USD:
The road proved another tough one for the USD on Wednesday as it kept losing ground to the other major currencies. The greenback is trading at the low end of its range and appears weak. Having said that, trading seldom is a one way street and the reasons for the fall in value of the USD are up for debate. Nevertheless, no matter the opinion held it is the market which is the vital scoreboard. There was little in the way of economic data from the U.S., but the Federal Reserve�s Beige Book was published and chimed in with the familiar refrain that though a recovery is underway that the economy remains fragile. An interesting tidbit gleamed from the report also warned that if consumer spending does not improve that the recovery will have problems achieving significant growth. And therein lays the double edged sword for Americans, they are being asked to spend, when in fact they are under increased pressure due to the value of their homes which have dropped in value and the prior debt they had taken on believing they had more money.
Today the weekly Unemployment Claims figures will be released and they are expecting a slight improvement to 560K compared to last week�s result of 570K. Also the Trade Balance numbers will be brought forth and the number is expected to basically match the previous figure. Stock markets in the U.S. yesterday turned in modest gains among the indexes. As volume increases in the coming days, the equities markets may prove to be fertile place in which trading sentiment is generated. President Obama delivered a speech in front of a joint Congress last night about healthcare. While he lobbied hard and fast to the nation, it remains to be seen where the devil lays in the details and this could spook Wall Street down the road. The USD has come under increased pressure this week and has found little in the way of backing. It appears that until another proverbial �shoe� drops regarding sour economic news for the international community that the greenback may find a difficult path.
EUR:
The EUR mustered another positive day of trading versus the USD. Germany released it CPI figures and they matched the estimate of 0.2%, once again showing that inflation, though there are voices warning about how dire it may become, remains mute. Today the French will release a rather productive day of data, including their Final Non Farm Payrolls statistic which is forecast to show a minus -0.5% outcome. Also the Industrial Production numbers are on the calendar and are expected to improve to 0.6%, the previous figure was a gain of 0.3%. Tomorrow the German�s will bring forth their WPI, which will give additional inflation insight. The EUR has enjoyed a positive week of trading against the USD and may find the ability to keep it pace going into today�s session.
GBP:
The Sterling traded higher against the USD again on Wednesday as it climbed towards the high end of its range against the greenback. The Bank of England will be holding their MPC meeting today and though the decision on its key interest rate is not in question, investors nonetheless will watch for additional details on any changes to quantitative easing policies. Yesterday the U.K. did release its Trade Balance statistics and they produced a slightly negative result of minus -6.5 billion compared to the estimate of minus -6.3 billion. Also on schedule today is the Halifax HPI which has been pushed back frequently the past week. If the Home Price Index is actually released today it is expected to carry a rise by 1.0%, last month�s report produced an increase of 1.1%. The GBP may find itself in an interesting trading range today due to the BoE results due this afternoon.
JPY:
The JPY turned in another impressive day against most currencies and did gain versus the USD. The JPY did this even as data showed severe drops in Core Machinery Orders and the Overseas Trade Index. A strong JPY does not bode well for the Japanese economy but there has been little that the Bank of Japan has been able to do to stem this tide. The question for the traders of the JPY is to what extent the currency can continue to test the high end of its range.
Dollar Weakness, Major Currencies Continue To Show Strength
SPX/USD:
Another up day for the S&P 500. However, it was interesting trading the open. Initially there seemed to be some weakness, and the market was not really able to get the foot hold it was looking for. All of a sudden buying came in and we popped 5 points in a matter of minutes. All in all, as the dollar continues to weaken, it seems that the equity market will continue to rally until the investment community begins to realize that the reasons the Dollar is failing, are the same reasons that the equity market should be declining! Technically, we have to play the trend. Support 1033.4, 1030.9, 1027.7, 1023.1. 1018, 1014.6, 1001.5, 992.25, 980.62 Resistance 1039.5
XAU/USD:
Gold traded a price band of $17 yesterday and trading was not terribly bullish. The question is whether or not traders feel comfortable with the precious metal at these levels. I am looking for some consolidation around these levels, before I consider a serious trade entry. Support, 990.8, 990.43, 986.8, 984.6, Resistance, 994.67, 996.57, 1000.9, 1002.05, 1007.6.
GBP/USD:
We were not able to trade too much higher yesterday. This might have a lot to do with the fact that we are waiting on the Bank of England to discuss their rate decision today. Listen closely to the wording they use and watch the price action. The chart is pointing upwards, but this trade needs to be taken cautiously as while we are in this trading range we can trade towards both ends of the channel. Support 1.6389, with a weak level at 1.6454, 1.6389, 1.6322, 1.6112, 1.5982 Resistance 1.6591, 1.6662, 1.6743, 1.6900
EUR/USD:
The Euro has continued to soar higher and higher. 1.4599 was the high. Continued dollar weakness has allowed us to push past resistance over and over. It�s important to monitor the dollar throughout these extended moves as we can gauge how strong, and long the move might actually be. Resistance 1.4599, 1.4719, Support 1.4449, 1.4327, 1.4176, 1.4004
