Futures Fundamental Analysis

The risk aversion sentiment has accelerated containing the markets following the falling of June personal income to 0.1% monthly revising down the figure of May to 0.2% from 0.3% while it was expected to be 0.3% and also monthly falling of US personal consumption expenditure by 0.2% while it was expected to rise by 0.2% in June with down revision of the figure of May from 0.2% to 0.1% in July. These new dovish data about the US economy has supported the demand for the gold to reach a new all times high at 1641 per ounce recovering the falling to $1606 because of the reached deal between the republican party and the democratic party of cutting the US governmental spending by $2.1 trillions over the next 10 years for having an agreement for raising the US debt ceiling avoiding defaulting but the rising worries about the US growth outlook have come back supporting the gold following the falling of July...

Trading in America has been sinking slowly and dragging the S&P 500 Index down with it, to the lowest level in almost two months. Bonds and commodities futures collapsed, while the storm clouds of a possible impending US default are gathering. The US dollar, however, appreciated. Surprisingly, the US dollar is finding opportunities for growth even under the threat of a default.  All of the problems surrounding the dollar and American bonds are only pushing it up. One can only imagine the euphoria with which enthusiastic investors will scramble to buy American bonds when the long-awaited news is finally announced. The S&P 500 Index went down 2% for the first time since June 1, falling to 1,304.89 points as of 4PM in New York. The cost of hedging against a default on US bonds went up to the highest rate since February 2010, while yields on 10-year treasury obligations increased two basis points to 2.98%. Coffee and oil futures lost over 1.5%,...

The US dollar was trading 0.2% above its record high against the Swiss franc before the US House of Representatives voted on a plan to cut government spending in exchange for raising the country’s debt ceiling. The dollar was also 0.2% below its lowest level against the New Zealand dollar, before analysts’ predictions showed that durable goods orders in June grew at a much slower pace. The yen reached a four-month high against the dollar amid speculation that the Japanese government might have to intervene again on behalf of the national currency to prevent a strong yen from hurting exports and hindering the nation’s economic recovery. “The dollar’s tendency to weaken will still have a stronger influence on the market than strong record highs in export-oriented currencies,” says Greg Gibbs, currency strategist at the Royal Bank of Scotland Group Plc. in Sydney. “The market is clearly providing risks for a further downgrade” on the US’s credit rating. As of 8:28AM in Tokyo,...

Today, Speaker of the House John Boehner announced to legislators that, despite the danger of a veto and the fact that negotiations in Congress are at a dead-end while the August 2 deadline looms near, he favors adding a short-term increase to the country’s debt limit over President Barack Obama’s proposed solution to the US’s debt problem. During a teleconference on Sunday afternoon, Boehner told rank-and-file Republicans that they should join together as a team to block Obama’s proposed $2.4 trillion increase to the current $14.300 trillion debt ceiling limit, which also stipulates all the funds are received simultaneously without having to give any guarantees on cutting government spending. Boehner’s comments were relayed to the press by someone closely involved with the course of the discussions. The Speaker of the House also said that no one wants to see the US default on its debt, therefore he is proposing a plan of only a short-term, $1 trillion increase in the debt ceiling...

The greenback has started the week under pressure on no reached deal between the current democratic ruling party and the republicans for hiking the taxes until now can open the door for succeeding voting for raising the current debt working $14.29B limit which has been reached in the middle of last May while the markets are waiting anxiously for the way the US Government to pay its financial obligations in the second of next month and it looks that till we reach this time the markets sentiment will be possessed by the development of this ascending problem in US eyeing on next Friday release of US Q2 GDP which is expected to get down to 1.6% y/y from 1.9% in the first quarter of this year. The Swiss Frank got use of this negative business spending sentiment and continued its pressure on the US dollar despite the recent weaker than expected release of Swiss trade balance of June which came at...

