Sunday, October 18, 2009
The US Dollar
Hi all, the US Dollar has recently weaken from the highs of almost $90 to the current levels of $75+.
Therefore in our journey of Forex trading, i feel that it is important that we follow the ups and downs of this currency. Amid current reports of alternative reserve currencies, a run on the dollar, dollar strength to rebound etc, views are confusing to say the least. I think it is appropriate for me to create a new section on my humble blog for the US Dollar. I invite you to join me and explore possible situations and scenarios together! *** In today’s introduction article, let’s explore the 5 possible factors pressuring the US Dollar to be weaker. * Gold is at a high of around $1050 * US Government Total Public Debt ( Figures from treasurydirect.gov 10/15/09 ) stands at 11,946,703,132,807.34 * US current account deficit at almost $100 Billion ( Sep 09 from BEA ) * Central Banks reducing US Dollar reserves * Reports of trade agreements between countries denominated in other currencies * Talks by US official on the importance of a strong dollar but an apparent lack of actions There are definitely more reasons than the above and we do have to put in effort in our homework. Forex trading is never easy Let’s stay tuned as events unfold with regards to the US Dollar. Trade safe. Labels: forex, Forex 101, Forex Indicator, Forex Trend |
Friday, August 21, 2009
Aug-21 Daily Forex Trend and Analysis
| by: Setyo Wibowo EURUSD Forecast:
GBPUSD Forecast:
USDJPY Forecast:
USDCHF Forecast
EURJPY Forecast
GBPJPY Forecast
AUDUSD Forecast
Labels: forex, Forex Analysis, Forex Indicator, forex signal, Market Analysis, Market Trend, money trading, Moving Average |
Thursday, July 30, 2009
GBPUSD Short-term Outlook
| by: Mihai Marinescu For today just a brief outlook of GU as I see it now before London session:
On H4 my indicators are turning flat, with slight bearish bias indicating correction but not necessarily reversal back to longs. We are sitting on a key H4 supporting TL @1.6350 & so far it looks like holding. I will be playing the retracement scenario today, buying small for targets up to 1.6480. That is the limit of the upside as far as I’m concerned, at least for today (which doesn’t mean i enter short but I will be exiting longs & stay out). H1 is so far supporting the correction plan with divergences on RoC & stoch while MA’s turn bullish right as I write this. The MA system on M15 gave me the entry @1.6390, stop is now 6368 – however I will need this trade to advance fast in the next hour to get me off the hook. Elliott-wave-wise I am seeing this move as a flat correction started @1.6346 – the current bullish wave if confirmed & sustained should be the last leg up before an aggressive drop (W3 red on H4). Labels: forex, Forex Analysis, forex signal, Forex Trend, Market Analysis, Market Trend, money trading |
Wednesday, July 29, 2009
July-29 Daily Forex Analysis
| by: Setyo Wibowo EURUSD Forecast
GBPUSD Forecast The GBPUSD had a bearish momentum yesterday. On h4 chart below we can see that this time the rising wedge formation has violated to the downside suggests a potential bearish view in nearest term but remains unclear in medium term. We have good support around 1.6380 area. Only a clear break below that area should trigger further bearish momentum towards 1.6300 – 1.6250 area. Immediate resistance at 1.6450 – 1.6490 area. Break above that area should trigger further bullish momentum.
USDJPY Forecast The USDJPY failed to maintain bullish view by fell back below 94.60 yesterday. On h4 chart below we can see that the price is now testing the trendline support. A breakdown to the downside should set us a bearish view back towards 92.70 area. Immediate support at 93.70. Only break below that area should trigger further bearish pressure.
USDCHF Forecast The USDCHF had a bullish momentum yesterday. On h4 chart below we can see that the triangle has been violated to the upside suggests potential bullish view. However we have a good resistance around 1.0800 area. Only a clear break above that area should trigger further bullish pressure towards 1.0900 area. Immediate support at 1.0710 area. Break below that area should trigger further bearish momentum.
EURJPY Forecast
GBPJPY Forecast
AUDUSD Forecast
Labels: forex, Forex Analysis, forex signal, Forex Trend, Market Analysis, Market Trend, money trading, Moving Average |
Friday, July 24, 2009
July-24 Daily Forex Forecast Analysis and Trend
by: Setyo Wibowo The broadening formation I showed you in the last 2 days give us a good suggestion of a volatile market where price make new highs and new lows without a clear direction and keep me stay away from the market, which proved to be the best thing to do now. Some guys asked me about my CCI set up. They thought that my CCI set up is good and try to find some “secret” in it. Of course, CCI is a great indicator, simple but powerful. However, it’s not my “secret” or a “holy grail”. I don’t use CCI to determine the trend, because I believe that is not the function of the CCI (or any indicators). I use it to find potential momentum, breakout/breakdown, rebounds etc. I depend on chart patterns to determine the trend, bullish, bearish or trendless. So I only trust my CCI when it support or confirm my chart patterns. If not, I don’t trust it. The current situation is one good example when I don’t trust my CCI. On daily chart below we can see that CCI is just crossed the 100 line down. The interpretation is that the pair has a big probability to make a bearish momentum to the downside. But, the broadening formation suggests that we have no clear direction yet and the facts in the last 7 weeks support that conclusion. So, right now I don’t trust my CCI. Of course, I am not saying that the pair won’t go south, but when my indicator conflicting with my chart patterns, I prefer to do nothing. Keep stay out from the market and good luck.
GBPUSD Daily Forecast Similar to EURUSD, the GBPUSD had volatile market without a clear direction. The pair attempted to push higher, topped at 1.6584 but further upside pressure was rejected as the pair closed lower at 1.6485. I don’t know how long you guys can stay with no trade condition, but I will keep stay out from the market as long as it shows no clear direction and still trapped in 1.6660 – 1.6000 area. I don’t care if it takes weeks or even months. This is not about predicting the direction, but the mindset of how I stay discipline with my system and protect my capital, which much more important than any “prediction”. Remember, market will always reward patient traders. Good luck
USDJPY Daily Forecast The USDJPY had a significant bullish momentum yesterday, topped at 95.28 and closed at 95.01. For me, this fact is a violation of my bearish medium term. The bias is bullish in nearest term. However we seem to have good resistance around 95.30 area. In my opinion, only a clear break above that area should trigger further bullish momentum and give us a buy signal targeting 96.05. CCI in overbought area and heading down so watch out for a potential downside rebound testing 94.60. Break below that area should lead us into no trading zone.
USDCHF Daily Forecast The USDCHF had a bullish momentum yesterday, topped at 1.0771 but closed below 1.0750. On daily chart below we can see that it seems like the trendline support is doing a good job preventing further bearish attack. The bias is bullish in nearest term but we need a consistent move above 1.0750 – 1.0800 area to have potential further upside momentum testing 1.0950. Failure to do so might lead us back towards 1.0620 area.
