Outlook as of 21st January 2014:
Our general outlook for the broad markets remains cautious. Digital Markets Advisor is concerned about the long-term economic crisis and challenges that face the European Union and the United States. Though recent data from Europe has improved, we remain unconvinced that the European crisis has finished. Short-term traders who choose to try to take advantage of trends need to remain fully alert to all data and the psychology of market. The Federal Reserve has proven that it continues to walk a fine line as it measures its monetary policy and its outlook on the American economy. The poor jobs numbers released on the 10th of January have not helped our outlook either and have helped fuel our scepticism.
EUR/USD – The EUR has broken through support and is now consolidating around it current values near 1.3556 as of this writing. The German ZEW Economic Sentiment reading will be released shortly and will be watched by suspicious investors. Yesterday’s holiday in the States brought about very low volumes so it will be interesting to see what takes place later today as traders sift through last Friday’s disappointing Consumer Sentiment data from the University of Michigan. The Single Currency now finds itself near mid-term support levels and the question that continues to trip up investors and institutions is how the Federal Reserve will react to the mixed bag of economic statistics that do not exactly point to clear sailing. It is a global economy and the ramifications of what takes place in the States will have a large impact on the EUR. The fact that Europe continues to struggle with its economies outside of Germany is also a stumbling block for the Single Currency.
GBP/USD – Unlike the EUR the Sterling has actually picked up value since Friday. Today the CBI Industrial Order Expectations will come from the U.K. and tomorrow voting results from the last BoE monetary policy meeting conducted by the MPC will be published. Neither of these reports are going to be earth shattering however. The GBP has done well for itself and the economy in the U.K. while not a blistering sun has done relatively well regarding stability and the government’s attempt to practice fiscal policy. Because of that the Sterling continues to find friends.
USD/JPY – The JPY has consolidated the past day. The JPY continues to be a rather unique trade regarding trend for long-term traders who have chosen to take sides with or against the Japanese government’s monetary policy. The BoJ is schedule to release its monthly policy statement early on Wednesday and this may bring some caution into the JPY market. Asian markets are rather nervous at this time because China continues to produce mixed results regarding its data too.
Gold – Gold is trading near the upper range of it short-term resistance levels having broken upwards before the weekend. The precious metal is near 1252.00 as of this writing and its value at these heights may prove a testing ground for bears who have controlled the metal for over a year now.
Crude Oil – Crude Oil has been unable to continue its gains the past two sessions. WTI has consolidated and is lingering in a tight range. Demand as it has been the past five years is in question, particularly since Chinese data continues to be lackluster. Commodities on a whole, particular the softs like Sugar and Coffee have been weak also the past year. With supplies steady the question is if there is enough inflation and speculation in the physicals to bring bulls back into the game.
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