US Dollar Index (DX) Futures Analysis – April 29, 2013

The June U.S. Dollar Index is trading lower on Monday in follow-through selling after Friday’s disappointing GDP report. Traders are also paring positions ahead of what is expected to be an active week of data and monetary policy decisions.

Investors continue to pressure the Greenback in anticipation of continued stimulus from the Fed. U.S. interest rates are under pressure which is a sign that the central bank will continue its easy money policy. This is encouraging investors to move out of the dollar and into higher yielding assets.

One currency moving higher against the dollar is the Euro. Last week investors appeared be convinced that the European Central Bank would cut its benchmark interest rate. This morning the market action suggests that investors believe that central bank is not going to make the move.

Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

The USD/JPY is also under pressure after the Bank of Japan refused to take additional action at its central bank meeting to further weaken the Yen. The inability to pierce the psychological 100.00 level with conviction was a strong sign that the central bank would refrain from implementing additional stimulus over the near-term.

Technically, the daily chart is indicating a weakening market. Overnight the market crossed to the bearish side of a major retracement zone at 82.55 to 82.37. In addition, it took out an uptrending Gann angle at 82.34. Both moves indicate the presence of selling pressure.

On the upside, downtrending resistance comes in at 82.58. Potential support is at 82.06. A break through this level could trigger a move to the April 16 bottom at 81.78. 

Lackluster Eco Data and Poor GDP Weigh On Crude Oil Prices

Lackluster Eco Data and Poor GDP Weigh On Crude Oil Prices
Lackluster Eco Data and Poor GDP Weigh On Crude Oil Prices
WTI crude oil is trading at 92.66 easing back after it looked destined last week to trade above 94.00. Crude oil futures declined on Friday after trading in a narrow range, as disappointing first-quarter US economic growth raised worries over the outlook for energy demand.

The US economy grew more slowly than expected in the first quarter, expanding 2.5% versus expectations of a 3.2% rise. China’s first-quarter economic growth slowed to 7.7% on a year-on-year basis, disappointing economists who had expected a median 8%, according to a Journal survey. The data suggest China’s economic growth is slowing after a second-half revival last year. It also helps explain why Chinese officials in recent weeks have opened liquidity floodgates and pumped new money into the system.

India has cut down the import of crude oil from Iran by over 26.5% to about 13.3mn tons in the financial year ended 31 March 2013, as the US and European sanctions has made it difficult to ship oil from the Persian Gulf nation.

Even the weakness in the US dollar has not been able to support prices. The US dollar tumbled from the mid-83.50 range to trade this morning at 82.38 which should help support oil prices.

The last weekly report from the Energy Information Administration also showed oil stockpiles last week rose less than expected, while gasoline inventories fell sharply. Energy speculators found a number of bullish cues in the EIA report. Oil inventories last week rose 900,000 barrels, less than the increase of 1.2 million barrels forecast in a Dow Jones Newswires survey of analysts. Gasoline stockpiles tumbled 3.9 million barrels last week, the EIA reported, while stockpiles of distillates, including heating oil and diesel, rose 100,000 barrels. Refinery utilization fell 2.8 percentage points to 83.5% of capacity. This helped push crude oil price to climb up to the 94.00 price level on Thursday as prices eased on Friday and continue to dip this morning by 34 cents.

Natural gas fell for last week on speculation that fuel demand will slump after a shot of unusually cold weather in the US helped increase residential demand. Natural gas is trading at 4.277 gaining this morning as weather forecasts changed over the weekend calling for another week of chilly weather. Exporting of US natural gas remains in the headlines as Shell and Japan try to push the US government for some commitments to when they will allow an increase in exports so that future demand can be met. US gas stockpiles increased by 30 billion cubic feet to 1.734 trillion in the week ended April 19, the EIA said yesterday. Supplies were 31.8 percent below a year earlier and 5.1 percent below the five-year average, down from a deficit of 4.2 percent the previous week. Natural gas for May delivery fell 5.6 cents, or 1.3 percent, to $4.111 per million British thermal units on the New York Mercantile Exchange at 1:11 p.m. Futures have more than doubled in the past year and have been trading above $4 for three straight weeks.

 

Gold Recovers Ahead of Important Central Bank Meetings

Gold Recovers Ahead of Important Central Bank Meetings
Gold Recovers Ahead of Important Central Bank Meetings
Gold is trading at 1469.05 this morning gaining 15.45 in the Asian session. COMEX gold closed the week at $1462 an ounce, up by $55.20 or 3.92 percent for the week. Gold continues to rebound from its 200 point drop triggered by weak Chinese data and a sell recommendation from Goldman Sachs. Gold fell from 1520 to trade a low of 1320 which hours.

