USD/CAD
The US dollar fell significantly against the Canadian dollar during the trading week, as the Bank of Canada and the Federal Reserve both had interest rate decisions. When the Federal Reserve suggested that a December rate cut isn’t necessarily a given at this point, the US dollar recovered quite rapidly. At this point, it looks like the USD/CAD pair is very comfortable hanging around the 1.40 level, an area that’s been important multiple times in the past. If the market breaks above the highs of the previous week, it is likely that the US dollar will eventually go to the 1.4250 level.
EUR/GBP
The euro rallied against the British pound during the week to break above the crucial 0.8750 level, an area that’s been significant resistance more than once. Breaking above that level suggests that the market is ready to go much higher, perhaps reaching the 0.89 level, an area that is the “measured move” from the previous consolidation area that we just broke out of. The British pound itself is very weak, so this does make a certain amount of sense for this to happen.
NASDAQ 100
The NASDAQ 100 has broken above the top of the trading channel that we have been in for months, and it looks as if we are trying to do everything we can to take off to the upside. Short-term pullbacks open up the possibility of value, and I do think that a “buy on the dips” attitude should be a major driver of this market to the upside, with the 25,000 level underneath offering a certain amount of support, as it was previous resistance. All things being equal, this is a market that I think continues to see a lot of upward momentum over the longer term, but we may be a little overextended in the short term.
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Gold
Gold fell significantly during the week to break below the $4000 level, but has turned around quite significantly to break back above that level. That being said, the candlestick is going to end up being a hammer, which obviously is a bullish sign. However, I think the best case scenario for gold at the moment is for it to go sideways, as we are trying to burn off some of that excess froth that had been in the market previously. Ultimately, if we break down below the lows of this past week, it’s likely that the market will go to the $3800 level below.
Natural Gas
Natural gas markets have gapped higher to kick off the trading week, as we rolled over into the December contract. At this point, the market is threatening to break well above the $4.00 level, but I think a short-term pullback is likely. That short-term pullback opens up the possibility of a binding value, as we are heading into cyclical trade for the next couple of months, and it will take advantage of colder temperatures 5 enough demand, which of course drives up the price.
EUR/USD
The euro initially tried to rally a bit during the course of the trading week, only to turn around and break down below the 1.1550 level, opening up the possibility of the euro dropping down to the 1.14 handle. This is a market that has been gradually rolling over since the United States started cutting interest rates, even though most people think it would work the other way. This is because the Federal Reserve doesn’t know that we need to automatically cut multiple months in a row, and of course, there are concerns about the global economy. Ultimately, the euro looks as if it is under serious pressure.
Crude Oil
The light sweet crude oil market fell a bit during the course of the trading week, as the $62 level has offered a certain amount of resistance. The $62 level was previously support and is now significant resistance. All things being equal, this is a market that continues to deal with the idea that demand may not be as high as the massive amount of supply as although the Americans levied more sanctions on the Russians, the reality is that oil will continue to flow into the market. Oil still has to be looked at with suspicion at best, and I will be looking for fading signs of exhaustion.
USD/JPY
The US dollar fell significantly during the trading week, only to turn around and show signs of life. Breaking above the ¥154 level is an important victory, just as breaking above the ¥153 level had been. All things being equal, this is a market that continues to be a “buy on the dips” type of scenario as the interest rate differential continues to favor the US dollar as the Bank of Japan will continue to be loose with its monetary policy.
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