A new pattern of daily trade is in place as the half-year comes to an end, and repeats what traders witnessed when Bear Stearns collapsed in 2008 and when Lehman Bros did the same in 2009. Both incidents sent shockwaves through the global credit markets, and both consolidated daily trading moving into small segments of price action that house virtually all of the momentum.
The net result right now is that the interbank market is balancing books as NYNEX commodity trade closes at 14:30 ET each day, and the last 90 minutes of U.S. trade is attracting the lion's share of daily movement.
When in doubt about the ability to easily sustain a trend, in either direction, the speculative side of the global traded market finds a way to create momentum so that book-balancing can be completed, and forex traders are now dealing with a period of trade that from 17:00 ET through until 14:30 ET just cannot move too far.
The fear of loss, even of a potential gain, is overwhelming, and a lot of it has to do with what numbers get reported by trade desks, hedge funds, mutual funds, and sovereign wealth funds at 17:00 ET on June 30th 2009. Until then, the 90 minutes of trade that closes each global daily session from 14:00 ET will be the center of attention.
The dollar index reversed off the 88.50 resistance price point that sent it lower in 2004, 2005, 2008, and 2009. There seems no reason to think that the same price point cannot be re-tested if equity markets fail to find support. Whatever happens in other markets, the recent high may however be the top of where global valuations on the Usd are pegged.
The dollar touches every part, of every global market, every day. It is the unit that central banks rely on as a reserve currency, and is the vehicle used to trade all global commodities on international markets. The index is made up of Euro 58%, Yen 13%, Pound 12%, Canadian 9%, Swedish Kronor 4% and Swiss Franc 4%.
Global trade has pushed S/P futures down to test 1095 support, with a break lower likely to lead to a parachute-drop to 1075. In that time the major currencies will likely lose heavy ground to the dollar, and most pairs will likely give back the June gains.
Global equity Daily charts are holding a long trend that looks to be finding buyers on any tests of support as half-year and quarter-end book-balancing takes place.
Volatility is reducing, as is the daily trading range. S/P futures trade reflects the risk sentiment seen in each of the main global stock markets. Futures trade runs 23 hours a day and reflects what is being priced in regard to fair value in anticipation of the cash market opening in each region. Risk Tolerance = Higher Equities and Lower Usd. Risk Aversion = Lower Equities and Higher Usd.
Eur/Usd has hit a sideways 30 minute chart channel, after the 4-hour chart signaled a change to short momentum at 1.2350, but the pair has struggled to follow through and hold below 1.2300. That tells us that it will take a lot of equity market selling to drop euro lower in the near-term, although sentiment now is mixed.
Usd/Chf is holding below 1.1100 as the battle-royale goes on over Eur/Chf valuations, with the Swiss National bank on the long side and global speculators on the short side. When the pair does break higher, through 1.1200, the rush to liquidate short Usd/Chf positions may be dramatic.
Gbp/Usd benefited from a positive spin put on the U.K. Budget and a move at the latest rate meeting from one member to raise interest rates, which has allowed the pair to move higher from the 50-day SMA area at 1.4830. The 4-hour chart is running sideways, although holding a long bias.
Usd/Jpy cannot break the weekly chart pennant formation that has price action locked in a 90.00 to 92.00 range, that when broken, either way, will release pending orders in great number.
Usd/Cad took a ride higher to test resistance at the 50 and 100-day SMA areas just above 1.0300, and now awaits the next bout of momentum to hit. The 4-hour chart is still in short mode, and is in-line with short daily momentum reads.
Aud/Usd is the most bullish pair of the majors, and is holding a long 4-hour chart read with ease. The pair has already broken technical ground that the other majors are struggling to complete, and that may allow the pair a period of consolidation while the other currencies play catch-up.
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