Daily Spot: Currencies

A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

Dollar Basket Mar (DXH) Mon gapped down and quickly bottomed upon testing 80.60 as support. Its recovery last week had signaled prior highs would be probed, too. Its retest this week – without launching another upleg – suggests the probe failed.

At least the balance of Monday’s session only ranged sideways, exclusively in negative territory. The “ineffectual pessimism” does make an immediately recovery credible for extending higher if attempted. Emphasis on the characteristic “immediately.” Delaying a recovery would increase the attraction back down to 79.85.

Last week’s probe of prior highs never recovered the 81.10 confirmation that a new rally leg was underway. Each session probed the prior session’s high without closing above it. Overcoming that distribution would be powerful. And it would have to be overcome the same day as trying to recover 80.90 to avoid being distributive.

Gold Feb (GCG) Like Thursday’s close, Monday’s session also ended while in the process of trying to recover 1381.00. Sunday night’s gap down had also fallen to Thursday’s lows. The overnight recovery to 1387.00 stopped pessimistically short of filling gap back to last Wednesday’s close. Exploiting these potentially bullish elements without delay would  launch a more productive rally next targeting 1407.00.

30-year Treasury Mar (USH) Support held another test Monday and surged into the close. Most interesting was the lack of any correlated markets trading so inversely or in tandem. An earnest attempt to rally back to 123’06 or 124’00 should follow-through above 121’18-121’20 without delay before retesting support.

Crude Oil Feb (CLG) Monday’s gap down was retraced but not rejected. A fresh low Tuesday under 90.50 would target 89.90. A close under 89.35 would seal the top and reverse momentum down. Otherwise, the delay in retesting the three-week old prior high still makes higher highs likely first, up to 92.50 or 93.50.

Natural Gas Jan (NGF) Recovered a test under 4.02 back above 4.06, to close back above 4.11 whose recovery Wednesday had reinstated potential for a larger rally. Follow-through Tuesday to close above 4.21-4.24 would signal that larger rally underway. Closing under 4.02 would trigger a downleg. The February contract’s premium is 5 cents.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).