Poor Economic Data Leads to Lower USD
Good Morning,
More of the same. Equities try to go down and as usual, we are trading well off the lows for the day. If you read Thursday's article, you were aware that the buyers were incessant and the the sellers in the VIX seemed to be taking off their "risk on" trades.
First up today, fundamentals. Guess what? We had more poor news. This time, on the retail sales side. That makes two (2) months in a row that the data has come in under expectations. Why do you think this is? Why are Americans slowing their spending? Could it be they are nervous about their job situation?
The data set continues with claims, Philly Fed, Bernanke's semi-annual appearance on the hill, and of course, earnings reports. Lots to keep track of!
Technically, the SPX is in the upper reaches of its recent range, with resistance at 1370. Support is at 1320 and 1308. Maybe more bad news will get us to test resistance as the worse things are, the more hope there is for a "QE Rescue".
In forex, the EUR/USD is trying to stay off its lows, but sellers are definitely in charge. Will we see a break of 1.20 and then a possible test of the 1.1875 low?
Past performance is not indicative of future results
As far as you day traders go, the USD is very, very weak against its cross pairs as the equity markets are stronger around the world. Again, as I mentioned earlier, even though the equity markets are down a bit today, we are off our lows of the day and given the huge move up on Friday, we aren't giving back a large percentage of the gains. So, a big move up, followed by a small retracement could lead to another move up. The USD seems to be taking its cue from equities and the stronger equities are, the weaker the USD is. You saw it on Friday and there seems to be some follow through today. On the flipside, if equities are overbought, is the USD oversold? Could this be a rally that you were looking for in the EUR to short the EUR/USD?
Happy Trading and Be Environmentally Cool
Coach Brian
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
