June 16, 2011
My Big Fat Greek debt default; Euro concerns push US Dollar Higher and Drives down Crude Oil Prices
All eyes on Greece, Ireland and Portugal this morning as rumors continue to fly about how on earth these countries will pull out of this tailspin. Traders this morning are calling for the eventual withdrawal from the EU by these countries which is sending markets in Europe lower this morning.
This crisis in Europe is having a clear impact on the US Dollar index, driving it up to new highs, and more importantly its giving demand for crude oil a big drop. Less demand on Crude Oil is leading to falling prices, great for all of us filling up the gas tanks for a summer road trip.
This strong US Dollar is also giving Gold prices some downward pressure as well (fear has kept it propped up apparently so far). Remember, most investors will jump into Gold Futures when the US Dollar drops, and today with the dollar rising it puts continued selling pressure on Gold Futures as the demand for precious metals drops.
And of course we cant forget that the Bruins won the Stanley Cup last night, so the world is a better place all around J
Looking forward at the news this morning we have a busy day ahead of us.
830am EST brings three major news events this morning. Housing Starts and Jobless Claims here in the US begin our day today. We also have Foreign Purchases out of Canada which also have crude oil moving this morning.
Initial jobless claims for the June 4 week nudged up 1,000 to 427,000 from a revised 426,000 the prior week and 429,000 the week before that. The four-week average of 424,000 is down 2,750 in the week and is down nearly 15,000 from a month ago.
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| Jobless Claims US |
Look at the chart on Jobless Claims and you can see the US jobs situation is in critical turning point here. We’ve been seeing fewer ‘claims’ since 2009 and new we’re seeing the bailouts, the speeches and all the ‘talks’ about job creation come to the FRONT LINE. Are we going to see jobs come back and these claims will fall back into its downtrend? Or is this a sign of more drops coming in the economy with more people looking for jobs. We shall see, but you can be sure people will be watching this today.
We also have some important news at 10:00am today, the Philly Fed Survey.
The general business conditions index of the Philadelphia Fed’s Business Outlook Survey in May slowed to 3.9, still over zero to indicate month-to-month growth but well under April’s 18.5 to indicate a much slower rate of growth. New orders and shipments both showed deceleration but positive growth while unfilled orders and inventories turned negative.
This isn’t just a cool name for a new event, this is 1 of 3 very important manufacturing surveys that will give traders important clues to the growth of the economy, and personally I use this report to day trade crude oil.
Natural Gas Inventories will finish up our day at 10:30 this morning and is not considered a major news event for the markets we trade in our live trade room.
Im not expecting a Golden Lunch today, a late morning move, because tomorrow is OPEX and Quadruple witching day…but we will be watching volume at 1130am for the European Close all the same, you never give up on your day, and we wont be today.
Lets look at the charts today…
The US Dollar Index is higher this morning after news from Europe that Germany wants to delay the talks for more bailouts in Greece, and traders get out of the Euro. The 89Range chart on the Dollar Index shows us at key resistance in the upper third of the trading range. We can easily see potential to test 76.785 this week, so keep your eyes on the US Dollar Index to see where it goes from here.
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| US Dollar Index 89Range SchoolOfTrade.com |
| US Dollar Index 13Range Schooloftrade.com |
I used the new trend channel drawing tool on the 13range chart of the DX 09-11 to illustrate the current short-term trend we have on the dollar index this morning.
Crude Oil futures this morning are in a major turning point on the 89range chart. You can see that we’ve broken the price wedge below 96.00 and now we have three different options for today.
We may trade sideways in the range we’re in, way may also rise back up into the range above 96.00 or we may keep tumbling to the lows of this major price channel around 91.00. Time will tell this morning and we will be watching the trading range defined with the white box as our first priority.
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| Crude Oil 89Range Schooloftrade.com |
Gold Futures are trading flat this morning after news from Europe sends the US Dollar climbing, but we think fear over inflation across the globe and overall uncertainty about jobs in the US are keeping the bottom from falling out on the GC 08-11 contract this week.
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| Gold 89Range SchoolOfTrade.com |
You can see a strong downtrend has turned a sideways price range and a bearish price wedge. All signs point to rising prices in Gold in the long run when you consider the variables in Europe, but day traders know better than to predict, we will react to the price action on tape as it comes into the market today.