EURJPY Forecast
GBPJPY Forecast
AUDUSD Forecast
Labels: forex, Forex Analysis, forex signal, Forex Trend, Market Analysis, Market Trend, money trading, Moving Average |
Wednesday, July 22, 2009
July 22 - Daily Forex Forecast
| by: Setyo Wibowo EURUSD Daily Forecast The EURUSD made indecisive movement yesterday, by opened and closed at almost the same price. On h1 chart below we have a broadening formation indicating a volatile market without a clear direction. It’s better to stay away from the market. On the upside, we have 1.4336 as the key level. Technically, a clear break above that area should confirm the bullish scenario. On the downside pay attention to 1.4050 – 1.4000 support area. Break below that area should trigger further bearish momentum re-testing 1.3750. Immediate support at 1.4176. CCI in neutral area on h1 chart.
GBPUSD Daily Forecast The GBPUSD failed to continue the bullish momentum yesterday, bottomed at 1.6382 and closed at 1.6449. On h4 chart below we have a rising wedge formation indicating potential bearish scenario especially if violated to the downside. However I prefer to stay away from the market. Immediate support is seen at 1.6382 (yesterday’s low). Break below that area should trigger further downside pressure back towards 1.6200 area. Initial resistance at 1.6480 followed by 1.6550. CCI in neutral area on h4 chart.
USDJPY Daily Forecast The USDJPY had a bearish momentum yesterday, bottomed at 93.27 and closed at 93.63. The 94.60 resistance area has proved itself as an important level at this phase. The bias is bearish in nearest term but we need a consistent move below 93.50 to have potential further bearish pressure testing 92.70 area. CCI in neutral area on daily chart.
USDCHF Daily Forecast The USDCHF made indecisive movement yesterday. On daily chart below we can see that the pair attempted to push lower, break below the trendline support, bottomed at 1.0620 but closed higher at 1.0663. Technically I prefer a bearish scenario but we really need to be patient since we had seen a lot of false breakout/breakdown in the market lately. I think it’s better to stay away and see if the price able to consistently stay below the trendline support before further bigger downside scenario towards 1.0400 area.
EURJPY Forecast
GBPJPY Forecast
AUDUSD Forecast
Labels: forex, Forex Analysis, forex signal, Forex Trend, Market Analysis, Market Trend, money trading, Moving Average |
Tuesday, July 21, 2009
Daily Forecast Analysis: July 21
| by: Setyo Wibowo EURUSD Daily Forecast The EURUSD had a bullish momentum yesterday. On daily chart below we can see that the price was convincingly break above the upper line of the triangle and consistently move above 1.4176. It’s still too early for bullish view but this fact should trigger further upside attempt re-testing 1.4336 area and give us hope to get out from indecisive market condition in the last several weeks. CCI on overbought area and heading down both on h4 and daily chart so watch out for potential downside rebound testing 1.4176 area. Break below that area should lead us back into no trading zone.
GBPUSD Daily Forecast The GBPUSD had a bullish momentum yesterday, topped at 1.6556 and closed at 1.6547. The bias is bullish in nearest term testing key resistance area 1.6660. However as long as the pair moves below that area, the medium outlook remains unclear. Immediate support is seen at 1.6470. Break below that area should trigger further bearish momentum. CCI just cross the 100 line up on daily chart suggesting potential upside pressure.
USDJPY Daily Forecast The USDJPY attempted to push higher yesterday, topped at 94.77 but closed below key resistance level 94.60. Only consistent move above that area should be seen as bearish scenario failure. Immediate support is see at 93.50. Break below that area should trigger further bearish momentum. CCI in neutral area both on h4 and daily chart.
USDCHF Daily Forecast The USDCHF had a significant bearish momentum yesterday. The pair was able to stay below 1.0750 and on daily chart below we can see that the price is now ready to challenge the trendline support. Break below that trendline support should set up a bearish view towards 1.0400 area. Immediate resistance at 1.0750. Break above that area should take us back into no trading zone.
EURJPY Forecast
GBPJPY Forecast
AUDUSD Forecast
Labels: forex, Forex Analysis, forex signal, FX Instructor, Market Analysis, Market Trend, money trading, Moving Average |
Daily Triangle on EUR could halt rally
by Johan Kriek (jkriek@fxinstructor.com) The analysis below is based on the Probability Study Technique:
If we have a look at the chart above, we can clearly see that on a daily chart we have lower peaks and higher lows. If we connect these pivots, then a triangular formation can be seen Please note that this particular triangle on the EUR daily does not carry any significance other than the upper resistance line where price has now bounced. We cannot call a possible breakout direction due to the fact that the preceding trend is much smaller than this triangle and it is not symmetric Nevertheless, the resistance line of this triangle proved to be major resistance and therefore I will honor this
On the above daily chart we can see how the bullish current trend cycle within the major trend has come to a screeching halt at the triangle’s upper resistance line
Here I have identified the most active cycles within the current trend on a 4hr chart. We can see that the most active cycle here is indeed bullish, suggesting a bullish probability for today but that major trend resistance line must be violated first, otherwise we might be buying at the top
On the 1hr chart above the latest 60minute trend has been identified based on the previous chart’s most active bullish cycle. We have a beautiful bullish 60minute trend but as we can see, price has already found resistance at the major trend resistance line. Also, if we did not have this major trend resistance line, I would have been more than happy to execute my trading system within this beautiful bullish probability/60minute trend
On this chart I have identified the exact support and resistance levels to watch and also inserted an exponential stochastic which will indicate where market rhythm is trending Major trend resistance: 1.4250 - This needs to be violated first before I take any longs as price can bounce here and come back with a vengeance 60minute trend support: 1.4160 - The 60minute trend support resides at 1.4160. This means that if 4160 is taken out, the bullish 60minute trend would have been violated and all of a sudden we will have a BEARISH PROBABILITY. I’ll keep an eye on this one (grin) CONCLUSION: We have a no trade zone because of that huge triangular resistance, otherwise I would have traded this one long. If price bounces here and moves as low to violate the 60minute trend I will start shorting. On the other hand, I will continue long if 4250 is violated Labels: forex, Forex Analysis, forex signal, Forex Trend, Market Analysis, Market Trend, money trading, Moving Average |
Thursday, December 11, 2008
Dec-11 Daily Forex Analysis
| by: Forexyard Headlines Dollar Likely to Depreciate on Release of U.S. Unemployment Claims Traders should look for the release of two key indicators today; the U.S. Trade Balance and U.S. Unemployment Claims. As reported earlier this week, the U.S. economy has seen a record number of new jobless claims. This report should be no exception. Don't look for any support in the Dollar if the jobless report fails to meet expectations. Economic News USD Auto Agreement Hurts Dollar The optimism of a tentative agreement being reached to bailout the U.S. auto industry moved the markets yesterday. Reports say that a $15 billion loan package was agreed upon in order to prevent the failure of the Big 3 automakers. News of the bailout plan provided a boost to equity markets and Crude Oil, but hurt the Dollar. The Dollar hit a two-week low against the EUR yesterday; as greater risk taking has deflated the Dollar and reduced the need for safe haven currencies. Since the beginning of the financial crisis, the Dollar has been a source of strength in an uncertain economic climate with investors bidding up the Dollar. As uncertainty disappears in the market, the Dollar may release some of its recent gains. Yesterday the Dollar ended the day against the EUR at 1.3046. The past two days have seen light trading, compounding the Dollars' losses this week. Traders should look for the release of two key indicators today; the U.S. Trade Balance and U.S. Unemployment Claims. The Trade Balance is expected