Overall, the currency market had another very weak overnight session, something that has become a trend lately. Almost every major pair is still trading within the range of the prior day, showing a general lack of momentum. Except for the aussie and the cad, which were able to develop and sustain some small trends helped by the commodity markets, the euro, the pound and the swissy moved very little. Going forward, the market is likely to pick up some more momentum during the U.S. open, but still be below the average daily movement.
The Euro (Eur/Usd) spent most of the day moving nowhere, as the pair is trading flanked by the 20 and the 50-day moving averages. Moreover, the trading volume was very thin, especially during the European trading hours, which denotes the market's lack of interest for the current price action.
The Pound (Gbp/Usd) looked range-bound during the Asian session and through most of the European trading hours, as the pair is trading just above the 50-day moving average. Since the Asian session started, the pair had a 70 pip range, which, compared with the prior few months of trading is very small. The pound's resilience might continue until Wednesday, when the Inflation Report is issued by the Bank of England.
The Aussie (Aud/Usd) was the only pair worth looking at during the European session. Around the London open, the aussie bounced from a 4-hour support trend-line, and gained 60 pips. However, as soon as it hit the 0.8385 area, the aussie started retracing, shedding almost every pip gained earlier in the session. On Monday, the 0.8385 area also played a crucial role during the intra-day session.
The Cad (Usd/Cad) moved higher, even though the rest of the major currencies advanced for some time against the dollar. The cad and the aussie moved in a correlated fashion over the last few trading sessions, but this was not the case today. At 8:15am EDT, the market reveals the Canadian Housing Starts numbers, which might have a strong influence over the Canadian Dollar.
The Swissy (Usd/Chf) saw very thin momentum overnight, moving less than 40 pips during the Asian and the European sessions. On the daily chart, the swissy is trading below the 1.0950 resistance area, which is a major swing point. Most likely, the market will try to test this point over the next few trading sessions.
The Yen (Usd/Yen) fell down to TheLFB S1 area at 97.70 and at the same time traded near to the 100-day moving average during the Asian session, but since then, the pair has moved mostly sideways. The main cause of this was the market's lack of liquidity, which kept the pair above the two important price points. In addition, during the Asian session, the Bank of Japan kept their interest rate at 0.10%, but this failed to have a strong influence in the forex market.
Overnight Markets Looking For Direction
Current Futures: Dow +18.00, S&P +1.80, NASDAQ +4.00
U.S. futures and European markets advanced a few points during the overnight session, however the market is confronting the same problem as in the last few weeks of trading: a general lack of momentum. Almost every stock market in Europe initially headed higher, but none advanced more than 1%, and all look capable of easily retracing the moves.
S&P futures managed to break above the 1007.00 area during the London open, but since then, have posted only small gains of approximately 0.3%. The 1007.00 area was the main intra-day resistance on Monday, and held the index, during both the cash and after-hour trading sessions. A break above this level will denote the market's positive outlook; however a reversal looks just as likely right now.
The European markets followed a similar Asian pattern on Tuesday, with the German Dax advancing from the first few minutes, up to the 5445 area, the resistance point of the prior cash session. Despite some, albeit weak, attempts to move higher, it failed to follow through. The U.K. FTSE gapped above Tuesday's high, and is now trading near the 4740 area, which represent the highest value touched since October 2008.
The biggest gainers in the German Dax were the financials, together with the carmakers, after the two dragged the entire market lower in the prior cash session,. The U.K. FTSE market was lead higher by the heavy-weight commodity stocks, as crude oil and metals posted modest gains during the European session, and after Chinese oil imports increased over the last period. The best company in the U.K. index was International Power, after it reported strong increases in its quarterly results. Interesting enough, the vast majority of companies in the European markets moved less than 1% up or down.
Overnight, the U.K. FTSE gained 18.73 points (0.40%) to 4,740.93, while the German Dax added 29.76 points (0.55%) to 5,447.99.
Crude oil for August delivery was recently trading at $70.90 per barrel, higher by $0.30.
Gold for August delivery was recently trading lower by $1.60 to $946.50