadian will be uncomfortable in their positions today and that could allow for a temporary recovery bounce back above the 86.00 level on the charts.
Tags: Canadian Dollar, Pound, US Dollar, Yen
About Dave Hightower