Gold pushes new Highs, Crude Oil pullsback off Big Round Number, and Traders prep for 830am news

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–  US House Speaker Boehner battling resistance from within his own party in debt- ceiling standoff

– S&P head of sovereign ratings Beers: Looking for a program that will make a difference in the medium term in slowing the increasing debt to avoid a downgrade

– US 1-year Credit Default Swap (CDS) at 85bps (record reading); Higher by almost 10bps

– Australia Q2 CPI exceeds forecasts; AUD at fresh three-decade highs near 1.11

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Talking Heads Overnight: (what they think they know)

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– German Fin Min Schaeuble stated that the  IMF, ECB assumed Greece was able to achieve primary budget surplus from 2012. He reiterates Chancellor Merkel’s view on the crisis as it was incorrect to think EU crisis could be permanently solved by one off summit. He stated that the German Gov’t rejected carte blanche for secondary bond market purchases by EFSF/ESM. The minister called for tougher sanctions on indebted States. He believed fears over Italy and Spain debt were misplaced but did not cast doubt on seriousness of fiscal plans. Lastly must prevent uncontrolled Euro member exits. IMF likely to contribute less than one third of official lending to Greek aid due to long-term EU exposure  IMF likely to contribute less than one third of official lending to Greek aid due to long-term EU exposure

– Czech Central Bank Tomsik (dove) commented that Czech monetary policy tightening might be pushed back due to lower outlook for Euro Area

– Russia Econ Min commented that Russia intended to sell as much as 15% stake in Rosneft in 2012

– Former Japan Vice Fin Min official Watanabe commented that he viewed it as too costly to intervene in currency market at this time

– Former Japan MoF official Sakakibara (aka Mr. Yen): JPY could continue to appreciate towards 75

–  Thailand Central Bank commented that it would continue raising interest rates in 2011 (has hike 5 times already in this year)

– Japan DPJ sec general Okada: Snap election would be impossible to concieve; time of resignation depends on PM

– China’s banking regulator (CBRC) reiterated its call for vigilance on local Gov’t debt as banks should control risks in property loans

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Currencies:

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–  For the most part the USD remained on the defensive in the absence of progress on raising the US debt ceiling. The EUR//USD drifted off its Asian session highs of 1.4536  after the German finance minister rejected bond market purchases by the EFSF/ESM. The peripheral spreads were wider by over 10bps in the session. There were reports that the IMF would likely to contribute less than one third of official lending to Greek aid due to long-term EU exposure

– The JPY and CHF currencies continued to firm against the other majors. Although Japan has warned numerous times the last few session that the recent FX price movements were  one-sided FX moves the USD/JPY continued to hit fresh post-intervention lows below 77.70. The USD/CHF hits fresh life-time lows below 0.7995 but managed to hover around the 80 handle in the session. SNB trimmed the 1-week USD repo rate to 1.06% from 1.07%

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In The Papers:

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– According to UN data, British 2010 foreign direct investment (FDI) hit its lowest level in 7 years at approximately $46 billion; a decline of 35% from the prior year. The decline was attributed to factors including concerns about the economic growth prospects of the country.

– The financial press reported that the British government is risking economic growth in order to maintain its AAA sovereign rating. The austerity measures are harming the economy, and the reduced level of spending could weigh on growth for years.

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Use this to make our cash today… (what day traders need to know today)

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Looking at the economic news this morning for day traders we have a busy day ahead of us, starting with 8:30am Durable Goods Orders.  We will be looking for volume coming into the market around this important news event this morning, hopefully getting us an early start to the day.

Later this morning all eyes will be on crude oil inventories at 1030am, which we will be watching the clock closely for the 3 Phases of Crude Oil on Wednesday’s.  Starting at 10am we will watch the volume slow down ahead of the news, and we need to be careful not to get into the market too closely after 1030am to avoid the fake-out breakouts we see after this important news event.

And last today we have the very important Beige Book report.  This report gives us a look into the minds of the Fed speakers around the US to see their views on the current economy, and this will indeed have traders sitting on hands after the end of the morning session as they wait to see what this news event has to tell us.

Expect volume today on a summertime Wednesday to be slow in the beginning, hopefully we get some 830am volume through 11am after crude oil inventories, but expecting volume to slow down after 1045am with news at 200pm today.

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Looking at the Charts:

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The US Dollar Index is trading at the lows of its major bull price channel on the 89Range chart shown below.  This is the BIG picture, so we use this to get an idea of where the major levels of support and resistance will be on the dollar.  Since we know these are the lows, we know that the higher percentage on the dollar will be to rise back up off these lows.

We then use a faster timeframe such as the 13Range chart to show the short term trend of the US Dollar Index which is what day traders will use most often.  I want to see new highs and new lows on the faster timeframe to give me confidence entering my day trades on the markets I trade most.

The faster 13Range chart shows us exactly what the US Dollar Index is doing right now, previously trading sideways, its recently moved to the highs of the sideways range, giving us a sloped trigger line, and building confidence this dollar may end up making new highs.  Remember to use the dollar index correlation today with the markets we trade most.  New highs on the dollar will give me selling opportunities on Gold, Crude, Euro, Russell, and more.

Crude Oil Futures have pulled back off the 100.00 big round number this morning ahead of its important news at 1030am today.  We can see the same price structure this morning as we had on Tuesday.  We are in the lower third of the major bull price channel, with a minor price wedge in green trend line, and the older price wedge in yellow trend lines.  We can see the ‘No Trade Zone’ from 100.15 down to 99.85 above us, and we are waiting patiently for crude oil to get out of the middle of this range down to the lows so we can get some trading opportunities this morning.

The key this morning will be watching the clock for the 1030am news, and get us down to the lows of this channel where we can buy around 97.75, 97.21.  If we push new highs we need to beware the big round number 100.00 so like Tuesday we look better to the downside, however, we will be open to buying pullbacks and selling at resistance if we can get through the 100.15 to the upside.

Gold Futures continue to push new highs as the concerns over the US and ECB debts continue to rise.  The US Dollar has been making new lows giving the gold market an easy boost to new highs, and giving day traders another opportunity to make some money.

With this bull price channel, sideways range, and all-time highs we have a simple plan of attack.  Beware trading around the all-time highs, there is too much emotion involved here and EVERYONE is watching.  So sell the highs carefully, and buy the lows of this range 1607.3 and if we break to new lows look to buy the lows of the channel 85.5, 83.3, 81.0, 76.2.  Buying at support as price falls, and being careful buying pullbacks with new highs, and watching the dollar correlation will be keys to gold trading today.