Last week gold prices were supported on physical demand by retailers as the recent price fall in gold attracted bargain hunters, especially from Asia. Coin dealers and jewelers were reporting a run on inventory as the US mint sold out of gold coins.

Prices were also supported as Russia and Turkey raised their gold reserves for March adding around 38 tons to the reserves. Hedge funds and money managers cut net long positions in gold futures and options in the week to April 23, as investors reduced bullish bets after the metal’s historic selloff, according to CFTC data. ETF’s saw record sell offs in gold and precious metals which continues to weigh on pricing. Gold futures declined on Friday, led by profit taking ahead of the weekend; however prices still closed higher for the week with gain of 4%, on the back of growing physical demand. Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 1,083.05 tons, as on April 27. Silver holdings of ishares silver trust, the largest ETF backed by the metal, increased to 10,392.42 tons, as on April 27.

Gold prices are expected to go down as continuous outflows from gold funds and caution ahead of the FED and ECB policy meet next week is likely to keep pressure on prices. Traders are expecting the ECB to reduce key lending rates by 25 bps, while the FOMC is expected to continue its current policy and stimulus programs.

The US Dollar slipped back against the euro, after a weaker-than-expected US first quarter growth estimate and as fears eased of military escalation over Syria’s alleged use of chemical weapons. The US dollar is down by 19 points this morning trading at 82.38, while the euro climbed at 1.3050 from its close last week at 1.3030. The weaker US dollar makes gold a more attractive buy with depressed prices the lower greenback can lure foreign traders as they buy the commodity in US dollars and their local currency brings a higher conversion.

Silver climbed to trade at 24.182 moving from the low in the 22 dollar price range, supported by the upturn in precious metals while the industrial demand remained weak after US and Chinese GDP numbers disappointed traders. Base metals are expected to move in a range as poor demand outlook from US and eurozone is likely to weigh on prices. However, pickup in Chinese demand on bargain hunting can support prices.

Euro Dollar Traders Closely Watch The ECB

Euro Dollar Traders Closely Watch The ECB
Euro Dollar Traders Closely Watch The ECB
Equities finished on a higher note Friday.  Although US data seems to continue to print on the negative side with the only positive note was a drop in unemployment claims. Mortgage application from the US declined last week from 4.80% to 0.20%, combined with lower Michigan consumer confidence. Additionally, the GDP growth rate slowed down from the expected 3% increase to an actual of 2.5% due to a higher unemployment rate. Existing home sales increased compared to new homes sales due to more buying in existing homes. This supported a downside in the dollar index which fell by 0.26% last week.

Europe remains under stress while Giorgio Napolitano was elected as the Italian president for a seven-year term, which created optimism in the market and, due to which, European equities ended on a higher note. Napolitano unveiled the new government over the weekend which will hopefully be voted on later today.

However, weak economic releases from the eurozone in the form of the debt-GDP ratio, PMI numbers and IFO weighed down on the euro. Germany seems to be cracking under years of pressure, while Spanish unemployment climbed to a record rate almost catching Greek unemployment. The countries data shows that almost 1 out of 3 people are unemployed.

From Asia, the Bank of Japan kept interest rate at its existing level and doubled the monetary easing base, which supported Asian equities to end on a higher note and continues to trade in the green as the week begins.

At the end of the week the euro fell 0.17% against the greenback, closing at $1.3030. The euro weakened after the eurozone’s debt-GDP percentage increased to 90.60% in 2012. The debt percentage increased due to a contraction in the GDP growth rate. The eurozone’s consumer confidence declined due to a record high unemployment rate and spending cuts across the region which eroded consumer spending. Germany’s and the euro-zone’s PMI number declined in April, as did Germany’s IFO figures. The eurozone’s M3 money supply fallen 2.60%. The euro climbed this morning to trade at 1.3050 as traders continue to absorb the dip in US GDP.

The next few days should be a bit exciting as the European Central Bank is holding its meeting on May 2nd and traders are expecting to see some action from Mr. Draghi, who promised to closely monitor economic data and assured markets that the ECB was ready to act if necessary.  The ECB will probably announce a rate due to a contraction in the eurozone’s GDP growth rate and a higher unemployment rate. Lower inflation at 1.7% may push the ECB to opt for the rate cut. This may create optimism in the market and support gains in the currency. However, other economic releases from Europe and Germany, including consumer confidence numbers, retail sales and unemployment numbers might curb gains in the currency. Moreover, the PMI numbers from the eurozone and Germany may further weaken the euro. Overall, traders can expect the euro to remain weak against the dollar in the days to come.

