The forex market was taking its direction clues from the equities market changes today which had a volatile session started strongly but closed in the red territory. The Dow future reached 8834 level by the US session and it has started losing ground to reach 8650 before closing down by .27% at 8739 and so the greenback has started the day in a defensive position before getting back some of its loses across the broad.
The single currency could get above 1.41 by the US session and it is now struggling to get back above 1.4 after reaching 1.3915 amid the equities market loses during the US session. The single currency has opened the week down under a technical pressure from last week closing below 1.4 amid S&P downgrading of The Irish economy to negative on the credit crisis consequences. The single currency could make a bottom in the beginning of the week versus the greenback at 1.38 while it was trading by the US labor data last Friday at 1.42 before joining the gains of the equities market directly after the release o the labor data which pushed the Dow future for the first time this year to this same level it has opened at today at 8834 before giving back the lead to the greenback again.
The British pound has joined the single currency the same performance versus the greenback but it was underpinned relatively by April industrial production of UK which increased by .3% after March declining by .6% and the market was waiting for a another declining by .1%and the UK manufacturing productions which increased by .2% in April from a fall by .1% in March and the market was waiting for a flat reading in April. The British pound has suffered recently from the political concerns around the Labor party future but it could bottom out at 1.58 but it has faced a resistance at 1.6435 level at the lower high it has made on the 4th this month of after its peak of the year which have made last week at 1.666 as we have aforementioned yesterday in the previous analysis.
The gold after finding support last week at 960$, it could not be sustained above 980$ after the labor data and it has fallen below 960$ which forms a resistance right now. The gold has suffered a technical pressure on last week closing below this level which lead to further declining to 942.8$ on the beginning of this week before joining the currencies advances versus the greenback yesterday and it is trading right now at 955$ after failing to break 960$ in the US session. Recently, The gold has found the support which pushed it above 980$ from the worries rising about the US treasuries confidence and the probabilities of increasing interest rate to add attractiveness to it which can erode the Fed efforts to stimulate growth amid the current increases of the commodities and energy prices which come accompanied with the rises of the market confidence in this gradual recovery and these worries come back to the market focusing again in the US session pushing the US 10 years treasuries yield up to 3.94% amid rising the oil prices above 71 and this can give the gold support to come back again above 960$.
God Willing, it is important to wait today for the release of US Retails sales of May later this week which are expected t be up by .3% after April declining by .5% excluding the auto sales and also, tomorrow, we wait for the preliminary reading of University of Michigan consuming sentiment survey of June which is expected to increase to 69.9 from 68.7 in May.
Best wishes
FX Consultant Walid Salah El Din E-Mail: snipped-for-privacy@fx-recommends.com