Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
DOLLAR: After some heavy initial pressure overnight versus the Euro, the Dollar has found some support as the reality of the Greece situation has taken some downside momentum out of the market. While having concrete details about a potential $40 billion EU/IMF aid package provided European currencies with a measure of support this morning and that in turn undermined the Dollar, it is important to remember that Greece still has to ask for this aid first, something that they have not done yet. The market may have to wait until Greece tries to sell some debt in the market this week before we see whether the aid package will be implemented. With little in the way of economic input from this side of the Atlantic, before the Treasury Budget announcement late in the session today, we may continue to see the focus of today’s trading remain on European issues. While well below its recent range, look for the Dollar to remain toward the upper end of today’s early trading range and possibly head back towards the chart gap area that was left just above the 80.85 level. A number of markets seem to have had a major knee jerk reaction to the EU Package news and have failed to sustain their initial reactions and that might suggest that all markets have indeed over reacted. Therefore we suspect that the June Dollar index will manage to hold above close-in support of 80.52 today. The Commitments of Traders Futures and Options report as of April 6th for US Dollar showed Non-Commercial traders were net long 30,248 contracts, a decrease of 5,040 contracts. The Commercial traders were net short 33,306 contracts, a decrease of 6,158 contracts. The Nonreportable traders were net long 3,058 contracts, a decrease of 1,117 contracts. Non-Commercial and Nonreportable combined traders held a net long position of 33,306 contracts. This represents a decrease of 6,157 contracts in the net long position held by these traders.
EURO: The June Euro started out overnight trading above its trading range for the past few weeks, but it has been unable to build upon that sharp rally as the market appears to be somewhat skeptical of whether the EU aid package will live up to the initial hype. Although Greece is saying that they have not yet asked for this aid, it is clear that a 200 basis point benefit from where Greece debt currently trades and what the EU/IMF package will charge in interest almost compels them to go with the aid. Also, there are some strong doubts that this 16-nation consensus will hold, if other EU nations come forward asking for help, or if possible Greece repayment problems escalate into a test of the EU’s “no-bailout” clauses. The timing of these announcements over the weekend had no small part in the market’s severe reaction to this aid package, and has likely helped the June Euro put in a near-term high. While remaining well supported, it is more likely that the June Euro will move back towards Friday’s highs around the 1.35 level than make a test of the overnight highs near 1.37. The Commitments of Traders Futures and Options report as of April 6th for Euro showed Non-Commercial traders were net short 64,017 contracts, a decrease of 19,183 contracts. The Commercial traders were net long 73,813 contracts, a decrease of -22,152 contracts. The Non-reportable traders were net short 9,796 contracts, a decrease of 2,969 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 73,813 contracts. This represents a decrease of 22,152 contracts in the net short position held by these traders.
YEN: Early strength from the broad-based Dollar weakness has dissipated, and the June Yen looks to be weaker going into the opening. Comments made by Bank of Japan officials indicate that there is a difference of opinion on the need for more Japanese rate cuts in the near future. However, the deflationary economy in Japan may ultimately have the final vote and that should keep the June Yen lagging behind most of the major currencies over the near future. Look for the June Yen to continue its move below the 107.00 level.
SWISS: The June Swiss has received the most carryover support from this weekend’s EU/IMF deal, gaining back much of what it lost from last week’s post-intervention sell off. However, the near-term easing of Greece debt tensions will continue to keep the June Swiss under pressure against the Euro and should keep the market well away from making new highs. Even so, the June Swiss is more likely to hold last night’s lows near the 94.25 levels, as its overnight move was nowhere near as violent as the June Euro move.
POUND: Although the June Pound has extended last Friday’s rally into this week, early strength has been eroding as the market appears tentative to move outside of its recent range. Political factors are starting to override economic numbers, as the first weekend of the election period saw agreement over the issue that a “hung” Parliament would be problematic for the UK economy. With the Dollar still likely to remain weak this morning, look for the June Pound to stay above the 1.54 level but it is also unlikely to make a move towards new highs.
CANADIAN DOLLAR: June Canada is still coming under pressure from Friday’s Canadian Employment numbers, but has held those lows and is still within sight of parity this morning. The weak US Dollar this morning may keep the market on the defensive, but given the underlying strength in the Canadian economy, it is unlikely that we will see a move below this recent trading range. June Canada may test the lows later today, but is also likely to head back towards the 99.75 level over the next day or so, with another attempt to break above 100.00 likely in the cards this week.
TODAY’S MARKET IDEAS: While European strength is likely to be the story of the day, we may have already seen the highs made during overnight trading. Look for a successful test of the lows today as a first step towards the June Canada making another run at parity with the US Dollar.