 

US Dollar Index forecast for the week of April 29, 2013, Technical Analysis

The US Dollar Index initially tried to rally during the week, but as you can see pulled back enough to form a shooting star. However, the previous week so a hammer, and as such it looks like we’re going to essentially stay within this range for the time being. Eventually we will breakout in one direction or the other, and the move should be somewhat significant. Once that day comes, we will be more interested in taking a longer-term trade in this marketplace, but in the meantime is in be very difficult to be involved from the weekly chart.

 

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US Dollar Index Forecast April 29, 2013, Technical Analysis

The US Dollar Index fell during the session on Friday, testing the 82.50 level. New this chart, you can see that there is a definite tendency to consolidate between the 82 and 83 handles, with a little bit of leeway in both directions. Because of this, we feel that this market will continue to consolidate, before eventually breaking out in one direction or the other. If we measure breakout above the 83.50 level, then it looks very likely that this market will continue much higher. Otherwise, it is probably best to simply stay out and wait to see if there is support somewhere closer to the 82 handle again.

 

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US Dollar Index (DX) Futures Analysis – April 26, 2013

The June U.S. Dollar Index is trading flat this morning shortly ahead of the release of the U.S. GDP report. Pre-report estimates are for 3.2% growth, up from 0.4% in the fourth quarter of 2012. This number should be a market moving event.

At 9:55 Eastern, the University of Michigan will release its sentiment survey. This is expected to show that confidence increased to 73.3 from 72.3. A surprise number will move the market.

Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

The Bank of Japan held off on any new policy moves, helping to prop up the Japanese Yen versus the U.S. Dollar. All week, traders defended the psychological 100.00 level, establishing it as key support.

Technically, the main trend is down. Earlier in the week the Dollar Index formed a potentially bearish closing price reversal top at 83.32. On Thursday, the index found support on a 50% level at 82.55. A break through this level could trigger a move to the Fibonacci level at 82.37. A failure to hold this level could drive the market into 82.28. On the upside, a downtrending Gann angle at 83.10 is a potential upside target.

 

Chemical Weapons In Syria Push Up Crude Oil Prices

Chemical Weapons In Syria Push Up Crude Oil Prices
Chemical Weapons In Syria Push Up Crude Oil Prices
WTI crude oil futures were trading slightly higher tracking a similar movement in benchmark NYMEX contracts. The US dollar has fallen from its highs in the low 83.00 price range to trade at 82.72 this morning, making dollar denominated commodities like crude oil cheaper. In the international market, crude oil futures edged higher due to a weak dollar against the euro and lower than-expected rise in the US crude oil stocks. US crude oil inventory rose by 900,000 barrels from the previous week to 388.6 mln barrels in the week ended Apr 19, against market projection of 1.2 mln barrels rise. Crude is trading at 93.20 giving back 43 cents as traders took advantage of the climb over 93.00 to book profits.

Crude oil prices settled at two-week highs on concerns over tightening supplies, while U.S. gasoline demand heats up ahead of the peak spring-summer driving season. Traders said weakness in the dollar, rising equities prices and news that U.S. weekly claims for jobless benefits fell to the lowest level in nearly five years added to buying interest. Data showed a sharp fall in the U.S. jobless claims last week. The initial claims for jobless benefits was 339,000 in the week ending April 20, down16,000 from the revised figure of 355,000 in the previous week, the U.S. Labor Department reported yesterday. Meanwhile, the four-week moving average, which helps smooth out week-to-week volatility, edged down to 357,500 from 362,000 in the previous week. Recent job data signaled an improving labor market, but still not strong enough to significantly cut the unemployment. The U.S. unemployment rate dropped to 7.6% in March.

Prices also got support from the reports over Syria’s possible use of chemical weapons stirred concerns over stability in the Gulf region. Oil prices jumped after the United States said Syrian government forces had likely used chemical weapons, raising worries that Washington would punish Damascus militarily. US officials said cautiously for the first time that they had evidence of the use of chemical weapons by the Syrian regime. This report was supported independently by France and Israel.

They stressed there was still not full agreement on the issue in the US intelligence community, but US Defense Secretary Chuck Hagel, speaking in Abu Dhabi, warned that use of such weapons “violates every convention of warfare.”