to show some improvement, which may provide a short term boost for the USD. Following on the report's heels is the weekly Unemployment Claims. As reported earlier this week, the U.S. economy has seen a record number of new jobless claims. This report should be no exception. Don't look for any support in the Dollar if the jobless report fails to meet expectations. EUR Pound Reaches an all Time Low against the EUR The Pound hit a new low against the EUR at 0.8822 in yesterdays trading. This follows the recent low of the GBP/USD level last month of 1.4467. On a trade weighted basis, the Pound has lost 25% in the past 18 months. Analysts have speculated that the size of the UK's national debt has caused the depreciation of the Pound. The foreign liabilities of the nation are approaching 500% of GDP. This is to say that Britain is operating with too much leverage. Others say the reason for the drop in the currency is due to the assets held by Britain are more heavily weighted towards equities and bonds. These assets may have suffered a sharp drop in value during the recent financial meltdown. In turn, the Pound has followed the decline in the asset values of Britain. If this is true, then a recovery in the Pound may only be seen if world markets post a significant turnaround. JPY BOJ Remarks Do Little to Move the JPY Yesterday's trading saw the Yen drop slightly against the Dollar, ending the day at 92.44. The drop can be attributed to greater risk taking as investors dumped their Yen positions for higher yielding currencies. A statement was made yesterday by Bank of Japan (BoJ) Governor Shirakawa, as he signaled for possible direct intervention by the government in currency markets to influence the value of the JPY. A recent appreciation of the Yen has hurt the export dependant Japanese economy. However, these statements have been made before, and the currency markets have yet to see the Japanese government take steps to sell Yen on the open market. These words may never come to fruition. Look for the USD/JPY to continue to trade in the 92-93 range for the remainder of the week. Oil Crude Receives Support from Saudi Arabia Saudi Arabia is taking the responsibility to prop up Crude Oil prices on its own. It has been reported that the world's largest Oil producing nation will cut supplies to customers next month. In addition, it is widely expected that OPEC will cut output when it meets on December 17th in Algeria. Because of the Saudi supply cuts, the price of Crude Oil rose over 1.5% on large price volatility. Crude ended the day at $44.34. These gains were in spite of U.S. Crude inventories posting larger then expected supplies according to the Energy Information Administration. The supply cuts may not have such an impact on the price of Crude Oil. The gloom that surrounds the global economy has kept a tight grip on the price of Crude, keeping it below the $50 Dollar price level for the week. We may expect Crude to stay below this mark, and possibly find a floor near the $35 mark. Technical News EUR/USD The pair has entered a very strong bullish move, and is currently testing the 1.3200 level. The pair is currently still above the Bollinger Bands' upper boarder, signifying that the bullish momentum is still quite strong. A breach through the 1.3200 level will probably verify the extension of the bullish move. GBP/USD There is a very distinct bullish channel forming on the 1-hour chart, as the cable is now floating in the middle of it. Currently, as all oscillators on the hourlies are pointing up, it appears that the rising trend has more steam in it. Going long appears to be the right choice today. USD/JPY The range trading continues on the 4-hour chart, as the pair is now traded around the 92.00 level. A bearish cross on the 4-hour chart's Slow Stochastic implies that a bearish trend might take place, and a breach through the 91.50 level will probably validate the bearish move. USD/CHF The pair is experiencing a bearish behavior since the beginning of the week, and is currently testing the 1.1900 level. A bearish cross on the daily chart's Slow Stochastic is indicating that the pair might continue its bearish movement. Going short with tight stops might be the right choice today. The Wild Card Gold Gold prices are riding a bullish ripple, and an ounce of gold is currently valued about $813. And now, as all oscillators on the daily chart are giving bullish signals, it seems that Gold prices might break weekly records. This might be a great opportunity for forex traders to join a very popular trend. Labels: forex, Forex Analysis, Forex Trend, Market Analysis, Market Trend, Moving Average |
Wednesday, November 19, 2008
N0v-19 Daily Forex Analysis
| by: Forexyard Technical New EUR/USD The pair is continuing to provide mixed results, without making a significant breach. Hourly chart's Slow Stochastic is negatively sloped indicating that this pair could face another bearish session. Going short with tight stops might be the right choice today. GBP/USD The pair has been decelerating its bullish pace during the last 2 days as the daily chart shows and is now floating around the level of 1.4948. Moreover, 4 hour chart's Slow Stochastic it is still negatively sloped implying that a bigger bearish move may take place. Going short with tight stops appears to be preferable. USD/JPY There is a very distinct bullish channel forming on the daily chart, as the pair is now floating in the middle of it. To strengthen this notion, the Bollinger Bands on the 4 hour chart are tightening, suggesting that traders should expect a violent breach. USD/CHF The pair extends its bullish momentum, and is now traded around the 1.2050 level. The Bollinger Bands on the daily chart and the hourly chart continue to widen, suggesting that the current bullish momentum is likely to continue. Going long seems to be a preferable strategy today. Economic News USD U.S. Building Permits on Tap The USD continues to trade between 1.2500-1.2800 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 1.3000 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. The Dollar has rallied recently as global economic outlook has worsened, with investors pulling money out of commodities, stocks and high-yield currencies and parking it in safe-haven assets such as U.S. Treasuries. According to Treasury data released yesterday, foreigners bought $143.4 billion of U.S. securities in September, the largest net inflow since early 2006. Testifying before Congress yesterday, Federal Reserve Chairman Ben Bernanke said massive demand for the USD means it remains unrivaled as the world's reserve currency. In conclusion, two factors have joined together to strongly support the USD. The first was the poor Euro-Zone data, which is continuing to prove that the most sustained global concerns are now coming from the European nations. The second factor is what is known as the "herd effect." The current USD bullish trend appears to be so enduring that investors are seeing potential for unlimited profits and are so anxious to join the feast that they are becoming almost oblivious to the economic indicators. In this turn of events, only a major combination of unfortunate data from the U.S., along with a series of positive signals from the Euro-Zone, could initiate a long-lasting reversal for the EUR/USD pair. As for today, a batch of data is expected from the U.S. economy. These figures are expected to set the tone for the USD's pairs and crosses. Special attention should be given to the U.S. Building Permits which is expected to fall to 0.77M. Traders pay close attention to this figure as it has a strong correlation with the value of the U.S. Dollar. Also today, the Core CPI is scheduled which should also have an impact on the market because if it delivers unfavorable figures, it will validate a problematic U.S. market, and the USD is likely to weaken as a result. EUR EUR Continues to Fall Under Foreign Influence The EUR saw very little change in its overall value against the other currencies yesterday. It has managed to remain rather calm in light of recent news from the Euro-Zone market. The only economic event out of the Euro-Zone yesterday was the Italian Trade Balance, which ended up slightly lower than forecasted, helping to keep volatility to a minimum. Sentiment in the U.S. economy has brightened in the past week following better-than-expected news. However, the EUR is still showing signs of resilience as it traded in a relatively close range yesterday even though there was a little volatility throughout non-EUR crosses. It will be crucial for traders to identify how the