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DOLLAR: The Dollar appears to be coming out of a volatile overnight session with some strength, and has been grinding higher. US equities have been weak, and the positive vibe out of the Euro zone may be eroding with a rumor that at least one German bank might fail the stress tests. There is one US economic number today to digest, but Housing Starts have been a chronic sore spot for the US economy and that may add to the darkening tone for the markets. While there may not be enough on today’s plate to change the direction of the overall trend for the Dollar, it appears now that new lows may be off the table for now. Look for the Dollar to find resistance up near the 83.05 level, but any further upside move from there, may require some solidly negative news outside of the US to sustain an upside thrust.
EURO: Today’s well-received debt auctions from Spain and Greece helped to send the Sept Euro up to a new high for the move, but a change in direction has sent prices back below the 1.30 in a hurry and that action seemed to be the result of weakening global equity prices. Talk that a German real estate bank might fail the EU’s stress test may be applying some pressure to the Euro, although the actual results will not be released until Friday. Whether this change in sentiment will be enough to fully derail the current longer-term rally attempt in the Euro remains to be seen, but weakening equity prices on both sides of the Atlantic are not helping the Sept Euro’s cause. Look for a further pullback for the Sept Euro down to the 1.2870 level, but the longer-term rally may have enough underlying support to withstand today’s temporary pressure.
YEN: In spite of the elevated risk concerns out of Europe this morning, there has not been much benefit to the Sept Yen so far. With prices already at high levels from the recent sharp rally, there may be signs that the current move may be topping out. While the Sept Yen will likely move back into positive territory from safe-haven support, prices will likely find resistance around the 115.70 area, as the upside momentum appears to be leveling off.
SWISS: While Swiss Trade numbers today indicated a larger surplus than expected, the Sept Swiss has been unable to gain ground due to the carryover pressure from fresh Euro zone problems. There may be some cause for concern, as profit-taking may become heavy if the 94.75 level is taken out today. The Sept Swiss should hold that area today, but there is a distinct possibility of getting swept up in a European liquidation sell off.
POUND: The Sept Pound has been consistently drifting further away from the recent highs, with today’s UK Public Sector borrowing numbers adding an additional negative tone to the market.
The longer-term up trend should remain intact, but there are concerns that pressure on the Euro zone may eventually entangle the Sept Pound in any extended sell off. The Sept Pound may continue to descend towards the 1.5140 level this morning, but it should find support down at those levels.
CANADIAN DOLLAR: Although the elevated risk concerns have taken prices off of their highs, the Sept Canadian has been able to hold its ground, as the market prepares for this morning’s Bank of Canada meeting. There is a general consensus that Canadian interest rates will move higher today, so anything short of that will obviously be a problem. Look for the Sept Canadian to hold the 94.50 support level before the BOC meeting, then we expect the September Canadian to move back above the 95.00 level when and if the rate hike is announced.
TODAY’S MARKET IDEAS: The Dollar should hold this current strength during the course of today’s trading, as risk concerns may provide ongoing support during today’s session. The Sept Swiss is likely to have the best chance of regaining positive territory, and look for the Sept Canadian to see a post-rate hike rally.
Currency Market Commentary – 2010.07.20
by Dave Hightower on July 20, 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: The Dollar appears to be coming out of a volatile overnight session with some strength, and has been grinding higher. US equities have been weak, and the positive vibe out of the Euro zone may be eroding with a rumor that at least one German bank might fail the stress tests. There is one US economic number today to digest, but Housing Starts have been a chronic sore spot for the US economy and that may add to the darkening tone for the markets. While there may not be enough on today’s plate to change the direction of the overall trend for the Dollar, it appears now that new lows may be off the table for now. Look for the Dollar to find resistance up near the 83.05 level, but any further upside move from there, may require some solidly negative news outside of the US to sustain an upside thrust.
EURO: Today’s well-received debt auctions from Spain and Greece helped to send the Sept Euro up to a new high for the move, but a change in direction has sent prices back below the 1.30 in a hurry and that action seemed to be the result of weakening global equity prices. Talk that a German real estate bank might fail the EU’s stress test may be applying some pressure to the Euro, although the actual results will not be released until Friday. Whether this change in sentiment will be enough to fully derail the current longer-term rally attempt in the Euro remains to be seen, but weakening equity prices on both sides of the Atlantic are not helping the Sept Euro’s cause. Look for a further pullback for the Sept Euro down to the 1.2870 level, but the longer-term rally may have enough underlying support to withstand today’s temporary pressure.
YEN: In spite of the elevated risk concerns out of Europe this morning, there has not been much benefit to the Sept Yen so far. With prices already at high levels from the recent sharp rally, there may be signs that the current move may be topping out. While the Sept Yen will likely move back into positive territory from safe-haven support, prices will likely find resistance around the 115.70 area, as the upside momentum appears to be leveling off.
SWISS: While Swiss Trade numbers today indicated a larger surplus than expected, the Sept Swiss has been unable to gain ground due to the carryover pressure from fresh Euro zone problems. There may be some cause for concern, as profit-taking may become heavy if the 94.75 level is taken out today. The Sept Swiss should hold that area today, but there is a distinct possibility of getting swept up in a European liquidation sell off.
POUND: The Sept Pound has been consistently drifting further away from the recent highs, with today’s UK Public Sector borrowing numbers adding an additional negative tone to the market.
The longer-term up trend should remain intact, but there are concerns that pressure on the Euro zone may eventually entangle the Sept Pound in any extended sell off. The Sept Pound may continue to descend towards the 1.5140 level this morning, but it should find support down at those levels.
CANADIAN DOLLAR: Although the elevated risk concerns have taken prices off of their highs, the Sept Canadian has been able to hold its ground, as the market prepares for this morning’s Bank of Canada meeting. There is a general consensus that Canadian interest rates will move higher today, so anything short of that will obviously be a problem. Look for the Sept Canadian to hold the 94.50 support level before the BOC meeting, then we expect the September Canadian to move back above the 95.00 level when and if the rate hike is announced.
TODAY’S MARKET IDEAS: The Dollar should hold this current strength during the course of today’s trading, as risk concerns may provide ongoing support during today’s session. The Sept Swiss is likely to have the best chance of regaining positive territory, and look for the Sept Canadian to see a post-rate hike rally.
Tags: Canadian, Currencies, Dollar, Financials, Pound, Swiss, Yen
About Dave Hightower