The report raised fears that Washington could intervene more deeply in the Syrian conflict, after having warned earlier that using such weapons would cross a “red line” in President Bashar al-Assad’s fight with rebels. A senior White House official said “all options are on the table” should use of the weapons be confirmed, a euphemism for military options being taken into consideration. But a US defense official stressed that a military intervention was not imminent.

Implied demand for gasoline–the most widely used petroleum product in the world’s biggest oil consumer–climbed to its highest level since November last week, U.S. government data showed. Gasoline stockpiles logged their biggest drop in a year, breathing new life into futures contracts that fell to a four-month low in recent days.

Gold Continues To Recover Surprising Speculators

Gold Continues To Recover Surprising Speculators
Gold Continues To Recover Surprising Speculators
Gold once again is surprising the markets after tumbling over $200 in a 24 hour period last week, touching the $1320 price speculators were sure that the precious metal would remain weak ahead of any decision by the Federal Reserve. Many traders were saying gold had turned bearish and would not recover. Gold tumbled into a bear market April 12 and by the end of the following session had retreated 14 per cent, the biggest two-day drop since 1983, falling as low as $1321.95. The slump highlighted some investors’ loss of faith in the world’s traditional store of value, even with nations still engaged in unprecedented money printing.

Physical buyers jumped in the markets, ranging from coin collections to stockists. As the marriage season hit in India pent up demand for jewelry had gold jewelry flying out of the stores. The US mint ceased selling coins as it simply ran out. Standard Chartered said April 23 its physical gold sales to India exceeded the previous record by 20 per cent and UBS said the same day its flows there are near the highest since 2008.  Central banks began adding to their gold holdings, while electronically traded funds in gold and silver sold off at record levels. Last week Goldman Sachs issued a short sell recommendation for gold which compounded with lackluster data from China spooked investors who sold off at record speed. Yesterday, Goldman withdrew its recommendation as the gold market began to climb and investors re-entered the market place.

Gold headed for its best week since October 2011 as demand rose after the worst slump in three decades. Silver was set for the best week since November.

Bullion for immediate delivery climbed as much as 1.2 percent to $1,485.50 an ounce, the highest since April 15 when it plummeted 9.1 percent. The metal traded at $1,476.33 set for a 5.2 percent gain this week.

Gold surged 12% from a two-year low on April 16 as coin and jewelry demand expanded from the U.S. to China and India. The volume for the benchmark contract on the Shanghai Gold Exchange was more than six times last year’s daily average every day this week, while premiums to secure supplies in India jumped to five times the level before the slump. Coin sales by the U.S. Mint are the highest since 2009 and Russia and Kazakhstan expanded gold reserves for a sixth month in March. Hedge funds have also got more bullish on gold, raising their bets on higher prices for two consecutive weeks, data from the US Commodity Futures Trading Commission show.

Silver has also capitalized on the demand for precious metals, while being held down by a slower demand for industrial metals. Silver has recovered to trade at 24.388 after falling into the 22.00 price range just days ago. The US dollar has dipped from a high earlier in the week well above the 83.00 range to trade this morning at 82.72 helping to make precious metals more attractive to investors.

US Dollar Index Forecast April 26, 2013, Technical Analysis

The US Dollar Index fell during most of the session on Thursday, but bounced off of the 82.50 level in order to form a hammer. This hammer suggests that we are going to attempt to breakout to the upside, something that we have thought or some time now. However, it isn’t until we break out above the 83.50 level that we think the “all clear” is put out for buyers to get involved in this market. Alternately, we would be interested in buying pullbacks down to the 82 handle if they occur.

 

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US Dollar Index (DX) Futures Analysis – April 25, 2013

A soaring British Pound and a stable Japanese Yen helped to drive the June U.S. Dollar Index lower overnight. Since the market formed a technical closing price reversal top on Wednesday, there should be a bearish bias on the market all session.

A strong rally in the British Pound helped drive the dollar index lower after the latest reading on economic growth showed the country avoided slipping into a triple-dip recession in the first quarter. A report from the U.K. Office for National Statistics showed the economy expanded by 0.3% in the first quarter, exceeding expectations of a 0.1% improvement. The surprise expansion meant the U.K. economy missed falling into a recession for the third time in five years.

Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

Since topping at 1.5411 on April 11, the U.S. Dollar had posted a gain against the Sterling on the notion that a weakening economy would lead to the implementation of additional stimulus by the Bank of England. Speculators took the market down to 1.5196 by April 23 based on this event. The overnight move drove the GBP/USD into a major Fibonacci level at 1.5457.

