** Dollar Slow Advance Sidetracked by S&P 500 Surge
** Euro Holds Fast Despite Sharp Drop in Inflation
** Yen Crosses Fail to Authenticate Risk Run
Dollar Slow Advance Sidetracked by S&P 500 Surge
Though the US Dollar's relationship to risk trends has been confused over the past months, a record high from the S&P 500 certainly leverages the occasion of a bearish close from the safe haven dollar. The benchmark equity index managed to overtake the 1,850 range high that has capped the market since we first approached the level on the final trading day of 2013. However, the headline-grabbing move couldn't muster enough fortitude to keep above the threshold into the close. Digging further into the impetus behind the 'risk on' position of the day, we would note that the yen crosses and Emerging markets were little moved. What does this tell us? That the market is still lacking for the bullish commitment that would help us scale resistance and engage a new wave of capital inflow into the financial markets (in other words transition a breakout into a trend). The limited level of confidence translates into limited losses for the greenback. The Dow Jones FXCM Dollar Index (ticker = USDollar) was down 0.2 percent - breaking the five-day run before it but not causing any panic. In the upcoming session, we should focus more on the 'depth' of any risk tides. Otherwise, the docket brings a Fed Tarullo speech and a Consumer Confidence survey.
Euro Holds Fast Despite Sharp Drop in Inflation
We should be no strangers to complacency nowadays - the charge in US equities and record use of leverage is testament to that - but the euro's steadfastness in the face of mounting data goes beyond the calm of a quiet fundamental backdrop. For the euro, the heavy capital inflows that chased the region's post-sovereign and banking sector crisis yields are facing an outlook of far greater restraint than the economic figures are suggesting. As the ECB is wont to warn, 'downside risks' remain for the region. The question is how tangible and concerning those risks look. The central bank has refused acting preemptively since its November rate cut, but Monday, the Eurozone CPI figure for January dropped a record 1.1 percent. We have the EU's economic forecast update today, while Thursday offers February CPI and January jobs data.
Yen Crosses Fail to Authenticate Risk Run
Perhaps one of the best indications that Monday's risk move was lacking for momentum that could mount a new wave of optimism was the yen's performance. Where the currency did drop against its higher-yielding counterparts (the crosses advanced), the move was restrained and cowed by resistance. This doesn't mean that we won't eventually find a renewed bullish drive, just that this thrust is not one with terminal velocity. Meanwhile, the CFCT net speculative holdings on yen futures increased a second week. While not a large increase, it halts a 2014 bullish trend.
British Pound: BoE Hike Hopes Fading in Rates Market
Swaps have proven a poor conduit for interest rate expectations for the
New Zealand Dollar: Surge in Inflation Expectations Cut Short
It's true that the
Natural Gas Suffers Biggest Drop in Over Six Years: Weather to Expiry
While the US equity performance stole the headlines this past session, the top move for the day belongs to Natural Gas. The energy commodity market favorite suffered an incredible 11.3 percent collapse on the day via
Emerging Markets Mixed Despite Lift in
At the conclusion of the G20 meeting in
Gold Spot Price and Speculative Longs Hit Four-Month Highs
A 1.0 percent rally by spot gold, 1.1 percent surge for gold futures and 1.1 percent run for a key gold ETF (the SPDR Gold Shares) sent all three to four-month highs. This jump happens to coincide with the dollar's tumble and the CRB Index's gap to 12-month highs. The traditional fundamental 'appeals' of the precious metal were engaged, but certainly not rousing the level of excitement that we would normally associate with pressing to new highs. This looks to be more of a 'market conditions' development. A broad advance in commodities - metals, energy and even 'softs' - is lifting the broader asset class. Looking at how traders are positioning in the metal, volume behind Monday's jump was the second highest for the year. From the CFTC's COT figures, we find speculators in the futures market have moved up their exposure to highest let long position since the week of
China Leading Eco Index - Conference Board (JAN)
Data is key as the Kiwi sits at major technical resistance. Higher inflation expectations would serve as a bullish Kiwi catalyst as the central bank hints at rate hikes.
Japan Small Business Confidence (FEB)
These are levels not seen since 2005/2006.
Portugal Budget Report (Year-to-Date)
Germany GDP - Details (4Q F) (YoY) NSA
With tight ranges in the EUR as of late, we may have to see a major meet or beat in order to see large moves.
France Manufacturing | Business Confidence (FEB)
Last month was the highest print since the summer of 2011.
South Africa GDP (4Q) (Emerging Markets)
Highest level since the fall of 2007.
Italy Consumer Confidence Index (FEB)
Confidence has been on the decline since the Sept. highs.
US House Price Index (DEC & 4Q) (MoM)
US Home Price Composite - S&P / CaseShiller (DEC)
US Consumer Confidence - Conference Board (FEB)
The reading has recovered back to summer levels at 80.0 from November lows.
Upcoming Events & Speeches
EU Issues Winter Economic Forecasts
Spain Prime Minister Rajoy State of the Nation
EU's Rehn to Discuss EU Economic Growth Forecasts
Fed's Tarullo to Speak on Economy
US to Sell 1-Month Bills
US to Sell
IMF's Largarde Speaks on Economy
New Zealand Fin Min English to Speak
SUPPORT AND RESISTANCE LEVELS
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CLASSIC SUPPORT AND RESISTANCE
INTRA-DAY PROBABILITY BANDS
The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified.