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Jim Wyckoff's Morning Report: US Dollar Surges Against Other Currencies

Jim Wyckoff's Morning Report: US Dollar Surges Against Other Currencies

25 September 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - A feature in the market place this week has been the surging U.S. dollar versus most of the other major world currencies.

The U.S. dollar index is at a four-year high, while the Euro currency has dropped to a 14-month low against the greenback. The dollar has been lifted by recent U.S. economic data that has been mostly upbeat, combined with some downbeat economic data coming out of the European Union, Japan and other major industrialized countries.

The U.S. dollar could continue to trend higher in the coming weeks, or longer, as it appears the monetary policies of the U.S. Federal Reserve and the other major world central banks will continue on divergent paths. The U.S. Fed is reeling in its very easy money policies of the past few years, while the European Central Bank continues to provide monetary stimulus to the flagging European Union collective economy.

The appreciating value of the dollar on the world foreign exchange markets has been a significantly bearish development for many raw commodities, which are priced in U.S. dollars on the world markets. Gold is at a nine-month low, while silver prices this week hit a four-year low. Grain markets are in the tank and crude oil prices are also in a downtrend.

Keep in mind that most raw commodity prices are very cyclical. Savvy traders realize this and are presently looking for value-buying opportunities in the present “valley” of the raw commodity cycle—knowing there will be another surge to a “peak” in the cycle in the coming months or few years.

U.S. economic data due for release Thursday includes the weekly jobless claims report, durable goods orders, the flash services purchasing managers index, and the Kansas City Fed manufacturing survey.

Wyckoff’s Daily Risk Rating: 6.0 (The risk aversion seen earlier this week, due to U.S. airstrikes against ISIS terrorists in Syria, has waned significantly.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

--Jim

U.S. STOCK INDEXES

S&P 500 December e-mini futures: Prices are near steady in early trading. Bulls regained upside near-term technical momentum Wednesday. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average.

Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 2,000.00 and then at the record high of 2,014.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at the 1,980.00 and then at the September low of 1,968.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly weaker in early trading today. Bulls are still in firm overall technical control. Shorter-term moving averages (4- 9-and 18-day) are still bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today.

Shorter-term technical resistance is seen at Wednesday’s high of 4,090.00 and then at 4,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 4,065.00 and then at 4,050.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady in early U.S. trading. Bulls have the overall near-term technical advantage and regained upside momentum Wednesday. Buy stops likely reside just above technical resistance at this week’s high of 17,180 and then at 17,200.

Sell stops likely reside just below technical support at 17,100 and then at 17,050. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are firmer early today. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today.

Shorter-term resistance lies at this week’s high of 137 18/32 and then at 138 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 136 26/32 and then at this week’s low of 136 20/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

December U.S. T-Notes: Prices are firmer in early trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today.

Shorter-term resistance lies at this week’s high of 124.19.0 and then at 124.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.08.5 and then at this week’s low of 124.01.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The December U.S. dollar index is solidly higher in early trading and hit a contract and four-year high. Bulls have the strong overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight contract high of 85.615 and then at 85.750. Shorter-term support is seen at the overnight low of 85.155 and then at 85.000. Wyckoff's Intra Day Market Rating: 6.5

NYMEX CRUDE OIL

November Nymex crude oil prices are slightly higher early today, on short covering. Bears have the overall near-term technical advantage as prices are in a three-month-old downtrend on the daily bar chart. Look for buy stops to reside just above resistance at $93.50 and then at $94.00. Look for sell stops just below technical support at the overnight low of $92.51 and then at $92.00. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were narrowly mixed but mostly firmer in overnight trading, on short covering. Not much new. Traders will examine today’s weekly USDA export sales report to see if lower grain prices are spurring more world demand. Corn, soybeans and wheat prices are still hovering near their recent contract lows. There are still no significant, early technical clues to suggest market bottoms are close at hand. This week sees U.S. corn and soybean harvesting pick up the pace significantly.

TheCropSite News Desk

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.



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