A stable Japanese Yen also helped pressure the U.S. Dollar. This USD/JPY has been hovering near the psychological 100.00 level for four days as traders took to the sidelines ahead of this Friday’s Bank of Japan policy decision.  

Technically, the June U.S. Dollar Index formed a closing price reversal top on Wednesday. This chart pattern often indicates the start of a 2 to 3 day break equal to at least 50% of the last rally. Based on the range of 81.78 to 83.32, the market completed the retracement when it tested the 50% level at 82.55. If downside momentum takes the market through this level then look for a test of the Fibonacci level at 82.37.

Short-term oversold conditions could trigger a technical bounce following the test of 82.55. The market may even gain intraday strength if it crosses over to the bullish side of an uptrending Gann angle at 82.66. Additionally, a move to the bullish side of a downtrending Gann angle at 82.72 could also trigger some intraday short-covering. 

Forex Fundamentals In Play Today

Forex Fundamentals In Play Today
Forex Fundamentals In Play Today

The ECB will cut its key interest rate to a record low next week as the euro- region economy slumps, according to banks including Nomura International Plc., UBS AG and Royal Bank of Scotland Group Plc. Now how could this many analysts be wrong? If anyone thinks they can out guess Mr. Draghi good luck to them. Economists forecast a reduction for May after gauges of manufacturing and services activity for April underscored weakness in output. Germany’s Ifo index of business confidence fell more than economists predicted. Mr. Draghi stated in his press conference after the April ECB meet that the bank was prepared to help the eurozone if economic data remain poor and that the bank would be closely watching the reports over the next few weeks. Traders have carefully evaluated the flow of data from the zone and there has been nothing supportive of recovery. There is a global call on the bank to take some action but that does not mean Mr. Draghi will act immediately or what his actions will be. Today traders will see unemployment data from France and Spain, which are expected to show increasing numbers. The euro is trading above the 1.30 level but staying in a tight range.

US demand for durable goods slumped in March by the most in seven months, adding to signs manufacturing in the U.S. cooled at the end of the first quarter. Bookings for merchandise meant to last at least three years fell 5.7% after a revised 4.3% gain the prior month that was smaller than previously estimated. Economist and analysts are hoping that this slowdown in growth and recovery is only due to the stress of the “fiscal cliff” and the “sequestered” budget cuts which kept consumers and businesses stressed through the first quarter of the year. Later today, traders will carefully evaluate the US unemployment numbers. The US dollar dipped from the low 83 price range to trade at 82.86 this morning.

South Korea’s economy grew the most in two years in the first quarter as the government front-loaded spending and exporters weathered the slide in the yen that aids rivals in Japan. GDP gained 0.9% from the previous three months after a 0.3% increase in Q4. That exceeded the median 0.7% estimate by Bloomberg. While the Bank of Japan continues its huge stimulus program the JPY is heading to the 100 price level trading today at 99.42, which is hurting its neighbors as the drop in the value of the yen, helps lower the price of Japanese exports which makes it more difficult for others to compete.

The bigger mover and shaker today has been the Great British pound as traders are hailing the government’s move to extend its Funds for Lending program and to open it to a wider financial services market allowing more funds to make it to help small and medium size businesses. Rumors are starting to surface that the UK may  just miss falling back into a recession with GDP edging just a tad higher as traders wait for data due shortly. The GBP is trading at 1.5324 braking above the range it has been stuck in over the past week or so.

Energy Markets Paying Close Attention To EIA Inventory Reports

Energy Markets Paying Close Attention To EIA Inventory Reports
Energy Markets Paying Close Attention To EIA Inventory Reports
Crude oil prices continue to climb this morning trading at 91.92 destined to break the 92.00 price as markets head into the European session.  Oil prices have been buoyed by a lower-than-expected gain in US crude stockpiles and hopes of an interest rate cut by the European Central Bank but seem to be ignoring the drop in US durable goods and German Ifo business confidence that surprised the markets on Wednesday. The closely watched Ifo survey of German business confidence fell sharply in April, after the fumbled rescue of Cyprus once again cast doubt on the euro zone’s ability to save itself. The figures followed Tuesday’s unexpectedly weak set of purchasing managers’ surveys across the euro zone.

