Comprehensive FX and Futures Daily Commentary
FastBrokers Research Team from FastBrokersFX at 02/08/10
Daily Market Commentary
EUR/USD Settles Following Last Week’s Tumultuous Activity
The EUR/USD is settling and cooling as investors take a step back to revise their outlooks in the wake of last week’s aggressive selloff in the risk trade. Trichet attempted to alleviate investor uncertainty by reassuring markets that the ECB and EU will make sure Greece takes care of its deteriorating fiscal situation. Meanwhile, the data wire is relatively quiet until China releases its New Loans and Trade Balance data. Hence, the FX markets have an opportunity to settle down over the next 24 hours should no new conditions flare up. However, unions in Greece are threatening to strike on Wednesday as the government announces its plans for reducing the nation’s outstanding fiscal debt. Should unrest swell in Greece this could disrupt markets once again. That being said, the risk trade is still in a fragile state with downward pressure bearing down on the EUR/USD. Meaning the EUR/USD will likely need a positive turnaround in fundamental data or an optimistic psychological shift to counter current negative forces. The EU will remain quiet on the data wire until Friday’s German Prelim GDP, implying the Euro could follow the path of the Dollar for the time being barring any significant developments regarding Greece. Speaking of EU data, Germany had a poor showing last week with Industrial Production and New Orders missing estimates. Hence, it will be interesting how Germany’s Prelim GDP turns out at the end of the week.
Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with intraday, 2/5 highs. As for the downside, we’ve created a few new uptrend lines to serve as technical cushions along the psychological 1.35 level and May 2009 lows. On a negative note, our uptrend lines now run through February 2009 levels, or the 1.27 area. Hence, the EUR/USD’s downturn this month could signal a more lasting, medium-term decline.
Present Price: 1.3675
Resistances: 1.3693, 1.3721, 1.3744, 1.3781, 1.3806, 1.3831
Supports: 1.3650, 1.3628, 1.3610, 1.3587, 1.3563
Psychological: May 2009 lows, 1.35 
GBP/USD Wavers Around Friday Lows
The Cable is hovering around Friday lows after continuing its extensive decline in the wake of strong UK PPI data. Friday’s resurgent PPI data couples with a similar CPI reading, indicating a pop in prices which could discourage the BoE from tightening liquidity. However, Mervyn King recently stated that the central bank is not overly concerned about the recent rise in prices and implied that it is not indicative of a more lasting trend. Regardless, there are many other reasons for the BoE to take a wait and see approach, including economic uncertainty in the EU and liquidity tightening in China. Therefore, the Cable showed little hesitation in participating with last week’s route from the risk trade. The risk trade will be relatively quiet for the next 24 hours, giving the risk trade an opportunity to calm down as analysts and investors assess the damage. However, the data wire will begin to heat up again during Wednesday’s Asia trading session with key economic data releases from China and Australia. Furthermore, the BoE will release its inflation report accompanied by a speech from King. Meanwhile, investors should keep an eye on the news wire for any significant news concerning Greece and other troubled EU economies. As we saw last week, developments in these countries can yield high volatility in the FX markets.
Technically speaking, the Cable has multiple downtrend lines serving as technical barriers along with intraday and 2/5 highs. We’ve created some new uptrend lines, albeit tight ones, to serve as technical cushions along with the psychological 1.55 area.
Present Price: 1.5584
Resistances: 1.5601, 1.5639, 1.5690, 1.5717, 1.5758, 1.5775
Supports: 1.5572, 1.5558, 1.5533, 1.5502, 1.5470, 1.5444
Psychological: 1.55 
USD/JPY Fluctuates Beneath 90
The USD/JPY is fluctuating below the highly psychological 90 level as FX markets cool down in the wake of last week’s heavy volatility. Although the USD/JPY was holding up relatively well, the currency pair finally gave in to downward forces as investors exited the risk trade in a flurry. Debt scares in Greece and Portugal combined with mixed global economic data sent bulls to the exits with the Cable and EUR/USD registering hefty pullbacks. The USD/JPY was performing relatively well for a while since the BoJ’s dedication to fight deflation managed to counter the flight to the Dollar. Furthermore, recalls from Toyota has placed a downward pressure on Japanese equites, a negative development for the Yen. However, the USD/JPY slid late Thursday as the decline in the risk trade accelerated and the USD/JPY is currently attempting to stabilize. The data wire will be relatively quiet until China’s New Loans and Trade Balance data. Japan will also release Core Machinery Orders data during Wednesday’s Asia trading session, giving investors an idea of how industrial production is faring. Meanwhile, investors should keep an eye on the news wire for further developments in the EU regarding Greece’s fiscal woes.
Technically speaking, the USD/JPY still has multiple uptrend lines serving as technical cushions along with 1/27, 2/5 and 2/4 lows. As for the topside, the USD/JPY faces multiple downtrend lines along with 2/5 highs and the highly psychological 90 area.