preceding economic indicators from the U.S., European and Japanese economies will affect their positions. There are no economic data releases expected from the Euro-Zone today; however there will be a nice batch of data from the U.S. which will affect the EUR's major counterparts. Traders should pay close attention to the response of equity markets to determine how to continue with EUR positions as well as to pay attention to the news from the United States to place their transaction accordingly with today's developments. JPY Japan Enters Recession for the First Time Since 2001 Japan's economy, the world's second largest, slipped into recession for the first time since 2001 as companies cut back spending. Japan's recession could last even longer than feared and reflects an increasing effort by governments to provide a cushion against a global downturn. What the market is seeing here doesn't represent fundamental data, but a crutch. Worried investors are still moving away from high yielding currencies and risky assets. Investors move out of these riskier positions and are using the JPY as the fall back, fueling demand and appreciating the JPY against its pairs. Looking ahead to today, there is no significant data scheduled from the Japanese economy, and the JPY isn't giving any signs of halting its recent movement. However, traders should bear in mind that when an abnormal activity is taking place, it is usually an irrational reason which eliminates it. This is why a reversal, or at least a correction, may be expected in the coming days. OIL Another Day of Falling Crude Oil Prices The price of Crude Oil continued to fall during yesterday's trading session and closed under $55.00. Oil suffered a sharp drop in price during the month of November and has almost reached one-third its price from the record high seen in July 2008. Traders should pay attention to U.S. economic indicators today, including U.S. Crude Oil Inventories, as these figures will indicate the status of Oil supply in the market. 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 and fall towards as low as $50 a barrel. Traders should look to the USD as well as it has historically been a strong indicator for the direction of the price of Crude Oil. The Wild Card OIL A bearish configuration on the daily chart is indicating that the momentum is still negative. The Slow Stochastic flows low supporting the notion that there is still room to run for this trend. From this point the commodity may descend further or there might be a small bullish correction before the bearish move resumes. forex traders can maximize profits by selling on highs and taking advantage of a currently bearish trend. Labels: forex, Forex Analysis, Forex Trend, Market Analysis, Market Trend, World Market |
Thursday, October 30, 2008
| by: Forexyard Technical News EUR/USD The pair continues to make bullish sounds, and is currently testing the 1.3200 level. However, it appears that the 1.3250 level has now become a strong resistance level, and a breach of that level might validate the continuation of the upward move. GBP/USD There is a very accurate bullish channel forming on the 4-hour chart as the cable is now floating in the middle of it. The RSI on the daily chart has crossed the 30 line, and the Slow Stochastic is still pointing up, all suggesting that another bullish session is pending. Going long appears to be the right choice today. USD/JPY Ever since bottoming at the 91.00 level, the pair has entered a very strong bullish trend and is currently traded around the 98.70 level. And now, a flag formation on the 4-hour chart suggests that the bullish move has more room to go. USD/CHF A very sharp bearish movement took place yesterday, as the pair dropped over 300 pips. The current price is floating beneath the Bollinger Bands lower border, indicating that the bearish move is still quite strong. Going short appears to be the right strategy today. The Wild Card Gold Gold prices are appreciating on a daily basis lately, and an ounce of gold is currently valued at $770. And now, all oscillators on the daily chart are pointing up, implying that the bullish momentum has more steam in it. This might be a great opportunity for forex traders to join a very popular trend. Economic News USD Interest Rate Cut Creates Massive One-Day Loss for USD In a move anticipated by most market analysts, the Federal Reserve cut target lending rates yesterday to a level not seen in almost 50 years! This was done in an attempt to prevent a widening financial crisis from tipping the U.S. economy into a prolonged recession. It was not the first time the Fed cut rates to stave off further economic disaster during these most recent times of financial hardship. Less than a month ago the Fed joined the European Central Bank (ECB), as well as other counterparts from the U.K., Canada, Sweden and Switzerland, in a coordinated reduction of interest rates, cutting its target rate by a half percentage point to 1.50%. Now, as a result of yesterday's further rate cut, the Dollar posted its biggest one-day fall against almost all of its major currency counterparts. The Dollar was already beginning to trade above $1.3200 per EUR in today's early trading sessions, after dropping 2.2 % yesterday, and has also climbed above 1.6500 against the GBP. The Fed may also be expected to lower benchmark interest rates even further in the coming months given the downbeat economic outlook provided by the Fed's policy statement yesterday. The market has been trading on a recovery theme lately; there is still a lot of uncertainty, and risk aversion is very much in place. If risk appetite continues improving, the Dollar may get even weaker. Despite showing signs of recession in the U.S. economy, the Fed's maneuver put the focus on the interest rate differential, and that might force the Dollar to go even lower no matter how the Advanced GDP figures appear when they are released later today. EUR EUR Finds its Strength from Weakened USD The EUR rose against the Dollar to 1.3200, marking a distinct rebound from last week's doldrums. The 15-nation currency rallied after the U.S. Federal Reserve slashed its target rates by half a percentage point yesterday and also left the door open to further reductions if needed. The EUR made further gains following Germany's announcement of its preparation of an economic stimulus package. Deutsch Bank AG, the largest bank in Germany, also declared surprising profits after implementing a change to its accounting rules. The USD no longer appears to be a save-haven for traders after the Federal Reserve released a statement that the pace of economic activity appears to have slowed significantly. The British Pound has also advanced against the Dollar as a report showed that mortgage approvals rose for the first time since June 2007. The Bank of England (BoE) said lenders approved 1,000 more home loans last month than in August, and the government is expected to pledge extra borrowing today to support the economy as it enters its first recession since 1992. The Pound had its biggest intra-day decline versus the Dollar on Oct. 24, when a government report showed the economy contracted in the 3rd quarter by more than twice as much as economists predicted. This indicates that economic news is beginning to once again have a larger impact on the movement of the major currencies. While appearing to gain strength recently, the EUR may in fact see a reversal to yesterday's giant upswing. News being released from the Euro-Zone today will likely show higher-than-expected unemployment in Germany and decreased consumer confidence throughout the region. While indicators have had less impact these past weeks due to the financial crisis, they nevertheless still carry weight in the confidence of investors; any negative economic data will have the potential to cause harm to the currency's value. JPY JPY's Excessive Volatility Ending as Japan Considers Cutting Interest Rates As the market's speculation increases that the Bank of Japan (BoJ) will lower its interest rates, the Yen fell for a second day against its currency counterparts, extending its largest ever decline. The first motivation for a potential rate cut is to stem the Yen's appreciation; another motivation is to try to prop up the economy. Yesterday, Japan's currency dropped 0.5% versus the pound to 156.47 on speculation investors will revive carry trades. In carry trades, investors borrow in currencies with low interest rates and invest in currencies with a higher yield. Japan's target rate of 0.5% is the lowest among major economies. The potential BoJ rate