Daily Spot: Currencies
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Dollar Basket Dec (DXZ) The weekend’s G20 meeting seemed to undo Thursday and Friday’s recovery effort. But we discussed at the time how Wednesday’s pullback had stopped optimistically short of filling the gap back to last Monday’s close. Thursday’s dip was too little, too late, so Friday’s bounce only exacerbated the problem.
Monday’s drop still hasn’t paid the punitive price for having slowed the drop for so long. The pattern still contains excessive optimism, despite having two gaps outstanding above.
The gaps should help to recover from one more test of the lows that includes a print at or around 76.65. The path lower might first fill the gap above back to Friday’s close, but its test should hold as resistance. Otherwise, a close above 78.00 might be able to signal a bigger corrective rally already underway.
Gold Dec (GCZ) Sunday night’s immediate reaction to G20 fulfilled the 1335.00-1336.00 bounce target. Last week’s 1347.20 buy signal that never triggered was retested, too. And it held again, pushing back down to test 1335.00. That should be refueling buyers for another run at 1357.00, and potentially 1363.00/1366.00 before a bigger downleg.
30-year Treasury Dec (USZ) Gap up Monday extended immediately to fulfill 132’20 bounce potential, around which the balance of the day ranged, until afternoon dived to 131’28. Even that stopped optimistically short, barely touching Friday’s “lower prior highs” as support. Close under 131’25 would still trigger next downleg, but now a close above 132’20 would extend the corrective bounce.
Crude Oil Nov (CLZ) Further gains intraday could not be ruled out, and Monday’s open gapped up above the prior three sessions’ highs. But there was no follow-through and the balance of the session fell to fill the gap back down to Friday’s close. The next dip down to 81.50-81.55 should trigger a more sizable downleg along the way to the 77.75 target.
Natural Gas Nov (NGZ) Monday was not going to avoid a new low intraday after a new low Friday, or after Friday’s new low confirmed Thursday’s breakout. The low could have extended, but did not. The open gapped down, probed new lows, and spent the entire session in negative territory – yet the close was still testing Friday’s low. This “ineffectual pessimism” is not a buy signal, but it can form the basis of one. A rally Tuesday would be credible for gaining traction.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).