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Futures Analysis

James Hyerczyk from ForexHound.com at 11/02/09


The U.S. Dollar is losing ground against most major currencies this morning as traders adjust positions following last week’s shift in sentiment out of higher yielding assets and this week’s slew of key economic reports and central bank meetings.

This morning the December Euro is holding above a technical retracement level.  Regaining 1.4771 will be a sign of strength.  The current chart formation suggests a possible rally to 1.4872 to 1.4916.  Key support is at 1.4689.


The December British Pound is trading weaker but remains rangebound between 1.6689 to 1.6245.  This creates a 50% retracement price at 1.6467. The main trend will turn down on a trade under 1.6245.


Higher equity, gold and crude oil prices are helping to boost the December Canadian Dollar.  This market is still in a down trend but this morning’s reversal is indicating oversold conditions.  .9318 remains major resistance.  If the buying continues to strengthen, then watch for a break out to the upside over this price.


The December Japanese Yen is trading higher but weakening after a strong surge overnight.  The current chart formation suggests a break to 1.1009 to 1.0967 is possible over the short-run.


December Gold is trading higher this morning.  The weaker Dollar is contributing to the strength.  Low yields in stocks and bonds are making gold an attractive investment.  Funds are continuing to flow into the gold market on breaks.  Some investors are holding on to gold in anticipation of inflation.  These traders are providing the support at this time.


Treasury futures are trading lower on position lightening ahead of this week’s key reports.  Last week, yields fell sharply in December Treasury Notes and Treasury Bonds when investors dumped higher yielding, higher risk assets.  Fixed income traders will be keying in on the Fed statement on Wednesday to see if the FOMC offers any hints as to when interest rates will be increased.


Look for a better opening in the U.S. equity markets.  Bargain hunters are providing support along with profit-takers following last week’s sell-off.  Many shorts most likely held positions over the week-end in anticipation of more weakness following last week’s liquidation.  If the market doesn’t weaken early, then look for the start of a sizeable short-covering rally.


December Crude Oil could post a modest gain today if demand for commodities increases.  A weaker Dollar and stronger stock market could provide additional support.  The supply and demand picture remains bearish and could help to limit gains.



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