I was wondering last night "when" will the USD start reacting positively to good market data. I really do not know the answer to this, but I do know a couple things:
1. The USD is and will retain the "safe haven currency status"
2. based on the deleveraging of global markets the last year, we have to be close to finding an "equalibrium" where the USD will start reacting well to good news, poorly to bad news
3. Since the USD is the primary funding currency trades (so we think) it should react to point #1.
back when the EUR/USD was at 1.43-1.44 ish, I had the same thoughts. And obviously, I was wrong. But given the pact that we have now paused at key levels to chart technitians (DOW 10K, S&P 1100, EUR at 1.50) we may be due for a more severe corrention in equity "over leveraged" markets.
So, will the USD strenghten from here? I am with a long USD bias at this point unless 1.50 is broken on the EUR or the USD index breaks 75.00. I will be buying on pullbacks, and this is my plan.
Blake Morrow
Chief Currency Strategist
USD News- 08:30 ET US Personal Consumption, Personal Income, Spending, and Employment Cost for Quarter.
Overnight we saw wedge formations on JPY pairs, so we are watching market direction for possible breakouts.
STRONG
Short GBP/USD 1.6500*
Short EUR/USD 1.4800
Long USD/CHF 1.0300
WEAK
Long GBP/USD 1.6600*
Long EUR/USD 1.4860
The Morning Edge Chart of the Day is the 360 minute interval chart for the USD/CAD as the miss on the CAD monthly GDP and selling pressure on Oil have allowed the USD to strengthen this morning after yesterday’s pull back.
Yesterday’s Morning Edge Chart of the Day was the long side bounce on the 720 minute chart for the AUD/NZD. Bulls in the equity market provided an advantage to the AUD in yesterday’s trading and we saw the pair advance early in the US trading session to stop shy of 1.2500, pull back to 1.2450 and then advance on strong buying pressure into the close back to 1.2500. The follow through of buying pressure early in the Asian trading session allowed the pair to advance to 1.2543 overnight.
The values in the T-chart data represent the next levels of significant support or resistance with trade opportunities to these levels, or breakouts beyond these levels. The use of Astrid denotes key sustained support or resistance levels, or counter trend opportunities in the market.
USD News – 08:30 Advance GDP for 3rd Quarter, Weekly Unemployment Claims, 09:30 Treasury Secretary Geithner testifies on Capitol Hill, 10:30 Natural Gas Storage
GDP 3.5% - better than forecast of 3.2%
Weekly Unemployment Claims – worse than expected
STRONG
Short EUR/USD 1.4680*
Short NZD/USD .7160
Short AUD/USD .8950*-S
WEAK
Long GBP/USD 1.6500***
Long EUR/USD 1.4770
Long AUD/USD .9120-R
Short USD/JPY 90.00
The Morning Edge Chart of the Day is the long side bounce on the 720 minute chart for the AUD/NZD as the RBNZ took a dovish tone yesterday evening towards future interest rate hike, pushing the target into 2010. If the equity markets are encouraged by GDP numbers (3.5% for 3rd Quarter), then this will support AUD strength.
Yesterday’s Morning Edge Chart of the Day was the Short Term Chart for the AUD/USD with a counter trend bounce to the short side. Selling pressure in the equity markets did drive the pair lower. Overnight the AUD gained back yesterday’s drop and is trading near where we saw the pair at the open yesterday.
The values in the T-chart data represent the next levels of significant support or resistance with trade opportunities to these levels, or breakouts beyond these levels. The use of Astrid denotes key sustained support or resistance levels, or counter trend opportunities in the market.
Overnight in the markets and in the news Thursday 10292009
Yesterday we saw significant selling pressure in stocks during the US trading session which allowed the USD Index to strengthen and energy prices to move lower with other commodities on the back of a strong USD and some concerns creeping into the markets about the rapid rise in stock values since March and sustainability as we continue to see a slow recovery in Global Economies and pending challenges to growth.
The Asian Markets followed through with selling pressure and the Bears ruled the session. Early European trading was bearish in the first hour, but has improved a little to essentially run flat at this early hour ahead of lunch in London. The markets were encouraged and buoyed by much better than expected employment data from Germany.
US Futures are slightly higher this morning, but pulling back from highs. The USD gave back a little of yesterday’s gains overnight, but would strengthen again if we continue to see selling in equities today.
Earnings from Oil and Gas continue to disappoint but we are waiting for Exxon today and Chevron tomorrow to see if the trend continues. BP and Shell have already shared some gloom this week sighting weaker oil prices on demand and only seeing higher per barrel prices as a result of a much weaker USD.