cut led to an unwinding of safe-haven flows to the JPY. Perhaps what has been driving the Yen to its recent strength is not speculation, but the repatriation of Japanese investors and de-leveraging by global investors. The Group of Seven (G7) issued an unscheduled statement on Oct. 27 saying it was concerned about "the recent excessive volatility" in the JPY. The Japanese government has also stated that it may intervene in foreign exchange markets by arranging purchases and sales of currencies, if necessary. Oil Crude Oil Prices Climb after USD Takes a Hit Crude Oil prices gained almost 9% yesterday as the Dollar posted its biggest one-day drop following the U.S. interest rate cut. Crude Oil prices surged to almost $69 a barrel as the weak Dollar and data from the U.S. government showed crude stocks rose less than expected last week and gasoline supplies fell unexpectedly. The prices appreciated on speculation the U.S. Federal Reserve rate cut will help spur a recovery in the world's biggest fuel-consuming country. Investors often purchase Crude Oil, and other dollar-priced commodities, when the U.S. currency drops because of their use as an inflationary hedge. Like other commodities, Oil has become more sensitive to the gyrations of the wider economy as the global financial crisis widens. Moreover, the OPEC cartel decision last week to cut output by 1.5 million barrels per day, as well as hints that it may cut production further, have also helped to stabilize Crude Oil prices in the market. Labels: forex, Forex Analysis |
Wednesday, October 29, 2008
Oct-30 ForexYard Indicator Report
| by: Forexyard Be Prepared! U.S. ADVANCED GDP Tomorrow At 12:30 GMT! We at ForexYard encourage our customers to get involved in the most intense market events. As such, we think you should know that the U.S. Advanced Gross Domestic Product (GDP) figures are expected tomorrow, October 30th, at 12:30 (GMT), and you need to be prepared. Market events like this one tend to create either big changes to current trends or push current trends even further. Generally, the majors are the ones most affected by market events in general, but Crude Oil, Gold prices, and even the price of Silver can change dramatically in the seconds after such a publication. For more information about the U.S. Advanced GDP, please read below. What is the The Advanced Gross Domestic Product (GDP) is a survey that is being used to measure the annualized change in the value of all goods and services produced by the relevant economy. It is defined as the total market value of all goods and services produced within the U.S. economy in one quarter, in this case the 3rd quarter. The survey is released on a quarterly basis and it measures the differences compared to the same quarter in the previous year. There are 3 versions of the GDP, released one month apart - "Advanced", "Preliminary" and "Final". The "Advanced" estimates are based on source data that is incomplete or subject to further revision by the source agency, while the adjusted figures are delivered through the 'Preliminary' version. Traders follow this survey very closely because it is considered to be the broadest measurement of economic activity and a primary gauge of an economy's health. If the Survey Comes Inline with Market Forecasts Expectations for this quarter reveal that the Advanced U.S. GDP figures will probably fall from 2.8% on the 'Final' publication to -0.5% on the 'Advanced'. Previous surveys have shown that GDP publications that go inline with market forecasts tend to leave the Dollar unchanged. They have also shown that in cases where publications have beaten analysts' forecasts, the market was greatly impacted, and the USD had instantly rose, usually in a dramatic trend. Because of the perceived economic weakness in the U.S. economy, any measure above the forecasted value may act as a positive that could return the USD's previous bullish run against the EUR. We may see a EUR/USD rate of 1.2700 continue through the week's end. If the Survey Will Surprise With Bearishness When the actual figure is lower than forecasted, investors are likely to see the USD depreciating against its currency pairs and crosses. Previous indicators relating to consumer spending, sentiment, and retail sales all came in below their expected values. Also the failure of Lehman Brothers in September caused major turbulence in the financial markets during the third quarter. American citizens may have been spooked by this event and kept their spending tight in the previous quarter. GDP numbers may be negatively affected as private consumption contributes a large percentage of the calculation. This leads us to believe that Advanced GDP may fail to meet expectations and send the USD lower against the EUR, possibly to the 1.3000 level. Labels: forex, Forex Analysis |
Tuesday, October 28, 2008
ForexYard Indicator Report
| by: Forexyard Be Prepared! U.S. Federal Funds Rate Expected Tomorrow at 18:15 GMT We at ForexYard encourage our customers to get involved in the most intense market events. As such, we think you should know that the U.S. Federal Funds Rate figure is expected tomorrow, October 29th, 18:15 (GMT), and you need to be prepared. Market events like this one tend to create either big changes to current trends or push current trends even further. Generally, the Majors are the ones most affected by market events in general but Crude Oil, Gold prices, and even the price of Silver can change dramatically in the seconds after such a publication. For more information about the U.S. Federal Funds Rate, please read below. What is the U.S. Federal Funds Rate? The U.S. Federal Funds Rate, or Interest Rates, is the rate at which banks lend balances held at the Federal Reserve to other banks overnight. This figure is released 8 times each year. It is important because short-term Interest Rates are the leading factor in determining the value of a currency. In fact, most other economic indicators are used by traders to speculate about the future movement of these Interest Rates. This figure is decided on by the members of the Federal Open Market Committee (FOMC) who vote on where to set a "target rate," because the actual rate is set by the open market. It is a mechanism used by the Federal Reserve to regulate the supply of money in the U.S. economy and has a direct impact on supply and demand for the USD. According to the needs of the U.S. economy, the FOMC will elect to increase, decrease, or leave the rate unchanged. Traders pay close attention to this figure as it has a strong correlation with the value of the U.S. Dollar. If rates are cut, there will be an increase in the amount of USD in circulation making them grow weaker in value. If rates are increased, the exact opposite happens. Dollars are taken out of the economy to help contain inflation and strengthen the value of the USD. If the Federal Funds Rate is Decreased At present, market analysts are forecasting the Federal Funds Rate to be cut to 1.00% from its current level of 1.50%. If this happens it would indicate that the Fed is going to start buying securities. This will likely have the effect of lowering the value of the USD against its major currency pairs as traders will start selling USD during its devaluation. By decreasing the Interest Rates, it stimulates U.S. economic growth by making it cheaper to get a mortgage or buy a car. This entices investors to put more money towards capital in the local economy. However, this change in the Interest Rate is always approached with caution. If rates are cut too far, the rapidly growing economy will force a sharp increase to the rate of inflation. As inflation raises, the cost of goods and services also rise and make the value of the dollar even weaker. When this happens it usually warrants a subsequent increase to the Federal Funds Rate. Ultimately the Fed is trying to find the target interest rate that balances these factors. Traders should expect a call by the Fed to cut the present rates as the recession is weakening the buying power of most Americans and action must be taken to stave off further disaster. If the Federal Funds Rate is Increased Although the current forecast is predicting the Fed to cut Interest Rates, there is the possibility of an increase in this figure. If the Fed decides to enact such an increase in Interest Rates, it will begin selling securities. This will limit the amount of U.S. currency in the market. If the Federal Funds Rate will indeed be increased, the upward momentum of the USD will take off as its value becomes much stronger versus its currency rivals. This result is less likely for October 2008 seeing as such a move has the potential to cause a recession. Since the U.S. economy is currently witnessing a recessionary move, an action such as this is not likely. It is far more possible that the Fed will indeed issue an order to cut current rates than it would be for the Fed to issue an increase in the Federal Funds Rate at this time. The best way to capture profits from the announcement of these rates is to be aware of their impact on the strength of the USD and trade accordingly. Labels: forex, Forex Analysis |
