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Post NFP- Global Traded Markets Take Stock

Forex Outlook
The dollar index made ground on Friday, in-line with equities that lost their support, while bond markets found buyers. The natural balance of short-risk/long-safety was instigated by a U.S. employment read that was not as solid as expected, and that was enough to add to the short-equity sentiment that has been in place since the NYSE fat-finger Thursday debacle.
 
Whether they like it, or not, the G-20 delegates will be debating more than global fiscal challenges this weekend, and will now have to run the gauntlet of putting a positive spin on inter-bank lending that had dried up, deficits running amok, a Usd that is empowering Reserve valuations. The Usd is way ahead of itself in regard to tracking the U.S. economic expansion, and way ahead of the Fed in regard to increasing interest rate moves.
 
The boulder that dropped into the Mill-Pond on Friday from the NFP report will take a few sessions to absorb, while the ripples work their way around the globe. If the G-20 cannot get together a very positive spin on this whole situation, the Sunday/Monday moves will very likely be more dollar buying, more stock and oil selling, and much weaker regional currencies against the greenback, which is not something the U.S. Administration will be looking to be maintained for too much longer.
 
Dollar Watch
The Usd up-trend is expected to stall at 90.0 highs, as long-term resistance points approach. The inverse Usd/Stock correlation is in place. Daily trading range is high at 2.2%.

The dollar index is at the 88.50 resistance area that sent it lower in 2004, 2005, 2008, and 2009. There seems no reason to think that the same will not happen again if equity markets find support. If equity sellers drive the S/P under 1035, the index will test 90.00, but whatever happens in other markets that may be the tipping point for a Usd reversal.

The dollar touches every part, of every global market, every day. It is the unit that central banks rely on as a reserve currency, and is the vehicle used to trade all global commodities on international markets. The index is made up of Euro 58%, Japanese yen 13%, British pound 12%, Canadian dollar 9%, Swedish kroner 4% and Swiss franc 4%.

Equity Overview
S/P futures are at the critical 1050 swing point. Watch for the Weekly chart hold above 1105 to trigger 1120 tests, or below 1050 to trigger a 1025 move. Daily trading range is very high at 3%.
Global equity daily chart trade is holding solid sideways channels that will not break, either long or short, and hold. Volatility is increasing, along with the daily trading ranges. S/P futures trade reflects the risk sentiment seen in each of the main global stock markets.

Futures trade runs 23 hours a day and reflects what is being priced in regard to fair value in anticipation of the cash market opening in each region. Risk tolerance = Higher equities and lower Usd. Risk aversion = Lower equities and higher Usd.

Oil Skids
Traders have pushed crude back to mid-May support at 70.00. Resistance is in place at 78.00 after the 200-Day SMA failure set 65.00 as solid support. Daily trading range is extremely high at 3%.

Crude prices tend to reflect forward sentiment on potential global growth, or not, as the case may be. Levels of forward speculative interest are closely monitored by all professional forex traders. Long Oil equates to Short Usd, and vice versa.

Gold Hedge

An impulsive up-trend on gold is expected to continue. Daily trading range is above average at 2%. The need to hedge the long-Usd environment allowed gold trade to move higher and stake a claim to be a stand-alone asset class that seems to have few peers when global expansion is in doubt. The GLD/USD correlation is holding strong.


Disclosure: No Stock Position