Currency Market Commentary – 2010.04.12
by Dave Hightower on April 12, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
DOLLAR: After some heavy initial pressure overnight versus the Euro, the Dollar has found some support as the reality of the Greece situation has taken some downside momentum out of the market. While having concrete details about a potential $40 billion EU/IMF aid package provided European currencies with a measure of support this morning and that in turn undermined the Dollar, it is important to remember that Greece still has to ask for this aid first, something that they have not done yet. The market may have to wait until Greece tries to sell some debt in the market this week before we see whether the aid package will be implemented. With little in the way of economic input from this side of the Atlantic, before the Treasury Budget announcement late in the session today, we may continue to see the focus of today’s trading remain on European issues. While well below its recent range, look for the Dollar to remain toward the upper end of today’s early trading range and possibly head back towards the chart gap area that was left just above the 80.85 level. A number of markets seem to have had a major knee jerk reaction to the EU Package news and have failed to sustain their initial reactions and that might suggest that all markets have indeed over reacted. Therefore we suspect that the June Dollar index will manage to hold above close-in support of 80.52 today. The Commitments of Traders Futures and Options report as of April 6th for US Dollar showed Non-Commercial traders were net long 30,248 contracts, a decrease of 5,040 contracts. The Commercial traders were net short 33,306 contracts, a decrease of 6,158 contracts. The Nonreportable traders were net long 3,058 contracts, a decrease of 1,117 contracts. Non-Commercial and Nonreportable combined traders held a net long position of 33,306 contracts. This represents a decrease of 6,157 contracts in the net long position held by these traders.
EURO: The June Euro started out overnight trading above its trading range for the past few weeks, but it has been unable to build upon that sharp rally as the market appears to be somewhat skeptical of whether the EU aid package will live up to the initial hype. Although Greece is saying that they have not yet asked for this aid, it is clear that a 200 basis point benefit from where Greece debt currently trades and what the EU/IMF package will charge in interest almost compels them to go with the aid. Also, there are some strong doubts that this 16-nation consensus will hold, if other EU nations come forward asking for help, or if possible Greece repayment problems escalate into a test of the EU’s “no-bailout” clauses. The timing of these announcements over the weekend had no small part in the market’s severe reaction to this aid package, and has likely helped the June Euro put in a near-term high. While remaining well supported, it is more likely that the June Euro will move back towards Friday’s highs around the 1.35 level than make a test of the overnight highs near 1.37. The Commitments of Traders Futures and Options report as of April 6th for Euro showed Non-Commercial traders were net short 64,017 contracts, a decrease of 19,183 contracts. The Commercial traders were net long 73,813 contracts, a decrease of -22,152 contracts. The Non-reportable traders were net short 9,796 contracts, a decrease of 2,969 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 73,813 contracts. This represents a decrease of 22,152 contracts in the net short position held by these traders.
YEN: Early strength from the broad-based Dollar weakness has dissipated, and the June Yen looks to be weaker going into the opening. Comments made by Bank of Japan officials indicate that there is a difference of opinion on the need for more Japanese rate cuts in the near future. However, the deflationary economy in Japan may ultimately have the final vote and that should keep the June Yen lagging behind most of the major currencies over the near future. Look for the June Yen to continue its move below the 107.00 level.
SWISS: The June Swiss has received the most carryover support from this weekend’s EU/IMF deal, gaining back much of what it lost from last week’s post-intervention sell off. However, the near-term easing of Greece debt tensions will continue to keep the June Swiss under pressure against the Euro and should keep the market well away from making new highs. Even so, the June Swiss is more likely to hold last night’s lows near the 94.25 levels, as its overnight move was nowhere near as violent as the June Euro move.
POUND: Although the June Pound has extended last Friday’s rally into this week, early strength has been eroding as the market appears tentative to move outside of its recent range. Political factors are starting to override economic numbers, as the first weekend of the election period saw agreement over the issue that a “hung” Parliament would be problematic for the UK economy. With the Dollar still likely to remain weak this morning, look for the June Pound to stay above the 1.54 level but it is also unlikely to make a move towards new highs.
CANADIAN DOLLAR: June Canada is still coming under pressure from Friday’s Canadian Employment numbers, but has held those lows and is still within sight of parity this morning. The weak US Dollar this morning may keep the market on the defensive, but given the underlying strength in the Canadian economy, it is unlikely that we will see a move below this recent trading range. June Canada may test the lows later today, but is also likely to head back towards the 99.75 level over the next day or so, with another attempt to break above 100.00 likely in the cards this week.
TODAY’S MARKET IDEAS: While European strength is likely to be the story of the day, we may have already seen the highs made during overnight trading. Look for a successful test of the lows today as a first step towards the June Canada making another run at parity with the US Dollar.
Tags: Canadian, Currencies, Dollar, Euro, Financials, FOREX, Pound, Swiss, US Dollar, Yen
About Dave Hightower