RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Early Look around the World

Asian equities are bouncing overnight; +2.5% in the Shanghai Index to -28% from January, +1.0% in the Nikkei 225.  China reported their usual faux GDP figure overnight, reporting 6.5% which was down from 6.7% y/y.  It’ll likely take more stimulus efforts from the Chinese to boost their economy moving forward.  The US will be keying on the existing home sales figures due out at 9am CST/10 EST. 

Intermediate-term view on Currencies

 The USD remains king of the currency space and if previous weeks highs are breached (95.84 Dec Futures), more near-term upside traction could be gained in the dollar with another possible test of the Aug highs of 96.45. Despite it’s strong technical action, the long USD is a very crowded trade and we still hold the view that there’s more downside risk than upside from here on an intermediate term basis. On the other side of the USD, the Euro, continues to slump on negative reported data out of the Eurozone. Lets not forget about gold, which I largely view as a currency. Gold has held it’s near-term bullish posture vs the USD’s recent strength which tells me that institutional investors are viewing gold in a positive light on forward looking basis vs the USD as well as other foreign currencies.  We still continue to think that gold will outperform into year-end and well into next year vs outside world currencies, especially if the U.S. economy begins to feel the residual side effects of a slowing world economy – which will be a net negative for the USD.  Sure, you’ll see some inflows into other world currencies if the dollar takes a stumble into year-end/ early next year, and I’m of the belief that the ECB will still attempt to tighten head on into a slowdown, which could help the Euro gain some traction, but with a projected slowdown in the U.S. economy and World economy for that matter, I expect gold to far out perform the World’s currency basket. 

I don’t claim to be the best chartist on the street, but here’s a look at a developing H&S Top on a Weekly Chart in the USD which could suggest a larger down turn to come.

Dollar Index Weekly Chart

Dollar Index 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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