Present Price: 89.25
Resistances: 89.40, 89.54, 89.72, 89.88, 89.99, 90.08
Supports: 89.13., 89.00, 88.89, 88.78, 88.63, 88.53
Psychological: 90, February highs and lows 
Gold Consolidates with Dollar
Gold is consolidating above its psychological $1050/oz area as activity in the FX markets cools down. Trichet attempted to calm investors this weekend at the G7 summit by implying that the ECB and EU have the situation well under control. We’ve seen multiple statements from governmental representatives hit the wires over the past couple days and it seems policy makers are looking to get the negative psychological forces under control. The tactic has worked thus far with the Cable, EUR/USD and AUD/USD all consolidating. Furthermore, the data wire is relatively quiet today, giving investors and analysts little to work with. Economic releases won’t pick up again until Wednesday’s Asia trading session with the release of Australia’s Home Loans data accompanied by China’s Trade Balance data. Furthermore, the BoE’s Inflation Report could prove to be a market mover since the central bank places considerable weight on prices when determining its monetary policy action. Meanwhile, downward pressure remains on the risk trade until there is a noteworthy positive shift either fundamentally or psychologically in the risk trade, meaning gold could continue to be under pressure considering its negative correlation with the Dollar.
Technically speaking, we’ve formed some new uptrend lines which run through levels set last week. Additionally, 2/5 lows and the psychological $1050/oz level could serve as technical cushions. As for the topside, gold faces multiple downtrend lines along with the psychological $1075/oz and $1100/oz levels.
Present Price: $1063.95/oz
Resistances: $1066.88/oz, $1068.34/ oz, $1070.77/oz, $1073.95/oz, $1082.19/oz, $1084.11/oz
Supports: $1062.26/oz, $1058.74/oz, $1054.86/oz, $1052.53/oz, $1050.12/oz
Psychological: $1050/oz, $1075/oz, $1100/oz, February highs and lows
AUD/USD Stabilizes as FX Markets Cool
The AUD/USD is stabilizing above its psychological .85 level and our uptrend lines as the risk trade stabilizes across the marketplace. A weekend of rest coupled Trichet’s reassurances the ECB and EU have Greece’s debt issue under control has allowed the Dollar to ease off of last week’s highs following its incredible rally. However, downward forces remain considering the extent of last week’s pullback and the risk trade will likely need several fundamental and psychological developments to break free of its downturn. The data wire will be relatively quiet over the next couple trading sessions, giving the risk trade an opportunity to consolidate as investors assess the damage. However, investors should keep a sharp eye on the news wire concerning developments in the EU since debt scares in Greece and Portugal were the driving force behind last week’s surge in the Dollar. Australia will bring economic fundamentals back into focus on Wednesday with the release of Home Loans data. This data release could have a noticeable impact on the Aussie should the results stray from estimates. The RBA’s decision to halt its rate hikes and a setback in Australia’s Retail Sales has created a bit of uncertainty. Therefore, investors will be honing in on Wednesday’s release to get a better idea of how Australia’s economy is faring. Furthermore, China will be releasing New Loans and Trade Balance data. Hence, volatility could pick up towards the middle of the week.
Technically speaking, the AUD/USD has multiple downtrend lines serving as technical barriers along with the psychological .87 area. As for the downside, the AUD/USD has multiple uptrend lines serving as technical cushions along with 2/5 and 2/4 lows. Furthermore, the psychological .85 area could serve as a technical cushion should it be tested.
Price: .8681
Resistances: .8692, .8711, .8729, .8749, .8763, .8780
Supports: .8662, .8647, .8627, .8607, .8587, .8562
Psychological: .85, .87, February highs and lows. 
S&P Futures Move Higher as Dollar Weakens
The S&P futures are back in the green Monday as major Dollar pairs settle in the wake of last week’s intense pullback in the risk trade. The EUR/USD, GBP/USD, and AUD/USD are all stabilizing this weekend as the weekend gave investors an opportunity to settle their nerves and assess the damage. Furthermore, we’ve received several comments from global policy makers emitting confidence concerning the state of the global economy. Trichet reassured leaders at the G7 summit that the ECB and EU have Greece’s deteriorating fiscal situation under control. It seems officials are attempting to combat the negative psychological impact from last week’s debt scares in Greece in Portugal. However, there remains a legitimate concern and last week’s selloff in the risk trade sent a clear message that investor uncertainty is at a heightened level. That being said, investors should keep a watch on the news wire for further developments regarding Greece and other troubled EU economies. Meanwhile, the data wire will be relatively quiet for the next 48 hours, providing markets with an opportunity to stabilize ahead of upcoming fundamental and psychological developments. Australia and China will reignite the data wire during Wednesday’s Asia trading session with the release of Australia home Sales and China’s Trade Balance. Additionally, the BoE will release its Inflation Report followed by a speech from King. The U.S. will also release its Trade Balance data that session accompanied by a testimony from Bernanke. Therefore, equities and currencies may not remain calm for too long with key events coming during the middle of the week.
Technically speaking, to the topside the S&P futures face multiple downtrend lines along with the psychological 1075 and 1100 levels. As for the downside, the S&P futures have 2/5 and 2/4 lows serving as technical cushions along with the psychological 1050 area.
Price: 1064.50
Resistances: 1064.75, 1066.75, 1069.25, 1073.50, 1077
Supports: 106`.75, 1059.75, 1057.75, 1055.75, 1050.75
Psychological: February highs and lows, 1100, 1075, 1050
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