Thursday, January 15, 2009
Jan-15 Daily Forex Analysis
| by: Forexyard Headlines Full News Day Should Provide Substantial Volatility in the Forex Market Markets appear to be leveling off in an anxiety-ridden anticipation of today's market indicators. Most importantly is the interest rate decision to be made by the European Central Bank (ECB) which is expected to slash rates by 50 basis points. Behind this data comes information regarding the US unemployment and inflation rates, which historically have a high impact on the value of the USD. Traders will no doubt see a lot of volatility in the market throughout the day. Economic News USD The USD Recovery Continues The USD continues to trade between 1.3100-1.3300 against the EUR, and the pair seems to be moving without direction in anticipation of the next big event to hit the news. As long as the 1.3500 level stays untouched, there is a good chance that the pair may move lower again in the coming days. Risk aversion continues to give the Dollar strength and that is likely to continue until we see signs of stabilization. Investors are speculating that the European Central Bank (ECB) will follow an expected interest rate cut today with further reductions in borrowing costs as the Euro-Zone economy continues to slow down. The economic momentum in Europe has been decreased dramatically for the last few months. The expectations remain that the ECB will continue its monetary easing into the first half of the year, which will likely lead to further Dollar appreciation. Barak Obama's victory has raised investors' expectations for bold policy measures in the U.S and is supporting the Dollar against its currency counterparts. Moreover, the greenback has proven that it can rise despite release of negative economic data as well. Analysts say that the upwards trend may continue as long as the Dollar's major rivals are stuck in a similar predicament. For example, sales at U.S. retailers dropped a steep 2.7% in December, as a deteriorating economy forced consumers to cut back on spending during the key holiday period. As for today, the leading U.S. data will be Unemployment Claims. The survey is expected to claim that 512,000 individuals have filed for unemployment insurance for the first time during the past week. Such a result will be a direct affect on the U.S. economy which will threaten to hurt the USD. Traders should follow it closely, as any crucial information might ignite a new trend in the market. EUR Interest Rate Cut Expected Today The Euro-Zone currency may decline further against the US Dollar on speculation that the European Central Bank (ECB) will lower its main refinancing rate by a half-percentage point to 2.0%. The EUR continues to deteriorate after falling to 1.3100 levels during yesterday's trading session. The ECB will announce its decision on its short-term interest rates at 12:45 GMT, and ECB President Jean-Claude Trichet is expected to hold a press conference 45 minutes after the official release. Last month the ECB reduced its target to 2.0%, in order to stabilize the economy. These days Europe faces the most danger from debt reduction, depression, and deflation, and from there excessive debt and deleveraging. As a result, the ECB will likely cut its interest rates today while other governments embark on state-sponsored investment programs. The market will view the ECB action of a rate cut as a step to restore investor confidence, and to mitigate the economic fallout from the financial crisis. In the last few months, the ECB has been less aggressive than the Federal Reserve in addressing financial problems, and as the financial crisis was worsening in Europe, the EUR was steadily falling against the USD. However, the ECB plans for cutting the interest rate might have an effect on the Euro-Zone economy, which reassured the banks that they could rely on it to keep liquidity circulating and also bring more confidence to the markets. JPY JPY Value Relatively Flat Recently The Yen completed yesterday's trading session with mixed results versus the other major currencies. The JPY was predominantly influenced by the other major currencies' behavior, however, as only one major indicator was published from the Japanese economy. It appears that this is often the case with the JPY as of late. Core Japanese private-sector machinery orders fell a record 16.2% in November, in a further sign the global crisis has stalled capital investment, while wholesale inflation hit a 4-year low, which dropped by more than half in December with crude oil prices sliding as the financial crisis sent much of the developed world into a deepening recession. Today, the JPY will be absent from the economic calendar, and traders should follow overseas events in order to determine the JPY's direction for today. Special attention should be given to the ECB announcement that will be published at 12:45 GMT, and will be today's leading publication that will affect the Yen's crosses. Oil Oil Prices Could Go as Low as $35! Oil fell again during yesterday's trading session due to rising inventories and flagging demand in the top energy consumer, the United States. U.S. distillate demand fell to the lowest level in five years as the economic recession battered industrial consumption, according to the Energy Information Administration. Traders should be eyeing news of key U.S. economic indicators, including a government report on weekly jobless claims due today. Moreover, worries that weakened international economic growth will depress Oil demand remains a key dampening influence on Oil prices. If the global economic condition deteriorates more aggressively, Crude Oil prices may extend their decline. Technical News EUR/USD The daily chart's RSI signals that this pair is still being over-sold, which may help support the pair in an upward direction in the coming days. A bullish cross forming on the daily chart's Slow Stochastic supports this notion. The price also appears to be floating near the lower border of the daily chart's Bollinger Bands, adding more support to an imminent upward movement. Going long with tight stops might be the right choice today. GBP/USD The price for this pair appears to have leveled off on the 4-hour and daily charts, indicating that there is a lack of direction in the market right now. The Bollinger Bands on the hourly chart is continuing to tighten indicating that a volatile price movement is imminent. Waiting for a clearer indication might be the right choice today. USD/JPY It appears a bullish cross has occurred on the daily chart's Slow Stochastic, indicating an upward correction may occur in the near future. The Bollinger Bands on the hourly chart also appear to be tightening, indicating a sharp movement may occur later today. Going long with tight stops might be the right choice today. USD/CHF The price of this currency pair is currently floating in the over-bought territory on the daily chart's RSI, signaling a downward correction may occur. The weekly chart's Momentum oscillator shows that there is still downward pressure on this pair. The Bollinger Bands on the 4-hour chart also appear to be very tight at the moment indicating a volatile price swing will likely occur later today. Going short with tight stops might be a good strategy today. The Wild Card Oil It appears a bullish cross has clearly formed on both the hourly chart's and daily chart's Slow Stochastic, indicating an imminent upward correction to this commodity's price in the near future. The weekly chart's Momentum oscillator also indicates that the pair has lost some of its downward momentum. It may be possible for forex traders to benefit from the imminent upward correction by going long with tight stops today. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, money trading, World Market |
posted by Matbank at 1:34 PM