Friday, October 24, 2008
Oct-23- Daily Forex Analysis
| by: Forexyard Technical News EUR/USD Similarly to what is happening all across the board, the USD bullishness did not skip this pair as well. It appears that the local EUR/USD bearish momentum might be taking the pair to 1.2600 levels. There are still bearish signals on one hourly chart, yet it seems that pair is overlooking all technical aspects. Going short wit tight stop might be the right choice today. GBP/USD A bearish formation on the daily chart is still intact; however the momentum is already quite low. The 4 hour chart is also maintaining a slightly bearish configuration yet with no distinct conclusion. The Bollinger Bands are tightening which indicates that the break might be imminent. Traders are advised to hold for the break and then swing into it. USD/JPY The pair is continuing its bearish movement with full steam, as it breached the 97.60 support level. The daily chart shows that the current price has dropped beneath the Bollinger Band's lower boarder, indicating that the bearish move has more steam in it. Going short seems to be a preferable choice today. USD/CHF The very strong resistant level of 1.1650 has been breached, and the pair is extending its bullish journey. An upwards momentum on the hourly chart's Slow Stochastic suggests that the pair may extend its bullish trend. Going long with tight stop might be the right strategy today. The Wild Card Crude Oil The Crude Oil price is once again dropping and a barrel of Light Crude is currently traded around $67. However, all oscillators on the daily chart are now providing bullish signals, indicating that the Oil might go up. In this case forex traders may have a great opportunity to enter a very popular trend. Economic News USD Unemployment Claims on Tap The greenback continued its rally yesterday as it further strengthened against the EUR and GBP, continuing to prove that for the time being this is the solid currency that traders can rely on to provide them with steady profits. The USD marked a 4-year record against the GBP yesterday, as the pair sunk to the 1.6150 level. The USD almost saw a 2-year record against the EUR as well, as the pair was traded at the 1.2730 level. Although no significant indicators were published from the U.S. economy, and no valid explanation can throw some light on this phenomenal trend, the USD continues to rise against all the major currencies, except for the JPY. It appears that in times when real estate is considered to be a risky investment with the word bubble hovering above it, and when stock markets around the globe are competing on who will provide today's most unfortunate news, the USD suddenly seems more attractive than ever. To highlight the significance of this trend, consider this: September 15th was the day when Lehman Brothers Inc. announced its filing for bankruptcy, and is considered to be the day when the global turmoil started. On this day the EUR/USD pair was traded around the 1.4300 level - today, about a month later, 1.2700 looks to be the new daily support level! This is a difference of roughly 1,600 points. As for today, the economic calendar is likely to play a leading role as the U.S. Unemployment Claims is expected at 12:30 GMT. If the U.S. economy is indeed heading towards recession, this is one of the leading surveys to predict it. An industry that contracts is one that aims to reduce expenses, and one which fears severe future losses. If the forecast for the 470K figure will be accurate, then the USD might face a bearish correction against the major currencies. Otherwise, the greenback will probably continue its journey to explore new bullish lands. Labels: forex, Forex Analysis |
Tuesday, October 21, 2008
20-Oct Daily Forex Analysis
| by: Forexyard Technical News EUR/USD The pair continues to fluctuate within a restricted range, and is currently set at 1.3500. A bearish cross on the 1-hour charts Slow Stochastic suggests that a downtrend might take place. Going short seems to be the right choice today. GBP/USD After completing a 100 pips rise, the cable's bullish momentum seems to be fading. And now, as all oscillators on the daily chart are pointing down, it appears that a bearish reversal might be imminent. Going short with tight stops could be the right strategy. USD/JPY There is a very distinct bullish channel forming on the 4-hour chart, as the pair is now floating in its upper section. And now, as the RSI on the daily chart is approaching the 40 line, it appears that the bullish momentum has more steam in it. Going long seems to be preferable. USD/CHF Although the pair is showing a violent and choppy session on many occasions, the daily chart is still floating on a very neutral territory with no distinct price direction. However, the Bollinger Bands on the 4-hour chart are tightening, indicating that a sharp movement is impending. Traders should wait for the breach and swing. The Wild Card AUD/JPY The pair is currently in the midst of a very strong uptrend after gaining over 700 pips in 4 days. And now, as all oscillators on the daily chart are giving bullish signals, it appears that the bullish trend might extend. This might be a great opportunity for forex trades to join a very promising trend. Economic News USD Presidents Bush and Sarkozy Call for World Summits on Financial Crisis Opening this week's trading sessions at the steady price level of 1.3400 against the EUR, the Dollar continues to hold its recent strength. This gain, which was brought about in recent weeks, has surprised many traders as the economic crisis had many analysts forecasting a drop in value. Contrary to those claims, however, the USD has continued gaining and holding strength versus every major currency except the JPY. Asked whether the USD would begin to lose value this week, many analysts were reluctant to answer. With so much uncertainty affecting its value, it has become more and more difficult to make an accurate forecast. The most important market data comes from news surrounding the various bailout packages being discussed and implemented throughout the U.S. and Europe, as well as the upcoming presidential election in the United States. President George W. Bush, French President Nicolas Sarkozy, and the European Commission stated this weekend that they will call for a series of summits between world leaders in which the financial crisis would be discussed more in depth. These summits will be held in the U.S., but not until after the November 4th election. As for today's trading, if investors can accurately gauge the upcoming valuation of the USD, as more information about the bailout packages are released, then the possibility to make lucrative gains are endless. A significant price move is in the making; which direction it takes, however, will be determined more by investor confidence than the various economic indicators being released. Traders should anticipate future monetary policy decisions on the USD during Fed Chairman Ben Bernanke's testimony later today in front of the House Budget Committee. He will no doubt give off clues about any upcoming decisions to be made by the Federal Reserve Bank. EUR Euro-Zone Set to Receive a Quiet News Week Further market uncertainty has gripped the forex markets as major world currencies seem poised to jump in value; direction being the only unknown factor. The EUR is no exception. Continuing to test upper and lower price levels within a small range versus its currency counterparts, it has still failed to make a significant breach. Opening today's trading at 1.3400 against the USD and 0.7765 versus the GBP, the EUR is looking for its next significant price move in a troubled market. In a speech delivered yesterday by European Central Bank President Jean-Claude Trichet, it was announced that banks in Europe should begin to increase inter-bank lending, as well as lending to clients, sometime in the near future. This increase in liquidity will help bolster confidence that the European market is heading in the direction of normality. It could not come at a better