RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

For the fourth straight time the Euro has failed at its >3-yr bear trend regression line running along 1.2450 at the start of the week.  Eurozone inflation data continues to come in soft and well below Draghi and the ECBs target.  German PPI came in at a paltry 0.1% and missed analyst expectations of 0.2%.  We’ve warned our client base that a near-term bottom in the Dollar could be taking hold. While we have yet to confirm a USD/EUR breakout, we’re watching US inflation expectations (which we believe will begin to re-accelerate in coming months), and naturally US interest rates specifically the US 10-yr yield (the dollar has a tendency to follow the direction of interest rates and hawkish or dovish Fed Policy).  For the time being, we recommend managing the range of the June Dollar Index futures 89.00-90.30. 

The June British pound has suffered a breakdown of its recent run higher since the start of the year.  The UK’s third data point miss (Retails Sales -1.2% vs 0.8% m/m) in a row this week, finally was enough to encourage the bulls to lock in profit.  Furthermore, the UK reported weak wage growth in Tuesday’s labor report and followed up with a miss in the Consumer Price Index.  While the recent data could discourage the BOE from raising rates altogether at its next policy meeting, it could be more likely that they perform a “dovish hike”.  Regardless, the softer data was unexpected and enough to discourage the market.  Near-term downside target could be down at 1.39.50 before signaling immediate term oversold.

US Dollar Index Trapped in a sideways range (88.90-90.30 range)

US Dollar Jun ’18 Daily Chart

US Dollar Jun '18 Daily Chart

 

British Pound Key Reversal w/ downside potential to the low end of the range to 1.3950

British Pound Weekly Chart

British Pound Weekly Chart

 

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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