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Market Wire Update:
Dollar Short, Just A Matter Of Time
Forex Trader Note: S&P trade still draws in 1115, 1122, and 1134, with 1105 the swing point. A negative outlook for stocks brings 1095 and 1085 into focus.
The major currency pairs are trying to break down the short side of the dollar, and with a positive equity (read risk-tolerant) market it would seem that initiating the next leg lower on the greenback is only a matter of time. However, the buck is not going down without a fight, and ahead of the ECB rate decision on Thursday, there is plenty of volatility in the dollar index arena.
Oil (78.20) and gold (1120) are backing a short-Usd play, but choosing the one pair to get long against the Usd may be a little challenging. Euro and Pound are dangerous to trade ahead of pivotal rate decisions, the Swiss franc is a mirror Euro image, Australian and Canadian dollars are at overbought reads against the Usd, and the Japanese yen is absorbing the Bank of Japan quantitative easing program.
Red Flag Economics:
--:-- EST Gbp Halifax HPI Exp 0.8%, Prev 1.2%
04:30 EST Gbp Services PMI Exp 57.1, Prev 56.9
05:00 EST Eur Retail Sales Exp 0.2%, Prev -0.7%
07:45 EST Eur Minimum Bid Rate Exp 1.00%, Prev 1.00%
08:30 EST Eur ECB Press Conference
08:30 EST Usd Unemployment Claims Exp 480K Prev 466K
10:00 EST Usd Fed Chairman Bernanke Testifies
10:00 EST Usd ISM Non-Manufact PMI Exp 51.6, Prev 50.6
Dollar Index: The dollar index went into Neutral mode on 26th Oct and has held that trend since. The near-term path of least resistance is consolidation of new lows. A weekly close above 76.00 (that signals buyers are dominating), is a long way off. Swing Point: 74.60
S&P Futures: The S&P futures market confirmed a Long momentum read on Nov 11th and has built a near-term support base around 1060. The 1110 area will be a major resistance point to battle this week. Swing Point: 1108
Crude Oil: There is still a very flat momentum read to crude oil trade, that has been in place since 6th Nov. The 76.50 area continues to be a main price point, after sellers were held at bay around 75.50. The 80.50 area is the topside number to breach. Swing Point: 77.15
Gold Bullion: Gold signaled long on 3rd Nov and has easily held that mode. 1165 is near-term support, backing any long tests of 1200. Now looking for a Options reversal signal that buys time to see gold fall. Swing Point: 1208