USD/JPY
The US dollar rallied quite nicely against the Japanese Yen during the week to break above the crucial 158¥ level again. The interest rate differential continues to be a major driver of where things go, as the Japanese are stuck in a situation where they cannot have monetary policy that’s too tight.
Quite frankly, this is a market that you have to pay close attention to getting paid at the end of every day, as many people will be holding onto dollars in lieu of Japanese Yen. Keep in mind that the overall attitude of this market is pretty bullish, but the 160 Yen level is an area the Japanese central bank has intervened at previously.
EUR/USD
The Euro has collapsed during the week and now looks like it’s going to head towards the bottom of the range that we had been in for some time. It would not surprise me at all to see the Euro drop to the 1.14 level. The 1.14 level is the bottom of the larger range that we have been in since March or so.
Ultimately, I think that as interest rates in America simply will not go away from the bullish move, the reality is the dollar will continue to attract attention. At this point, it looks like energy inflation shocks are being priced in everywhere.
Natural Gas
The natural gas markets have been strong for the week, but we still see the $3 level above as a potential resistance barrier. I like the idea of fading this market anytime it gets a little too bullish, especially near the $3 level.
I don’t think this is a bigger trade or a long-term trade that we are getting ready to set up, just a short-term fade the rally type of situation, as this time of year sees a lot of weakness in demand.
Crude Oil
The light sweet crude oil market has been bullish for the week, but it’s also been extraordinarily volatile. Unfortunately, that’s the way this is going to be going forward as we continue to hear headlines coming out of the Middle East.
This will continue to have people pricing in the idea of energy inflation and the idea that perhaps we have a lot more pain to go through before we get any relief. The global markets are starting to run out of oil that had previously been on the ocean in tankers and now is going to start feeling the effects of the oil that came out of the Middle East. Watch out, this is a market that I think is going to be rather noisy.
Bitcoin
Bitcoin pulled back for the week, but it continues to threaten the upside. One of the things about Bitcoin is that it performed when everything else was falling apart. That is a bit of a departure from what we had seen previously.
With interest rates being as high as they are, it’s not a surprise to see Bitcoin pull back, but we have to be honest, you could have seen Bitcoin pull back for several months now and it just can’t be bothered. In other words, sometimes you have to pay attention to what Bitcoin or any other market for that matter is doing, not what it should be doing. I think Bitcoin finds buyers.
Gold
Gold markets have gotten hammered and as long as rates continue to climb, that is going to have a negative influence on gold. The market is below the $4,600 level, and now we’re going to watch out for $4,500.
Breaking below that level then opens up the possibility of a move down to the 50-week EMA. Short-term rallies continue to see the $4,800 level as a bit of a barrier, and as long as the 10-year yield remains very strong in America, I think gold is going to struggle.
Silver
Silver had a horrific week. This is after initially looking like it was going to launch into the stratosphere, but the $90 level has been like a brick wall. Interest rates rising in the United States have been toxic for silver, as it typically is over the longer term.
Now we are forming an ugly candlestick for the week. At this point, it would not surprise me at all to see silver start to drop towards the $70 level again, an area that’s been massively support. Regardless, silver is a very dangerous market right now.
USD/MXN
The US dollar has rallied against the Mexican Peso for the week, but we are still very much in the same consolidation area that we had been in for a while, with the 17.50 level above offering significant resistance and the 17.20 level underneath offering support.
I think we continue to bang around here because while the US dollar is strengthening against most currencies, the interest rate differential between the US dollar and the Mexican Peso still favors selling this market. I think we go sideways for a while until we sort out bigger questions.
