The USD continued to show weakness on Friday as some traders seemingly have put their faith into a U.S. recovery while seeking riskier venues. Although there are many others who are still asking if the data is too good to be true, there is no denying that the University of Michigan�s Preliminary Consumer Sentiment reading scored a 70.2 reading compared to the anticipated figure of 67.2. Wall Street however did not greet this as particularly enough impetus to lift the equities markets and it turned in a lackluster day. We have now arrived to the one year date in which Lehman collapsed and turned the financial world on its head. Although there is no major economic data being released today, let there be no doubt that many public officials from the States including the President and various FOMC members will make their way to podiums and address the economic crisis. The greatest question is not where we were, but where we are going.
The USD has struggled for consistency the past couple of weeks and there are a variety of opinions regarding its lack of strength. A dead certainty is that the broad market place continues to show a palpable amount of disagreement concerning the place the economy and the financial system stands compared to one year ago. Stability may have been attained but questions about potential growth and the risks that remain are abundant. Tomorrow the U.S. will release important Retail Sales data and taking into consideration that the U of M Consumer Sentiment reading was stronger than expected on Friday it will be more than a little interesting to see what figures are brought forth. The USD has slumped significantly the past few trading sessions and the old axiom that the market is seldom a one way street, may come into play soon, if traders believe that the greenbacks lows present a buying opportunity in the short term.
EUR:
The EUR found another day of solid trading on Friday as it found itself holding onto gains made in previous sessions against the USD. The EUR enjoyed a good week of trading against greenback and finds itself at the high end of its range. The German WPI was released on Friday and produced a gain of 0.7%, above the projected number of 0.3%. The Italian Industrial Production figures were also published and showed a gain of 1.0%, better than the anticipated outcome of 0.4%. Today the broad European Industrial Production data will be released and is expected to have a decline of -0.3% and the Employment Change numbers will be announced for the continent. Tomorrow the German ZEW Economic Sentiment readings will be presented and this could affect the market. Until then the EUR is likely to trade on sentiment being generated from dollar centric action.
GBP:
The Sterling climbed to the higher reaches of its range against the USD as the week ended finishing a solid trek of sessions for the GBP. There was no major economic data from the U.K. going into the weekend but today the RICS House Price Balance results are due and expected to have a result of minus -0.1%. Tomorrow there will be inflationary data from the U.K. and investors will be keen to inspect these numbers as they continue to debate what is taking place in the economy. Like the U.S. it can be expected that there will be plenty of officials offering up their viewpoints on the one year anniversary of the banking collapse of Lehman. The GBP has turned in fast and furious results against the USD in recent trading and the question that some traders may be asking is if there is enough fuel in the tank to take the Sterling higher in the coming days.
JPY:
The JPY continued its rather strong pace against the USD on Friday. The JPY is now within the higher points of its range against the greenback and traders may be tempted to see if the Japanese currency can keep its momentum. Gold has found itself locked around the 1000.00 USD mark and is trading in a tight but vicious manner. The price in Gold could be a signal that investors, particularly those in Asia remain a nervous group.
Written by: Robert Petrucci, Chief Commodity Expert and Forex Analyst
Uncertainty Lies Ahead, Will Dollar Weakness Send Markets Higher?
SPX/USD:
On the 6th trading day we still pushed higher! Take a look on the daily SPX/USD chart. We hit a high of 1048.2 on Friday but did not end the day with a higher close. This is not necessarily a bad sign. The trend is still very much up. Support 1038.4, 1023.1, 1018, 1001.7 Resistance, 1048.2, 1072.9, 1106.4. If and at this point when (which is a scary thought) we hit 1106.4 we will be trading back at levels that I would start to consider as being a zone pointing at recovery. I hope by the time that happens the fundamentals will be in line as well, because currently they look like an upside down pyramid. (I.E, Not very stable) Of course, keep a close eye on the dollar as any strength could send us crumbling down.
XAU/USD:
Friday had a selling tail and even though we hit a high of 1011.85 we are showing serious weakness today. At the time of writing we are trading at 993.6 about $15 lower than the open. Support is at 990.2, followed by 982.4, 971.75. Resistance, 1011.85 and the ever elusive 1032.3. This market is in an uptrend, but expect it to be violently jittery over the course of the next few days!
GBP/USD:
Every once in a while looking at a technical chart just makes you smile! Friday�s candle is one of those days. We moved right up to resistance of 1.6743, and formed a bearish reversal doji candle. At the time of writing the pound is trading 1 full cent lower than the Fridays candle, and I expect us to test the lower end of this trading range. Be cautious as the pound can suddenly flex its muscles and send us flying up to 1.7042.
EUR/USD:
We have now established a new trading range. Albeit one that could be very temporary depending on the way the US dollar continues to trade. Resistances 1.4634, support 1.4449. If we manage to break above, next stop is 1.4719, followed by 1.4866. On the other hand if dollar strength begins to be a factor we might see a move down all the way to 1.4188!