The US government’s Department of Energy yesterday announced that oil stockpiles in the country increased by 900,000 barrels in the week ending April 19, fewer than forecasts for a gain of 1.2 million barrels. Changes in US inventory stocks are closely watched by dealers as they indicate levels of demand in the world’s top crude consumer. WTI traded near the highest price in two weeks after U.S. gasoline stockpiles fell and fuel demand increased. Crude was trading higher on Wednesday, following Nynex prices, as U.S. crude inventories rose by less than expected in the week ended April 19, according to data released Wednesday by the Energy Information Administration unit of the U.S. Department of Energy. Crude oil stockpiles rose 947,000 barrels to 388.6 million barrels, compared with an average survey estimate of a rise of 1.2 million barrels. There is no explainable reason for the surge in crude prices, after Chinese GDP missed expectations a week ago and just a few days ago, Chinese HSBC PMI printed well below expectations. The US dollar which dipped slightly on the day has been trading much higher this week then over the past month. The dollar is trading this morning at 82.86 after trading above 83.00 yesterday.

Natural gas continues its slow decline after peaking above the 4.40 price gas is slowly slipping downward as trader’s book profits and worry about the end of the winter chill. Natural gas is trading at 4.205 down by 11 pips this morning while traders eagerly await today’s inventory, which they are hoping shows a larger than expected decline after an unusual spell of chilly weather across the US. As news remains focused on the export and increased demand for US natural gas, governments and businesses are awaiting rulings from the US government. Even though the U.S. is one of the world’s largest and most advanced LNG, and the U.S.-Japan security alliance is critical, the U.S. hasn’t yet capitalized on Japan’s need for assured LNG. After the Fukushima disaster, Japan was able to meet its immediate energy needs by paying premiums for the diversion of LNG shipments from intended markets. But Japan harbors a determined interest in long-term agreements with U.S. exporters. Abundant American supplies, their reliability (with the right U.S. policies), and the prospect that U.S. LNG will be among the cheapest all make American LNG an ideal long-term source.

Gold Regains Its Momentum

Gold Regains Its Momentum
Gold Regains Its Momentum
Investors finally returned to the commodities market yesterday pushing gold up by 20.00 on Wednesday and following suit on Thursday morning to leave gold at 1443.65. There seemed to be a radical shift in the gold market as traders had abandoned it after last week’s tumble. Gold fell close to 200.00 in 24 hours the largest decline in 30 years after into the 1325 price range. As prices dropped EFT’s and speculators sold off the asset at record levels. While pent up consumer demand saw gold coins and jewelry flying off shelves. The US mint stopped sales as the run on gold coins depleted inventories.  Gold climbed for the seventh time in eight days, rebounding from the biggest slump in three decades, as rising central bank and physical purchases countered falling exchange-traded product holdings.

Traders had been a bit antsy this week after Chinese data continued to miss forecasts and the eurozone and US followed suit. There was a slow subtle shift to safety which helped support the US dollar as well as the JPY, which was unable to break the 100 price level against the greenback. Gold saw a slight increase in trade but it was the physical demand that kept prices afloat, until the shift after US durable goods missed target by a large number.  Today’s rise has been helped by a weaker US dollar, the currency most gold trades are denominated in, which has pushed up the relative value of the metal. The US dollar fell on a poor reading on a much bigger than expected slide in durable goods orders during March, with the 5.7 per cent fall almost twice an expected 3 per cent decline that economist forecasts centered on. A weaker run of economic data from many major economies has traders believing that easy monetary policy is likely to remain in place for some time to come.

Shortly after the durable goods release gold began to tick up as traders shifted from the high dollar to cheap gold. The US dollar had been trading in the 83.00 price range but dipped below a bit this morning dropping 20 points to trade at 82.86.

Silver was able to ride the shift in sentiment also gaining yesterday and then adding over 2% this morning to trade at 23.293. Both gold and silver are relatively cheap in comparison to the last 6 months.  Goldman Sachs withdrew their sell recommendation for gold yesterday after they started the ball rolling downhill last week.

Industrial metals remain overall weak, with growth, manufacturing and sales tumbling the outlook for metals is very poor. Copper futures pushed higher on Wednesday as investors who had bet on lower prices during the metal’s retreat to 18-month lows cashed out. Futures this week slumped to the lowest price since October 2011 on worries that slowing demand growth in top consumer China would allow metal to keep piling up. Inventories of copper held in London Metal Exchange-monitored warehouses are at a decade high, and have almost doubled so far in 2013, rising 94%.

US Dollar Index Forecast April 25, 2013, Technical Analysis

The US Dollar Index fell during the session on Wednesday, closing below the 83 handle. This market seems like it is still struggling with the general vicinity, and that there is still a significant amount resistance just above. However, we certainly see a strong attempt to breakout, and as a result we think that more than likely we will continue to see that play out in this marketplace. Pullbacks should be viewed as buying opportunities, and a daily close above the 83.50 level should be an imitation to start buying as well. As for selling, we have no interest in doing so at this point in time.