time. Stating that an unlimited amount of EUR and USD would be made available for banks has moderately reduced liquidity concerns. Whether or not it does the trick is yet to be seen. Right now banks and central governments have to worry about the loss of confidence in the markets as this has done more harm than many of the financial indicators currently being released. Numbers only tell half of the story; the consumer's interpretation of those numbers is the other half of the equation, and it carries a heavy impact. This week in the news we have very little information about the EUR being released. As the last two weeks have been laden with news about the various bailout programs, this week will seem mild for many investors. On the other hand, this can be deceptive. After a call from the American and French presidents for a series of economic summits to be held in the near future, there is always the possibility that unexpected information will be released until these summits are underway. News events such as these tend to influence the market heavily as traders anticipate future price movements. It would be wise for traders to keep an eye on the news this week as it is hard to predict what might be said by any number of actors. JPY Is the JPY's Bullish Run Over? The JPY began losing its momentum this morning after a long week of steady gains. Opening at 101.41 and then steadily losing ground to the USD, the JPY is now trading closer to 102.00. Some analysts claim that this is because of the uncertainty affecting the entire market, not just Japan's. Investors are waiting for the proverbial "sign from above" to see which way the market will go before picking a direction. Traders could see this indecisive fluctuation continuing throughout the day. Bank of Japan Governor Masaaki Shirakawa stated early this morning that the BoJ needed to keep an eye on the global economy and watch for the potential fallout that could come from this recent crisis. Japan's currency usually does well during times of economic downturn, but when investor confidence is restored, the market may see a sell attitude develop as traders return to their carry trades; selling JPY in exchange for higher yielding currencies. OIL OPEC Announces Future Production Cuts As global demand for Crude Oil slumps even further, actions are being discussed to cut production as a counterweight to falling prices. OPEC has agreed to decrease output, but there is still no agreement as to how much of a cut will be implemented. The upcoming production cuts will range between 1 and 2 million barrels a day, roughly 6% of total production, according to OPEC President Chakib Khelil. The announcement of these cuts was enough to calm the price of Oil for the time being as it appears to have leveled off in today's early trading sessions. A further depreciation may be expected in the short-term, however, as the effects of this production cut are purely psychological at this point. Until they actually take place, the price will continue to reflect investor expectations, and the value of Crude Oil compared to its currency counterpart: the U.S. Dollar. When the major currencies find their direction and take off, the price of Crude Oil will do the same. Traders should look to the USD as it has historically been a strong indicator for the direction of the price of Crude Oil. Labels: forex, Forex Analysis |
Thursday, October 16, 2008
16-Oct Daily Forex Analysis
| by: Forexyard Technical News EUR/USD The Slow Stochastic and the RSI on the daily chart are showing a continuation of the current bearish correction. There is also a very accurate bearish channel forming on the 4-hour chart. In addition, all indicators on the hourly chart are pointing down. Going short might be the right choice today. GBP/USD The Cable is in the middle of a very intensive downtrend that started a week ago and shows great momentum that on a larger scale appears to have more room to run. In a shorter time frame, a bullish cross on the hourly indicates that there might be a minor correction before the bearish move resumes. Selling on highs appears to be preferable today. USD/JPY The pair has been range-trading for a while now with no specific direction. The daily chart's Slow Stochastic is providing us with mixed signals. All oscillators on the 4-hour chart do not provide a clear direction either. Waiting for a clearer sign on the hourlies might be a good strategy today. USD/CHF This pair is still in the midst of a steady uptrend which is not yet showing any sign of leveling out. The RSI and Momentum on the daily chart are still positively sloped indicating that there is still plenty of steam left in this bullish move. Once this pair breaches the 1.150 level it's likely to make another sharp break upwards. The Wild Card Oil There is still a bearish configuration on the daily chart, indicating that the momentum is still down. The Slow Stochastic flows high supporting the notion that there is still room to run for this trend. In the shorter time frame, there is a bullish cross forming on the hourlies indicating that there might be a small bullish correction before the bearish move resumes. Forex traders can maximize profits by selling on highs and taking advantage of a currently bearish trend. Economic News USD Dollar Appreciates Despite Negative Figures After a relatively negative news day, the USD still managed to appreciate against most of its currency counterparts. How can this be? Analysts have declared a decreased risk appetite and market uncertainty as the culprits. People simply are not trading. The loss of risk appetite means that most traders are waiting for more steady market conditions before taking a strong position. There is too much uncertainty right now with the various bailout plans, bank failures, and the presidential election in the U.S. These factors have produced the recent "wait and see" attitude in the forex market. On top of that, we have negative figures such as yesterday's Retail Sales figure, which also adversely affect the market. Following yesterday's cautionary speech from Fed Chairman Ben Bernanke, many market analysts are now expecting further interest rate cuts. An important warning given by Bernanke was that economic recovery would not come quickly. It would be a process which takes a long time and starts with the stabilization of the banking system followed by a bolstering of the housing markets. He also said it will take some time to restore normal credit flows and pledged the U.S. Federal Reserve would continue to act aggressively to fight the crisis. Adding to this speech was the fact that U.S. stocks went down sharply yesterday after an unexpectedly big drop in September retail sales. Government reports showed that Retail Sales fell -1.2% in September, below the -0.6% expected by analysts. Negative data coupled with an explanation of uncertainty and a call for patience has lent more weight to the argument that traders are, and will continue to be, waiting for a sign as to which direction the market will move before re-investing their money. USD trading will be interesting today as another a batch of important economic data is expected to be released. Similar to yesterday, the news will start at 12:30 GMT with a series of economic indicators being released starting with CPI figures, unemployment claims and the TIC Long-Term Purchases report. Surprisingly, almost all of these releases are expected to be higher than their previous figures meaning the USD could continue to show further bullishness today. The Core CPI release is expected to stay unchanged at 0.2% and will likely not affect the USD unless it comes out at an unforeseeably low mark. Traders should stay close to the market today, as there is a strong chance to capitalize on the fluctuations which will likely follow these releases. EUR European Central Bank to Aid Neighboring Hungary through Financial Turmoil Yesterday the EUR saw very little change in its value against the other currencies. While continuing with its recent downward trend, it has managed to remain rather calm in light of recent news from the market. With a batch of important data releases from the Euro-Zone, Great Britain and the U.S., the market witnessed surprisingly low volatility across the board. Word of a 5 billion EUR loan from the ECB to Hungary to help stave off another country's financial collapse has spread recently as the ECB attempts to find more solutions to the current crisis. This operation has helped stabilize the Euro-Zone economies through an easing of fears of a more panic-stricken market. It will also help increase market