GFT Daily Market Commentary
The unemployment data didn’t let us down, triggering aggressive, but divergent reaction of the dollar against different currencies. Late Friday, as if the initial volatility hadn’t been enough, talk of that the Treasury Department was close to finalizing a plan to help shore up mortgage giants Fannie Mae and Freddie Mac vaulted the dollar against the low yielding yen and Swiss franc, and tripped it against the pound, euro and commodity currencies. This pattern should continue early this week, as it was confirmed that the government’s Federal Housing Finance Agency seized control of Fannie Mae and Freddie Mac, which have nearly half the U.S. home-loan market. So, the market should take more profit on the short European currencies versus the yen.
Euro/dollar
Euro/dollar collapsed to an 11-month low on Friday, but bounce early Monday and my model went long on profit taking (after going short on September 1). The immediate outlook is positive.
Initial resistance is at 1.4385. Above 1.4450, resistance is at 1.4625.
Immediate support is at 1.4271. Below 1.4198, support is at 1.4085. Further support comes at 1.3835. Distant support is at 1.3695. Oscillators are declining.
NEAR-TERM: Bullish
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/yen
Dollar/yen collapsed to a new 1 ½-month low in early Friday trading but then reversed losses in an aggressive manner. It then rallied early Monday. The yen remains the favorite in crosses against the European currencies in the medium term, but not in the short term, as my model went long. The short-term outlook is bullish.
Above 108.70, resistance follows at 109.15 from another 50-point pivot, which targets 109.65 and 108.65. Distant resistance is at 110.35 from a 50-point pivot, which targets 109.85 and 110.85.
Initial support is at 107.95 from a 50-point pivot, which targets 107.45 and 108.45. Strong support follows at 106.75 from a 50-point pivot, which targets 106.25 and 107.25.
Oscillators are declining.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar fell to a near 2 ½-year low on Friday. But it rallied early Monday and my model just went long (profit taking on the short opened on August 22). The medium term is bearish, but the short term outlook is bullish.
Initial resistance is at 1.7885. This is followed by 1.7930. Above the strong line at 1.8000, distant resistance looms at 1.8100.
Immediate support is at 1.7717. Below 1.7672, a pivot low is at 1.7538.
Oscillators are falling.
NEAR-TERM: Bullish
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Dollar/Swiss franc
Dollar/Swiss surged to the highest levels since the start of 2009 and my model remains long. The Swissy should catch up with the rest of the European lot, so its weakness is limited on a relative basis.
Initial resistance comes at 1.1260. Above 1.1360 there is a pivot high at 1.1605.
Initial support is pegged at 1.1090. This is followed by 1.1010. Distant support is at 1.0935.
Oscillators are rising.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
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