The European periphery continues to come under pressure with yields of Italian and Spanish debt trading at stressed levels while threats of a US rating downgrade has prevented the US dollar from making substantial gains. The Canadian dollar looks set for further gains given market positioning and increased inflationary pressures. Today’s Key Economic Data Events: EUR – German ZEW Economic Sentiment – 09:00 GMT Expectations: -11.8. Previous: -9.0. Today’s German ZEW survey is expected to show declining economic forecasts as the European debt crisis weighs on future sentiment of analysts and investors. The euro is susceptible to events surrounding the debt crisis and public comments by European leaders as Thursday’s European summit approaches. ECB President Jean-Claude Trichet was firm in his opposition to any selective default by Greece. Initial resistance for the EUR/USD comes in at the 100-day moving average at 1.4290. Support is found at last week’s low of 1.3835. USD – Building Permits – 12:30 GMT Expectations: 0.61M. Previous: 0.61M. US Housing numbers are forecasted...

The Euro rebounded today, as equities in Europe rallied on the back of strong profits from Novartis, and we had positive results from IBM helping US futures as well as commodities, bringing some risk appetite to the market. The AUD, GBP as well as the EUR were stronger versus our safe haven currencies. Here’s a quick round-up of the important stories as they pertain to the EUR. 1. Spain Debt Auction Spain sold 4.4 billion euro ($6.2 billion) of 12- and 18-month T-bills, which was close to the top of its range of 3.5 billion to 4.5 billion euro, with demand higher for the longer dated paper. While borrowing costs at the auction shot up compared to the last time Spain offered similar dated maturities, it was still a relief for the market as it shows demand is still there for Euro-zone periphery debt. The Treasury sold 3.8 billion euros of the 12-month T-bill, paying an average yield of 3.702 percent compared with 2.695 percent at...

Borrrrrrrrrrrrrrrrrrrrrrrrrrrrrring!! Overnight markets are again characterised by a combination of independent EUR weakness and generally diminishing appetite for risk. Although off the low ($1.4015), EUR/USD is still 100 pips down from Friday’s close. Ostensibly, EUR weakness is attributed to the limited credibility of Friday’s bank stress tests and is mirrored in wider peripheral spreads (Italy +13 bps; Spain +20 bps). More generally, equities are soft (US futures -0.6%), leaving JPY the top performing currency in G-10, with USD not far behind. SEK is the worst performer, though this has more to do with general risk appetite than the Riksbank minutes, which added little to the policy debate. White House and Republican leaders appear to have made little progress over the weekend in striking a deal to raise the debt limit, which is also weighing on risk sentiment. The House plans to vote on July 19th to increase the debt ceiling. Press reports suggest that President Obama has already moved to the...

Coming up Today (All Times GMT) USD - Net Foreign Purchases of US Securities(13:00) AUD - RBA Minutes (01:30)   EURUSD The euro is trading lower against the dollar, a sign that investors remain cautious after the release of the European banks’ stress tests. Last Friday, eight European institutions have been qualified as undercapitalized in the event of a sovereign default: among them, two Greek commercial banks and five Spanish lenders. It is worth noting that all Italian banks passed the test successfully, a sign of relief for the country after a week of defiance on its public deficit. Technically, the EURUSD is trading in a bearish channel, eying the $1.4030 support line. Any break above the $1.4110 resistance line could signal a trend reversal, with $.4190 as next target. EURUSD Support/Resistance: 1.4040/1.4110 EURGBP Support/Resistance: 0.8700/0.8780 EURJPY Support/Resistance: 110.70/112.10 GBPUSD The pound benefitted last week from the weakness of the US dollar as well as from a sharp selloff in European equities. The drop in the US dollar was the...

The US equities Markets came back under pressure after Bernanke's try to redirect the markets which cheered by the existing possibility of supporting the US economy by another quantitive easing plan as he said that can be on circumstances we do not face currently and he has added clearly that the fed is not ready to take such a step currently in his second day of hit semiannual testimony in front of the financial services committee on the house after saying the first day that everything should be on the table. The greenback could be supported after these comments which hurt the risk apatite which has been pressure by another new warning of downgrading the US credit rating maintaining its negative outlook which has changed from stable in last April and this new warning came following Moody's warning of downgrading the US credit rating to contain the markets sentiment highlighting the risk of not raising the $14.29 trillion ceiling of US...