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Session close: Settled at 1.13435, down 28 ticks
Fundamentals: The Dollar strengthened in the back half of last week after Q4 GDP proved doubters wrong by simply coming in at a marginal 2.6%. Because of this, Dollar buyers were unfazed by a weaker than expected ISM Manufacturing and Michigan Consumer Sentiment on Friday. This wave of Dollar strength carried into the new week and pressured the Euro through midsession. While UK Construction PMI may have weighed more broadly on the region, the Euro-centric data was better; Sentix Investor Confidence was the latest in a run of less-worse sentiment reads and PPI was a tenth higher than expected. Helping the overall midsession turn and finally deterring those Dollar bulls was a surprise contraction on U.S Construction Spending. Today was expected to be the quieter session before things pick up tomorrow. Final Eurozone Services and Composite PMIs are due at 3:00 am CT tomorrow following the regional reads. Eurozone Retail Sales are out at 4:00 am CT. From the U.S NFIB Small Business Optimism is due at 5:00 am CT, Boston Fed President and 2019 voter Rosengren speaks at 6:30 am CT and Minneapolis Fed President Kashkari speaks at 8:30 am CT. Final U.S Services and Composite PMIs are due at 8:45 am CT ahead of the most anticipated read on the session – ISM Non-Manufacturing at 9:00 am CT. New Home Sales are also due at 9:00 am CT and Richmond Fed President Barkin speaks at 10:30 am CT.
Technicals: Price action slipped sharply last week after failing to get out above the 50 and 100-day moving averages. This three-day drop has now reached the psychological 1.13 battleground; a level in which the bulls have shown up. First key support comes in at 1.1302-1.1328 and this held today. Our pivot at 1.1367-1.1369 will be what’s most crucial in telling who has the near-term edge. Above this level, the bulls can look to push a retest at 1.1434-1.1447, now major three-star resistance; this aligns the 50 and 100-day moving averages, trend line from the January 10th high and other significant indicators. We are Bullish in Bias from this current level.
Resistance: 1.1392-1.1395**, 1.1434-1.1447***, 1.1491**, 1.15575-1.1563***
Support: 1.1302-1.1328**, 1.1283*, 1.1245-1.1261***
Session close: Settled at .89585, up 20.5 ticks
Fundamentals: The Yen broke-down through support on Thursday traded lower into the weekend. After equity markets opened higher Sunday night, the Yen was destined for further weakness. However, the tables turned this morning during U.S hours and S&P lost much as 1.8% from the high. This reinvigorated interest in the Treasuries and helped stabilize the Yen despite the S&P finishing smack in the middle of its range on the session. If weakness in equities persists into tomorrow, we expect the Yen to climb back to its breakdown point near .9000. Tonight, we look to a 10-year JGB Auction and tomorrow will be all about the data and Fed speak.
Technicals: Last week, the Yen broke down below both the continuous 100 and 200-day moving averages which aligned with major three-star support at .9011-.9032. Because of this we are now Neutral in Bias until the Yen can close back above this level. While the 100-day appears to want to cross above the 200-day, more importantly is now the stagnated 50-day moving average; after rising ever since December 14th, it appears it might move lower on tomorrow’s session and this does not bode well for momentum. The breakdown was textbook and went right to our next level of support. This must now hold, and we must then see a close back above .9004-.9014 in order to neutralize the weakness.
Resistance: .9004-.9014**, .9091-.9015**, .91555-.9186**, .9238-.9249***
Support: .8919-8931**, .88355-.8845***
LEJ9: -1.075 at 128.475, trading in a range of 1.675
LEM9: -.50 at 119.925, trading in a range of 1.45
GFH9: -.05at 141.175, trading in a range of 1.075
GFJ9: UNCH at 145.05, trading in a range of 1.275
Cattle Commentary: The bulk of last week’s cash trade came in at 128 live and 205 dressed, late on Friday afternoon. As mentioned in last week’s reports, we believe that higher cash was being priced into the market, in what turned out to be an over promise and under deliver scenario. Markets retreated this morning and fell short of staging a rally mid-morning. The big-ticket item this week comes Friday afternoon in the form of a Cattle on Feed report.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 223.55 / 217.21
Change from prior day: / 2.26 / .42
Choice/Select spread: / 6.34
Live Cattle (April)
April live cattle traded higher in the first minute but that was short lived as futures rolled over 1.675 in the following 35 minutes. The pullback wasn’t concerning by any means, in fact we looked at it as an opportunity to work with clients in getting out of short positions and buying to go nest long. There’s a solid trendline that comes in near 128, so long as this remains intact, we like giving the buy-side a shot here. The path of least resistance has been higher, and we have not seen three consecutive down days since the first week of the year. Fundamentals haven’t changed much, so both sides should temper their expectations.
Resistance: 128.90-129.025***, 130-130.45**, 134.55****
Support: 127.70-128.00***, 126.60-127.25**
Feeder Cattle (April)
Feeder cattle continued their slide lower this morning but managed to find technical support at the 200-day moving average. First technical support tomorrow comes in from 143.85-144.30. A break and close below could open the door for another leg lower. On the resistance side of things, the 50-day moving average acted as a barrier and will continue to tomorrow, that comes in at 145.60.