On tap for news today will be Canadian inflation data; Raw Material and cost of goods leaving the factory (IPPI). These are monthly reports that are expected to show no inflation which supports maintaining current interest rates.
The US will deliver Advanced GDP for the 3rd quarter, and the forecast / expectation is that GDP saw significant gains. Certainly a weak USD has given exporters an advantage, but the forecast has set a pretty high bar at 3.2% growth. Be careful as the report is released an hour ahead of the open bell (08:30 ET). Weekly unemployment claims will be out at the same time.
US Treasury Secretary Tim Geithner opens testimony before the House Finance Committee at 09:30 am and at 10:30 Natural Gas Storage is out with an expectation that we will continue to see growing surpluses, which could weigh in on the CAD and Energy Futures.
USD News – US Durable Goods, New Home Sales 10:00 ET
STRONG
Short GBP/USD 1.6250*
Short EUR/USD 1.4770*
Long USD/CAD 1.0820
Short AUD/USD .9000*
Short NZD/USD .7250
WEAK
Long EUR/USD 1.4840
Short USD/JPY 90.00
The Morning Edge Chart of the Day is the Short Term Chart for the AUD/USD with a counter trend bounce to the short side. Selling pressure in the equity markets is needed to drive the pair lower. Watch for New Home Sales impact at 10 am ET.
Yesterday’s Morning Edge Chart of the Day was the 360 minute interval on the USD/NOK as we saw selling pressure in the equity markets testing resistance at 5.6650. If we can break above that then we will target resistance at 5.7500 for a possible swing trade. The pair advanced early, then pulled back before continuing to advance overnight with equity selling in the Asian, Early European trading, and the US Index Futures.
The values in the T-chart data represent the next levels of significant support or resistance with trade opportunities to these levels, or breakouts beyond these levels. The use of Astrid denotes key sustained support or resistance levels, or counter trend opportunities in the market.
GBP/USD: A little bit of extra activity this afternoon to the long side, but watch to see if it holds. You need to beat and rest above the 1.6400s, but be aware that we hit highs at 1.6440. If we can't breach these levels you may have Swing short potential. Be cautious on the upside because of the activity this afternoon...start of scalping and stretch only if it delivers.
EUR/USD: USD has ruled this pair for the last two days. Slow down please. You don't necessarily want to counter this trend to the downside, but you do need to keep profit targets tight as it is now pushing into day 3 and that for me doesn't equal swing expectations in the same direction.
USD/CHF: ditto, but flip the directions
USD/JPY: Watch this, hawk this...swing trade capability looms, but levels of import are the 91.50s on the low side and the 92.30s on the high side. Within the range keep targets tight. If you are able to build profit through the breakout then stretch it into swing as long as the lights and your profits allow you to stay put. Key lights are the 720 and the 180.
USD/CAD: This one has been drifting lower and if USD weakness on retracement comes into play across the board, this may be the place to look to short the USD for a swing as it failed to rally on a second day of USD strength. Keep a close eye on OIL info. as well and CAD news.
AUD/USD: This started early...I liked it as a setup long, but now that it has started that move in the middle of the afternoon it may not be a gimme. Key breaking points to the long side include 0.92 with head fake potential up to the .9220s as a ballpark. If it fails to breach these levels tonight...be careful as your 180 may tighten up on you and leave you with only scalping opportunities in either direction. Play safely.
Alright PIP people! I'm out. I'll see you next week!
Wishing you all the PIPs you can handle!!
Lindsay
USD News – 09:00 ET Home Price, 10:00 Consumer Confidence
STRONG
Short GBP/USD 1.6250*
Short EUR/USD 1.4830*
Short AUD/USD .9160
Long USD/CAD 1.0715
Long USD/JPY 92.30
Short NZD/USD .7440
WEAK
Long GBP/USD 1.6450ish
Long EUR/USD 1.4950
The Morning Edge Chart of the Day is the 360 minute interval on the USD/NOK as we see selling pressure in the equity markets testing resistance at 5.6650. If we can break above that then we will target resistance at 5.7500 for a possible swing trade.
Yesterday’s Morning Edge Chart of the Day was the 180 minute chart for the AUD/CAD as we saw AUD strength breaking the pattern to the Long side. The AUD continued to strengthen overnight to test the high from the Long Term chart.
The values in the T-chart data represent the next levels of significant support or resistance with trade opportunities to these levels, or breakouts beyond these levels. The use of Astrid denotes key sustained support or resistance levels, or counter trend opportunities in the market.
