Futures Market Commentary for October 12th 2012 $GE_F $EED_F $YE_Foptions Xpress - Friday, October 12th, 2012
Today's Spotlight Market
The Euro's rally in spite of a downgrade of Spain's debt rating was impressive, though many analysts were expecting such an action. Much better than anticipated, the U.S. weekly jobless claims figures supported the Euro vs. the U.S. Dollar even though the Labor Department reported some "technicalities" with this week's figure that make the data "suspect".
The over 1,000-pip recovery in the value of the Euro vs. the U.S. Dollar since late July caught many traders off guard, as there has been little in the way of realistic measures being implemented to stave-off the continued deterioration of the Euro zone economy. The International Monetary Fund ("IMF") released some somber research regarding the global economic outlook, with the current Euro crisis front and center of global economic concerns. Little progress has been made in dealing with the debt situation in both Spain and Greece. With Spain reluctant to ask for aid from the European Stability Mechanism ("ESM"), at least until after regional elections in Spain on October 21st and Greece continually short of funds, there is little to reassure investors that the crisis will be abated soon. A record short position in Euro currency futures may have been a major catalyst in the recent recovery of the Euro, as short-covering buying has taken on a life of its own vs. overall negative Euro zone fundamentals. The past 4 weeks have seen some price consolidation as market sentiment moved from being overly bearish to overly bullish, and now some traders are beginning to reassess their positions as the December Euro futures hover near the 1.3000 area. Though the European Central Bank's program to buy unlimited amounts of government debt may have sparked the rally in the Euro, the terms that a struggling country would have to agree to in order to provoke the purchases of its debt may end up being too unpalatable to actually be implemented.
Looking at the daily continuation chart for the Euro futures, we notice what appears to be a descending triangle pattern forming. This chart pattern is usually viewed as a bearish indicator, possibly signaling that long-holders are starting to exit their positions. Prices are trading above the 200-day moving average ("MA"), but are currently below the 20-day MA, giving a conflicting signal to both long and short-term traders. The 14-day RSI is neutral, with a current reading of 55.47. 1.2813 is seen as support for the December Euro, with resistance found at 1.3080.
Mike Zarembski, Senior Commodity Analyst
|Support / Resistance & Oscillators|
|Dec Euro Pivot||1.2783||1.2861||1.2910||1.2988||1.3037|
|Dec Euro Chart||1.2813||1.3080|
|Today's Highlights and Economic Data|
|Economic Reports||8:30 AM ET: Export Sales
8:30 AM ET: PPI
|FND / LTD||LTD: Oct Hogs, Soybean Oil & Soybean Meal
LTO: Oct Hogs & Eurodollars
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