Futures Market Blog

USD/JPY Daily Commentary for 3.2.09

The USD/JPY is weakening back towards our 2nd tier downtrend line after it failed to reach the psychological 100 level.  The movement comes in reaction to a withering U.S. economy.  Investors are now bouncing back and forth between using the Yen and the Dollar as a safe haven.  Should the U.S. economy release more highly negative economic data coupled with discouraging news, then we could see a retreat towards the Dollar and considerable profit taking in the USD/JPY.  However, this development would have to come sans equally negative news from Japan.  Therefore, the direction of the USD/JPY is turning into a guessing game for the near-term.  However, the 100 area will continue to serve as a critical psychological barrier to the upside.  Should the USD/JPY happen to close comfortably above 100, then we could see the continuation of its impressive near-term surge.  On the other hand, there are several downtrend weights bearing down on the USD/JPY and the currency pair could easily duck back into its medium-term downtrend.  Fundamentally, we maintain our resistance of 98.25 with fresh resistances of 99.05, 99.64, and 100.30.  To the downside, we find supports of 97.66, 97.22, 96.56, and 95.96.  The USD/JPY is currently exchanging at 97.62.

GBP/USD Daily Commentary for 3.2.09

The Cable is selling off sharply on Monday in reaction to a terrible earnings report from HSBC.  Additionally, the major London bank will need to raise cash to stay afloat, showing a second wave of contraction is washing through the global financial industry.  Since Britain’s GDP is highly reliant on the financial sector, the Cable is getting knocked with the currency pair heading back towards the psychological 1.40 level.  The relative weakness of the Pound is reflected in the EUR/GBP as the Euro looks to break out against the Pound again.  Therefore, it seems it is the Cable’s turn to make a large leg down.  We must not forget both the EUR/USD and GBP/USD are positively correlated to U.S. equities and the S&P futures are crashing below their 2008 lows.  Therefore, we find little reason to be positive on the Cable trend wise.  Although Britain’s Manufacturing PMI came in line today, Net Spending and Mortgage Approvals continue their decline, showing consumer confidence is deteriorating.  Fundamentally, we find resistances of 1.4078, 1.4119, 1.4173, and 1.4219.  To the downside, we see supports of 1.4023, 1.3964, 1.3905, and 1.3841.  The 1.45 level still serves as a psychological barrier to the upside with 1.40 serving as a cushion to the downside.  The GBP/USD is currently exchanging at 1.4060.

EUR/USD Daily Commentary for 3.2.09

The EUR/USD has fallen below all of our supports and our relatively flat medium-term uptrend.  Fortunately for the bulls, the EUR/USD has found temporary support just above February lows, preventing the currency pair from retesting 2008 lows for the time being.  However, the EUR/USD is in dangerous territory, for if the currency pair should crash below 2008 lows, we could see a heightened near-term selloff.  Considering the S&P shares a positive correlation with the EUR/USD and the S&P has fallen below its own 2008 lows, then it is difficult to be positive on the EUR/USD trend wise.

Germany’s 2nd largest bank, Commerzbank AG, posted significant losses today after its CEO said the bank may need to attain more cash to maintain operations in the futures.  Furthermore, France’s largest bank, BNP Paribas, dropped roughly 8% in European trading.  Eastern Europe continues its rapid contraction, harming all of the EU banks with significant exposure to the area.  Eastern Europe’s decline coupled with a faulting U.S. economy is a substantial reason for the Euro to depreciate against the Dollar since the ECB may need to increase the potency of its upcoming monetary shock.

Fundamentally, we find support of 1.2555 with 2nd tier and bottom-end supports resting at 1.2514 and 1.2458, respectively.  To the topside, we see resistances of 1.2634, 1.2690, 1.2761, and 1.2822.  The EUR/USD is currently exchanging at 1.2605.