Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
DOLLAR: The Dollar remains in a partially bullish posture after last week’s impressive range up extension and that is telling in of itself. In other words, the Dollar has managed to hold up despite talk that “risk” trades are back in vogue again and that is in a sense a true change. While it is premature to suggest that money is expecting a greater return inside the Dollar directly ahead, the trade is seeing the signs that the US could be getting in a position to raise rates in the future. With some slack economic readings from the euro zone overnight, one could also suggest that the macro economic differential between the US and the Euro zone has started to shift and that could also be another source of residual buying interest for the Dollar. While the Dollar did see some minor selling pressure off the news of the Dubai bailout overnight, the trade seems to be looking at the Dollar in a slightly different light. Furthermore, with a lack of scheduled US numbers due out today, it could be difficult for the market to throw off the bullish tilt in the Dollar from last week. With the December 8th Commitment of Traders with Options report for US Dollar showing the Non-commercial position to be net long 13,854 contracts, with the Non-reportable position net long 1,339 contracts, that made the “combined” spec and fund position net long 15,193 contracts as of early last week. In short, the Dollar showed only a modest net spec long positioning and that could mean that the Dollar isn’t in danger of becoming technically overbought off minor upcoming gains.
EURO: While the March Euro is showing signs of rejecting the lows forged at the end of last week, we can’t argue with a continuation of the bear track. In addition to slack Euro zone economic readings overnight, it would not seem like favorable global equity market action is providing the Euro with much in the way of lift. In fact, the Euro zone showed a decline in industrial activity and a loss of employment and that could prompt the trade to assume that the Euro zone won’t be poised to raise interest rates anytime soon. In fact, in order to turn the down trend pattern around in the March Euro, might require a rally back above 146.80. However, the December 8th Commitment of Traders with Options report for Euro showed the Non-commercial position to be net long 586 contracts, with the Non-reportable position net long 18,189 contracts, and that made the “combined” spec and fund position net long 18,775 contracts as of early last week. However, despite the slide in the Euro in the wake of the COT report mark off, the Euro probably remains minimally net spec long and vulnerable to more selling.
YEN: The Yen appears to be showing strength in the early action today but considering that the current trade is still significantly below the highs from last week, we aren’t surprised in the attempt to bounce. However, we continue to think that the November highs in the Yen are some form of significant historical high that won’t be replicated easily. In fact, we think last week’s failed rally above 114.00 has created a fairly significant resistance zone that traders should use as an area to implement fresh short side position plays. The 50 day moving average in the March Yen is seen down at 111.74 and that could become an extremely critical pivot point later this week.
SWISS: The Swiss has clearly fallen below the 50 day moving average and seems to be entrenched in a downward bias on the charts. We think that the SNB is facilitating the slide in the Swiss and that a sub 86.00 trade is likely in the coming week. Even more surprising is the fact that the Swiss continued to slide in the face of a less aggressive SNB intervention dialogue at the end of last week. In order to throw off the down trend pattern in the March Swiss, probably requires a close back above 97.45.
POUND: Even in the face of up beat economic dialogue from the UK Prime Minister, the Pound appears to remain in a downward tilt on the charts. With the March Pound sitting comfortably below the 50 day moving average and the markets not exactly enamored with the growth news coming out of the UK economy, it might be difficult for the Pound to avoid a near term return to the 160 level. One might have expected the Pound to bounce, in the wake of the Dubai bailout news overnight and that in turn suggests that the Pound looks to remain mired in a downward bias on the charts.
CANADIAN DOLLAR: The Canadian wasn’t able to attract enough non Dollar buying support to overcome the bullish tilt in the Greenback at the end of last week and that still doesn’t seem to be case into the opening today. With a host of key Canadian commodities remaining weak and the residual interest in the Dollar apparently too much for the Canadian trade again, the path of least resistance in the March Canadian looks to remain down. In fact, an 8 month old up trend channel support line was also violated overnight and the Canadian also fell below the 50 day moving average late last week and therefore the bear camp looks to have a series of technical indicators in its favor into the opening today.
TODAY’S MARKET IDEAS: Expect the Dollar to gain against the Swiss, Canadian and Euro this week.
