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Market Wire Update: Aug 11 09 09:25 EDT
Major Pairs: The majors are showing completely mixed reads on trend and momentum, and right now signal that the market does not have the energy to finish the swing change that it started during the last week of trade. The market gave the impression that it wanted to sell the dollar lower in the overnight session, but equity and commodity markets ran out of forward momentum, and the dollar was bought. The calendar is quiet now until springing to life on Wednesday, and as such the major pairs will be lead be the nose along the path trodden by equity traders on Tuesday.
If the dollar fails now to add to the recent moves, after seeing an equity based collapse, the majors may regain control of the swing change. However, to see the dollar get bought heavily ahead of the FOMC rate decision will signal a big change in sentiment, that may also spell a tight time for equity markets in August. When the Usd moves higher it is harder for equity traders to hold things in the green. Overall, August is deemed to be a positive stock trading month, with the proviso that one the few years that it fails, it tends to fail in style.
Oil and Equities: Long trends and neutral momentum, equals possible swing point on the Usd drivers. We are looking now for the economic calendar to kick in and lead things fundamentally. If oil and equities start to move, so will the currency market, and right now that overall trend is long on the global drivers and still short on the Usd.
That is in contrast the the dollar index which has the greenback dominant in the near-term, however the momentum reads are all over the charts on the equity, commodity, and currency reads, and that is a red flag to observe in regard to the market's ability to easily follow through, in either direction. Gold and euro have succumbed to Usd buying, the oil and equity markets still have some fight in them to hold the higher ground.