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Weekly Outlook for Forex
This week we are looking squarely at the summer doldrums. Markets are drifting more than anything else. We do not expect any abrupt change interest rate policy out of any major Central Bank anytime soon, so we do feel that many markets are currently a bit out of step with that idea. That presents us with a number of opportunities this week. While many markets have expanded their respective ranges we do not expect immediate follow through in most cases. So our overall plan for the week is to fade many of the moves we saw last week as those extreme levels are tested again. (…)
Weekly Outlook for Forex
O&F FOREX News & ViewsBy: Head Trader, Derek Frey
June 9, 2008
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General Market Comments:
This week we continue with a full schedule of upcoming data announcements. (…)
Weekly Outlook for Forex
This week we have a virtual tsunami of data coming out. We have 4 major central bank interest rate decisions starting on Tuesday with the RBA. Then on Wednesday we have the RBNZ, followed by both the ECB and BOE on Thursday. We end the week with Friday’s NFP report here in the US so we expect to see a ton of activity this week. The main theme is still a Dollar that is trying to stabilize in the face of continued inflationary pressures. Most analysts expect none of the central banks to move rates so it does seem that we have entered into a global pause which could last the balance of this year. Any surprises would likely be on the side of cutting not hiking. Overall this pause does point favor continued stabilization of the Dollar. We continue to be Dollar buyers on dips. (…)
Weekly Outlook for Commodities
Commodities are trying to hold onto the gains they have had as you can see in the CRB index. The CRB is building a bull flag on the daily charts. However, we do not see immediate upside follow through any time soon. We remain biased to expecting a pullback in commodities in the near term. This is partially due to the stabilization we have seen in the Dollar as well as the fact that upside momentum in commodities is slowing considerably. (…)
Weekly outlook for Majors
General Market Comments:
This week we have little in the way of major reports. (…)
Weekly outlook for Majors
This week we have a number of important reports coming out. CPI, being one of the key reports coming out. We expect CPI will show more inflationary pressures building. We also have a week full of Fed. (…)
Weekly outlook for Commodities
Commodities continue to try and hold these high levels but as a whole we see more and more cracks in the armor. With the exception of Crude Oil and Rice, most other major commodities are already well off of their highs. We continue to see a consolidation taking shape over the coming months and perhaps years. We do read the current action in the Crude Oil complex as a sign of a near term top.
Energy:
Last week we mentioned the possibility of blowing off to about 125 before pulling back. We have seen that play out almost to a T. We are now short from the close On Friday and looking to hold thru Tuesday of this week. We could see a much larger fall on the back of Wednesday’s inventory report but we will cross that bridge when we get to it. Over all we believe that the action we saw in Crude oil last week is nothing more than an emotional overreaction to fear. We expect crude oil to move sideways to lower over the near term. We expect a new range to begin forming between 110-125. Remember, “nothing cures high prices like high prices.” Longer term we may in fact see much higher prices, but near term we feel it is safer to be trading from the short side than the long.
Nat Gas:
Natural gas is still trying to hang on to its gains. We are also expecting this market to pullback to above 10.00 by months end. We then expect this market to also trade within a range between 10.00 – 12.00 over the coming weeks. .
S&P500:
The stock market remains range bound. We still see nothing on the horizon that would break us out of the range in either direction. We expect we will see the S&P drift back down to the 1350 level before the month is out. Bottom line is sell rallies above 1400.
Bonds:
Bonds did dip briefly below the 115 handle. We used that to buy calls that we are now already exiting for a profit. We continue to be buyers of dips in bonds so long as support above 114 continues to hold.
Metals:
Gold continues to struggle with the rising Dollar. We expect to see gold trade sideways to lower over the near term. We see gold having the ability to fall to $750 before any major long term support shows its head. Silver too should track lower in the coming weeks. Silver could fall all the say back to 14.00 before finding solid support. Copper did not follow through as we warned in past issues. We are happy to short copper anytime it trades above 400 as that price is unsustainable in the near term.
Grains:
Wheat is still trying to hold support at the 8.00 level. We continue to see this market holding above 7.50 and are therefore still buyers of dips to or below 8.00 with stops below 7.50 targeting a move back to at least 9.00. Corn remains a sell as long as we do not close above 634 basis July. We did exit our shorts on beans last week but missed our long entries so we are now waiting for a pullback to reenter longs. Bottom line here is buying dips in beans and wheat while selling rallies in Corn.
Softs:
OJ cannot seem to hold onto rallies. We are holding calls now but will exit if July closes below 110. Otherwise we will hold on targeting at least 130 by expiry. Cocoa is breaking down as we suspected it would and we are still targeting a move to 2400 before this slide finds support. We reentered Coffee long at 130 and have now moved stops up to at least breakeven giving us a risk free trade. We will begin exiting near the 140 handle but will hold onto about 25% of the trade for a possible breakout above 140. Sugar is forming a bear flag which points the way down to support near the 11.00 level. We are sill sidelined in Sugar but may become buyers once support is tested. We are still holding our long Cotton from 70 with stops at 66. We are looking to begin to exit this trade on a push above 75.
Weekly outlook for Majors
This week we have very few reports coming out so we should see a week with little to no trending action. We expect most of these markets to remain range bound throughout the week. Friday morning we have a few reports out that could give us some directional bias going into next week but again this week we are simply trading the range. We continue to see a macro change in trend for the US Dollar. This change in trend has already been going on for over 6 months and could continue for another 6 months. We are in no way trying to call an absolute bottom on the Dollar but for the near to medium term we continue to see the Dollar at best moving higher and at worst trading sideways. But the bottom line is at least a pause in the Dollar’s free fall if not an outright turn. (…)
Weekly outlook for Commodities
This week remains critical for the commodity complex. Commodities have seen incredible grown over the last 6 years or so and we continue to see signs that the bull is at the very least tired if not exhausted. We are using any remaining rallies to exit the few remaining longs we have and at the same time begin to position short for the near term. In no way are we calling an end to the commodities rally but simply a pause and consolidation over the near term. The key to all of this is of course the Dollar. If the Dollar is in fact stabilizing, then so too will commodities. Since the FOMC has signaled a pause we do see the Dollar holding recent lows. The Dollar could be dragged lower down the road due to continued trade imbalances but near term the FOMC news trumps the trade balance worries.
Energy:
Crude Oil began the week with a sharp rally that stopped out all but the strongest shorts. We are reading this as a stop hunting rally not a resumption of the trend. We expect to see Crude head fake above the recent highs only to fall back. We are put buyers above 119 targeting a move back to 100 or lower before the quarter is over. We are only buying puts here not outright shorts as the potential for this market to blow off all the way up to or through 125 remains high.
Nat Gas:
Natural gas continues to follow Crude. We are still short biased but remain on the sidelines from last week. We will buy puts should the old highs hold later this week. Overall we are still expecting this market to roll over and are waiting patiently for the entry signal.
S&P500:
Last week we mentioned that we did not expect the rally to follow through much if at all above 1400. We are now seeing that come to be. We are selling short above 1405 with stops above 1434 which is a bit wide but necessary at this time. Should we break below 1400 we will move the stops into 1421. Our first target is a move back to 1375 and then 1350. (…)
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