Resistance: 145.60**, 146.10-146.375**, 147.80-147.825****
Support: 143.85-144.30****, 142.60-142.90**, 140.35-141.20****
Lean Hogs (April)
April lean hogs gapped open, is anyone really surprised? The market has been extremely difficult for those looking to hold overnight, as the opens have been choppy. The close above 57.25 is encouraging in our mind, consecutive closes above this level could help spark another move higher. The next meaningful resistance doesn’t come in until 60.35. On the support side of things, the bulls must defend 56.50-56.825 on a closing basis.
Resistance: 57.80-58.125****, 60.35**
Support: 56.50-56.825***, 52.25-52.75****
Yesterday’s Close: May corn futures finished yesterday’s session up 2 ¾ cents, trading in a range of 4 ¼ cents.
Fundamentals: Optimistic headlines surrounding trade offered some support to start the week but the market seems to be putting less and less faith into those headlines as time goes on. Weekly export inspections came in at 866,000 metric tons, within the range of estimates and above last week’s 762,000 metric tons. The big-ticket item will be the USDA report on Friday, we hope to have estimates for you by mid-week.
Technicals: Yesterday’s strength was encouraging but the inability to close towards the highs is a bit of a near term caution flag. First support today comes in from 372 ¼-373 ½, this pocket represents yesterday’s lows and the gap from Friday’s close to the Sunday night open. The bulls must defend this on a closing basis, a failure to do so leaves the door open for a retest of contract lows. We remain friendly on prices but need to see technical confirmation to feel comfortable with getting more aggressive.
Resistance: 377-380***, 385 ¾-387 ¾***
Support: 372 ¼-373 ½***,363 ¼****
Yesterday’s Close: May soybean futures finished yesterday’s session up 5 ¾ cents, trading in a range of 11 ¾ cents.
Fundamentals: Talks that U.S. and China are getting closer to a trade agreement offered some support early on yesterday but failed to garner true believers. This whole situation is setting up to be identical to the boy who cried wolf or like a weather man in July saying that it will snow, every day for 5 months until it does. Export inspections yesterday morning came in at 844,000 metric tons, below the low end of estimates and well below the 1,308,000 we saw last week. Market participants will be keeping a close eye on Friday’s USDA report and the estimates that roll out before then.
Technicals: The last two sessions have been choppy, trading in a range of 24 ¼ cents, offering plenty of opportunity for short term traders on both sides of the aisle. First resistance from yesterday’s report held well, today we see that coming in from 922 ¼-924 ¾. On the support side of things, 900-904 ¾ is the must hold pocket. This pocket represents the lows on the year (Jan 16th), they psychologically significant 900 handle, and the middle of the range from the contract lows to the highs in December.
Resistance: 922 ¼-924 ¾***, 934 ½-939 ¾****
Support: 910 ½**, 900-904 ¾***, 893 ½****
Yesterday’s Close: May wheat futures finished yesterday’s session down 1 ¾ cents, trading in a range of 7 cents.
Fundamentals: Export inspections yesterday morning came in at 440,000 metric tons, a dismal number that was well below the range of expectations. Wheat bulls are hopeful that Friday’s USDA report could provide a spark to some short covering from funds, who are roughly 100,000 contracts short.
Technicals: The lack of any follow through yesterday should be a caution flag for those in the bull camp. Tough the market is grossly oversold with the RSI at 20.55, that is not reason enough to suggest we are at a bottom. We want to be buyers in the market but need to see a more constructive trade to get us more aggressive. Consecutive closes above resistance from 653 ¾-466 ½ would be the first step.
Resistance: 463 ¾-466 ½***, 479 ¾***, 495-497 ½***
Support: 447 ¼-450**, 441 ½**
Session close: Settled at .7088, up 13 ticks
Fundamentals: The Aussie finished higher today ahead of tonight’s RBA policy decision. They are not expected to cut rates tonight although there is a belief that the next rate-move from the RBA is likely to be a cut due to dissipating growth domestically, slipping home prices and headwinds globally. The data last night was mixed with Building Approvals better and Company Gross Operating Profits worse. Overall, the Aussie held ground very well given the broader risk-off shift as the session developed.
Technicals: Price action slipped sharply last week as the U.S Dollar gained ground, but the Aussie has not broken below major three-star support and that makes tonight’s post-fundamental swings very technically important. We have first key resistance coming in at .7121-.7137 and a fundamental move out above here later this evening should garner a technical tailwind.
Resistance: .7121-.7137**, .7208**, .7278- .7300***, .7407****
Support: .7063-.7082***, .7001-.7024**, .6825***
Session close: Settled at .7513, down 8.5 ticks
Fundamentals: Though the last two weeks, we have noted the tailwind that Crude Oil strength has brought to the Canadian; he who giveth, taketh. On Friday Crude got smoked, finishing $2 from its high and this certainly weight on the Canadian, but it was not the only factor. Canada’s GDP figures showed a monthly contraction by 0.1% when neither growth nor a contraction was expected. Tomorrow’s session will prove critical ahead of Wednesday’s Bank of Canada meeting with the closely watched Ivey PMI due at 9:00 am CT. Today, Crude Oil did stabilize gaining more than 1%.
Technicals: The Canadian finds itself at a crucial technical inflection point. Major three-star support comes in at .74855-.7505 and for now this is holding. A continued hold here would reinvigorate a wave back up to .7565 which closely aligns with the 100-day moving average. However, if support breaks, there is room to go.
Resistance: .7565**, .7615-.7649***, .7716-.7725**, .7835
Support: .74855-.7505***, .7436**, .7330***
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