Daily Futures Market Commentary
Stock-Markets / Futures Trading Jul 16, 2009 - 07:27 AM GMT
September Euro - The September Euro is trading higher overnight driven by increased appetite for risk. Global equity markets are trading better which is leading investors to seek higher yields in more risky currencies like the Euro.
Stock futures markets led by the S&P 500 Index remain up boosted by strong earnings from Intel Corp. and Goldman Sachs. The recent data releases and earnings reports out of the U.S. have been buoying equity markets while putting pressure on both the U.S. Dollar and lower yielding Japanese Yen versus the Euro.
Despite being nervous over earnings results from other leading U.S. banks later this week, risk seeking investors are still providing buying power in the indices overnight. This current rally flies in the face of investors who are still approaching the financial markets with caution. Many investors are still far from convinced that the Euro Zone and U.S. economies are on a steady path to recovery from the deep recession that has been gripping both economies.
While the West struggles to right the ship, China is on track to reach its annual goal of 8% growth. The European Central Bank on the other hand is still debating whether the stimulus packages introduced several months ago are working or have to be expanded. This debate by ECB authorities is one of the reasons for the sideways trade this currency has seen over the past sixty days.
Demand for more risk is definitely the driving force behind the Euro strength this week as the economic data picture has been mixed at best. Earlier this week the ZEW indicator of confidence in the German economy was well below expectations. European consumer prices also fell for the first time in June led by declines in energy costs. Rising unemployment also helped contribute to a cut in household spending.
The Euro Zone economic reports do not suggest the need to buy the September Euro at this time, but given the relatively higher yield versus the U.S. and Japan, investors are leaning toward the better yield in exchange for the extra risk.
This morning the Euro is stronger against the U.S. Dollar before the release of U.S. industrial production data. This report will be the key driving force early in the trading day as an improvement in U.S. production will create even more demand for higher risk assets. Traders will also be looking to the U.S. inflation data for another reason to buy the Euro.
Technically the September Euro is overtaking a key retracement level at 1.4037 this morning. Establishing support over this price will set up a further rally to 1.4107. Gains could be limited if this price is tested today because there is not enough upside momentum to turn this market into a runaway bull at this time.
September Eurodollars
Demand for higher yielding assets has been putting pressure on the September Eurodollar. Since reaching a peak at 99.47 late last week, the Euro has been met with profit-takers who have decided to shift their funds out of one of the lowest yielding investment vehicles into the more risky equity markets. Better than expected earnings from Goldman Sachs and Intel earlier in the week are helping to boost equity markets overnight which are adding to the current pressure on this contract.
Technically, the main trend is up with a new top forming at 99.47. Watch for a rally to 99.43 to attract some new selling pressure. Breaking 99.39 could trigger the start of an acceleration to the downside.
September Unleaded Gasoline
Look for a higher opening in September Unleaded Gasoline. The weaker Dollar along with firmer equity markets are helping to boost the demand for higher risk assets. Yesterday the American Petroleum Institute reported that gasoline inventories had dropped 69,000 barrels last week. This friendly report combined with the thought that an improvement in the economy will lead to increased demand for gasoline is helping to support prices this morning.
Technically this market is finding support at a major 50% level at 1.6047. The actual low was at 1.5957. Based on the developing pattern, September Unleaded Gasoline has a chance to retrace back to 1.7834 to 1.8276.
September Copper
Increased demand from China is helping to boost September Copper overnight. The weaker Dollar and firm equity markets are also providing support as speculators bet that a recovery in the global economy will spark even more demand for this metal.
Traders have been saying for months that China would curtail its purchases but a report shows that imports actually increased in June. In addition to greater demand, some traders are using their long copper positions as a hedge against inflation.
Technically, the main trend is up. The current rally is coming off of a major support zone at 2.1828 to 2.1166. Crossing 2.3690 overnight turned the main trend to up and breaking out over a retracement zone at 2.2933 to 2.3333 is providing upside momentum which could take this market to 2.3600 over the near term.
September E-mini Dow
Better than expected earnings from Intel yesterday and Goldman Sachs earlier in the week are helping to fuel this current rally in the September E-mini Dow.
Gains could be limited today, however, as this market has reached a key 50% retracement level at 8418. This market will have to close above this level in order to trigger a further rally to 8512.
Upside momentum is likely to stall if today’s Industrial Production and Consumer Price Reports fall short of expectations. In addition, any strength in the Dollar is likely to trigger a break as investors will seek the safety of lower risk currencies.
If this rally begins to fizzle late in the day it could be because of profit-taking and position evening ahead of bank earnings reports later in the week and Friday’s option expiration.
Please do not hesitate to contact us at 1-800-971-2440, with any questions.
www.brewerfuturesgroup.com
futuresblog@brewerfuturesgroup.com
DISCLAIMER: Futures and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication by or from Brewer Futures Group, LLC, Brewer Investment Group, LLC, or their subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