 

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US Dollar Index (DX) Futures Analysis – April 24, 2013

The June U.S. Dollar Index reversed course overnight following an initial surge to 83.32. Profit-taking apparently hit the market after the market neared the early April main top at 83.66. With investors shifting their interest to riskier assets, it looks as if the Greenback could feel some selling pressure today.

The dollar initially rose after the German Ifo survey fell short of expectations. The data fueled speculation the European Central Bank would cut interest rates, weakening the Euro against the dollar. The dollar also received a boost after the Australian Dollar declined after the release of weaker-than-expected inflation data encouraged investors to bet on a further cut in Aussie interest rates. The British Pound also initially fell against the dollar after a report showed a gauge of U.K. retail sales unexpectedly fell this month.

Following the initial upward thrust in the U.S. Dollar Index, profit-takers took over; reversing the dollar’s course and sending it lower shortly before the U.S. Forex market opening. The breakdown could be worse, but the USD/JPY is posting a small gain. If the Yen starts to rally against the dollar then look for more pressure to emerge on the U.S. Dollar Index.

Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

Technically, a new range may be forming between the April 16 bottom at 81.78 and today’s high at 83.32. The retracement zone created by this range is 82.55 to 82.37. This zone is the next likely downside target.

Initially, the key resistance level was 83.44. Based on current market activity a new resistance level has formed at 83.22.

If downside momentum continues then investors should watch for a possible test of an uptrending Gann angle at 82.53. Based on the average daily range, the market is not likely to test the key downside targets today, but the closing price reversal top that is currently forming should trigger the start of a move back to these support zones. 

US Dollar Index Forecast April 24, 2013, Technical Analysis

The US Dollar Index bounced off of the 82.50 level during the Tuesday session in order to skyrocket higher and move above the 83 handle. We are now starting to get into the highly resistive area of the recent price action, but if we see this market move above the 83.50 area we feel that this market will continue much, much higher. That is our basic premise anyways, but that would without a doubt remove any type of concerns that we would have. As far as selling is concerned, it’s an impossibility at this point in time, and we will be looking for pullbacks as opportunities to buy this contract.

 

US Dollar Index Forecast April 24, 2013, Technical Analysis
US Dollar Index Forecast April 24, 2013, Technical Analysis

Physical Buying Frenzy Supports Gold

Physical Buying Frenzy Supports Gold
Physical Buying Frenzy Supports Gold
Gold is gaining this morning in Asian trading reflecting a more positive mood after earnings in the US did better than expected and housing numbers showed an increase. Gold has added 13.75 to trade at 1422.55. The precious metal continues to be supported by physical buying as consumers seem to continue in frenzy. Demand from consumers for the precious metal has caused the U.S. Mint to suspended sales of its one-tenth ounce American Eagle gold bullion coins as surging demand after bullion’s plunge to two-year lows depleted the government’s inventory. This marks the first time it has stopped selling gold product since November 2009, dealers said. A spokesman for the Mint did not return calls seeking confirmation of that milestone. The U.S. Mint, one of the world’s leading gold and silver coin producers, halts coin sales from time to time as it runs out of coin blanks to meet increases in demand. India markets are closed today for a local holiday as wedding season moves into full swing gold purchases are exceeding demand, forecast and prior years. The US dollar remains near recent highs in the 83.00 price range trading flat this morning. The stronger US dollar also weighs heavily on precious metals, as dollar denominated assets cost more in the terms of dollars.

ETF continue to shed gold almost as fast as consumers seem to be buying the metal which is keeping gold from a larger tumble. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.68 percent to 1,097.19 tons on Tuesday. The current holdings are at multi-year lows. Gold, which has dropped about 15 percent this year, has been caught in a tug-of-war between physical buyers seeking bargains and wary investors cutting exposure to it on worries about central bank sales and prospects of easing inflation.

Manufacturing data released from China and Euro Zone intensified the worries over global economic growth, souring overall market sentiments. Commodities were in deep red after manufacturing PMI from China were below expectations and that from Germany shrank for the first time in five months raising concerns that global economic activity is losing steam.

Base metal on the LME were on the negative turf with copper prices making a fresh eighteen month low hurt by worries over demand from China. HSBC flash manufacturing PMI released yesterday indicated a dip to 50.5 in April from the previous month reading of 51.5.

Silver is also gaining on cues from gold this morning to trade at 23.053 while the white metal remains very weak being pulled down as base metals and industrial metals sag due to poor eco data as mentioned above.

 

US Dollar Index (DX) Futures Analysis – April 23, 2013

The June U.S. Dollar Index is trading higher after a volatile overnight trade. Early in the session, the dollar plunged versus the Japanese Yen after weaker-than-expected Chinese manufacturing figures added to concerns about slowing growth in the world’s second-largest economy. Shortly thereafter, a report showed services and manufacturing in the Euro Region shrank for a 15th month, sending the dollar higher versus the Euro. The Chinese data also drove the Greenback higher versus the Australian Dollar.

The news from China comes as no surprise because of the austerity measures in Europe and slower growth in the U.S. Today’s poor reports from Europe increased the likelihood of the European Central Bank cutting interest rates at its next meeting. The sharp sell-off in the EUR/USD is a strong indication that speculators are betting heavily on this action taking place.

Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

Technically, after an early session break that tested a 50% price level at 82.72, the June U.S. Dollar Index surged, regaining the Fibonacci level at 82.94 and crossing over to the bullish side of an uptrending Gann angle at 83.03.

Currently, the market is in a position to challenge a resistance angle at 83.25. A sustained move over this angle could drive the market into 83.46.

Later this morning, U.S. Dollar traders will get a chance to react to the Flash Manufacturing PMI and New Home Sales. The Flash Manufacturing PMI is expected to show a decline from 54.6 to 53.8. New Home Sales should show a slight gain from 411K to 416K.

Bullish investors will be looking for news that will indicate an improving U.S. economy. This would drive the dollar up against most major currencies. 

Crude Oil and Natural Gas Decline After Weak Housing Data

Crude Oil and Natural Gas Decline After Weak Housing Data
Crude Oil and Natural Gas Decline After Weak Housing Data
WTI crude oil is giving back some of yesterday’s gains to trade at 88.83 down by 36 pips and continuing to decline after a lackluster PMI report from China this morning. Crude oil climbed Monday, with Brent crude back above $100 a barrel, as prices recovered from last week’s sell-off of more than 3%. Monday’s move comes on the heels of last week’s steep gains, attributed to concerns about weakening oil demand and stabilizing global supply. Brent fell under $100 a barrel for the first time since July. Signs of weak global oil demand have been a drag on oil prices in recent months, following demand growth downgrades from the Organization of the Petroleum Exporting Countries, the International Energy Agency and the Energy Information Administration.

This morning Chinese HSBC PMI manufacturing data printed at 50.50 showing continued expansion but at a slower rate than markets had expected. The forecast was at 51.40 based on estimates of growth in China and factory increases. Last week Chinese GDP data also failed to meet expectations printing at 7.7% which is respectable growth, but the forecast was for growth at 8%. This sparked a huge tumble in the commodities market with gold tumbling the most in one session in close to 30 years, while crude oil followed suit.

Sales of US existing home sales also declined yesterday missing forecasts and weighing on energy commodities. Previously owned U.S. home sales unexpectedly dropped in March as a lean supply of properties kept the industry from generating a stronger recovery. Purchases of existing houses, tabulated when a contract closes, fell 0.6 percent to a 4.92 million annual rate.

Crude oil inventories increased again by 2.6 MB and reached 1,781.8 million barrels. The linear correlation between the changes in stockpiles remained mid-strong and negative: this correlation implies that the price of oil, assuming all things equal, will decline again next week.

Furthermore, oil imports to the U.S also rose by 0.4% last week. The weekly developments in oil imports have a mid-strong negative relation, which suggests oil prices may further decline next week. Oil production and refinery inputs also rose last week. In other words, the rise in supply suggests the oil market has slightly loosened in the U.S.

Gains in US equity markets helped supported dollar index and in turn helped US crude futures to move ahead further. Bargain hunting was also seen due to lower crude oil prices overall.

However, overall demand still look slump and over increasing stockpile of crude oil has pressurized crude oil prices overall. Traders can expect crude oil prices to move down today as poor home sales data from US has increased the worry over US economy. Also inventory is expected to increase which can pressure the prices downwards.

Natural gas continues its decline as traders sell off to book profits after natural gas hit a recent high over 4.40. The commodity is trading at 4.274 down 19 pips this morning. US natural gas futures moved down on Monday for the first time in last five sessions due to milder weather forecasts that should finally slow heating demand after few more days of cold weather.

 After a late spell of chilly weather increased residential demand, the weather forecast is now calling for more spring like temperatures as winter is now behind. Traders will wait to see how much inventory was used during the cold front last week. Natural gas is expected to continue to ease below the 4.00 price range.