liquidity by infusing the market with more cash. The most significant economic data released from the Euro-Zone yesterday was the Consumer Price Index (CPI). This figure stayed unchanged from the previous month's mark of 3.6%. A stable figure is not enough to cause the EUR to be bullish against most of its counterparts; worry of very slow economic growth in the Euro-Zone is becoming stronger and has taken its toll on the value of the 15-nation currency. Similar to the U.S. economy, recent economic indicators seem to carry less weight as news surrounding the bailout plans and money market operations are the primary motivators in trading recently. The appetite for investment risk is lower than ever. Until there is more certainty in how the market is going to respond, trading volume will continue to be low. Today will also be a very quiet news day for the EUR as only one economic figure will be released. The Italian Trade Balance is expected to drop even more, compared to last month, which should do some harm to the value of the EUR; however, the other currencies will drive the market's momentum today. The other 3 currencies: the GBP, JPY and USD, all have major economic releases that should affect the EUR's volatility more than anything else. JPY JPY Reaches Remarkably High Value in Spot Trading The JPY rose toward a 7-month high versus the dollar after the biggest decline in U.S. retail sales in three years. It closed at 99.60 at the end of yesterday's trading session. The yen also approached the strongest level in three years versus the EUR closing at 134.55. Analysts claim that the reason for this appreciation can be found in the fundamental news from the Asian giant. As the export-based Japanese economy took advantage of the drop in Crude Oil prices, lowering the transportation costs of Japanese exported goods across the world, the JPY has found strengthening value as a result. As also explained in past analyses, the JPY tends to gain value when the other major currencies falter. Since the global economies are finding more uncertainty and losing ground, the yen is gaining momentum. For traders today, there is only one data release from Japan that is significant: the Tertiary Industry Activity, which will be released at 23:50 GMT, the end of the day's trading session. The official forecast for this figure is lower from the previous reading. A rising trend will have a positive effect on the nation's currency because it generates more jobs and investment. Today, however, investors should pay closer attention to the JPY's counterparts before placing their transactions. Mapping the movement of the Stock markets worldwide could also provide much needed clues as to the direction of the heavily traded currency. Oil U.S. Crude Oil Inventories on Tap Crude Oil prices experienced another day of depreciation as the oft-traded commodity dropped below $72 in this morning's early trading session. Oil prices traded down for the third straight day, continuing a nearly 2-month long drop in overall energy prices. Much of the bearish movement in Crude Oil can be attributed to fears of a drop in fuel consumption due to poor economic outlook in the major world economies. With economic growth slowing in the U.S. and Europe, and another month of falling service industry numbers, Crude Oil may continue to see a depreciating value. Looking ahead today, one of the more influential pieces of economic data will be Crude Oil Inventories for the U.S. The inventories index has become more and more relevant over the last few months as the movement the price of Oil has become a major market mover. Expectations show a drop to 1.9M from last month's of 8.1M. Traders can, and should, expect wide market volatility around the 15:00 GMT release of these inventories figures because of Crude Oil's recent importance to today's market. Labels: forex, Forex Analysis |
Wednesday, October 15, 2008
15-Oct Daily Forex Analysis
| by: Forexyard Technical News EUR/USD The pair has been range-trading for the last few days, and is now traded around the 1.3620 level. Currently, the Bollinger Bands on the 4-hour chart is tightening, suggesting that a sharp movement is impending, and as all oscillators on the 4-hour chart are pointing down, it appears that the move will be bearish. Traders should wait for the breach and swing. GBP/USD The cable is currently range-trading within a relatively wide range. A doji formation on the 4-hour chart indicates that a sharp movement is forthcoming, and a bearish cross on the Slow Stochastic suggests that the move will be bearish. Traders should wait for the breach and swing. USD/JPY The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic is providing us with mixed signals. All oscillators on the 4-hour chart do not provide a clear direction either. Waiting for a clearer sign on the hourlies might be a good strategy today. USD/CHF After peaking at the 1.1485 level, the pair is dropping consistently and is now traded around the 1.1370 level. Currently, as all oscillators on the 4-hour chart are pointing down, it seems that the bearish movement could extend. Going short appears to be the preferable choice today. The Wild Card EUR/AUD There is still a bearish configuration on the daily chart, indicating that the momentum is still down. The Slow Stochastic flows high supporting the notion that there is still room to run for this trend. In the shorter time frame there is a bullish cross forming on the hourleis indicating that there might be a small bullish correction before the bearish move resumes. Forex traders can maximize profits by selling on highs and taking advantage of a current bearish trend. Economic News USD U.S. Retail Sales on Tap Following the U.S. Treasury's announcement to inject $250 billion into financial institutions this week, the dollar finally appears to have broken its 3-day downward trend against the other major currencies. The dollar was traded at $1.3575 against the EUR at the end of yesterday's trading session after climbing steadily to 1.3767 over the course of the last few days. The previous appreciation of the USD was largely due to the reluctance of banks to lend to one another, which spurred a surge in demand for U.S. currency funding in global money markets. However, the Federal Reserve announced that it would offer European banks as many dollars as needed, and at a fixed interest rate, which has caused the dollar to slip against the other major currencies in recent sessions as an increased supply of USD is expected to ease demand. As a result of the aggressive steps taken to pump cash into troubled banks, investors have started to unwind safe-haven trades in the USD which has also caused a correction to the greenback's recent upswing. However, even after the latest measures by global governments to flood banks with cash, inter-bank lending rates were not expected to fall so quickly. It is still too soon to determine whether this move is going to end up causing bearishness for the USD over the long run, or if it will help stabilize the economic system. Traders have an important day of trading ahead of them today. Starting around 12:30 GMT and lasting throughout the day, a stream of announcements and economic indicators will be released by the American economy followed by speeches from Federal Reserve Board Chairman Ben Bernanke and a speech by FOMC member Donald Kohn about the state of the U.S. economy. With important figures such as Retail Sales and the Producer Price Index (PPI) being released, traders can expect some heavy volatility in USD trading throughout the day. EUR Euro-Zone Bank Bailout Encourages Investment Lately the EUR has experienced a positive trend against its major currencies as investors are speculating that the European and U.S. government plans to pour cash into troubled banks will help markets climb out of the financial crisis. The European bailout plan gave a strong boost to the value of the various European currencies, primarily the EUR, which climbed out of the hole it found itself in after the USD's bullish run late last week. Following the U.S. announcement on Tuesday that the government would pump $250 billion into banks, similar plans are being executed by governments in Britain, France and Germany. This direct capital infusion is exactly what traders hoped for. As bank balance sheets are being shored up, the conditions for bank lending are receiving some slack. However, there is still much anxiety regarding the upcoming recession, so traders will have to see if this move produces the desired effect. Even though the European Central Bank (ECB) cut its target interest rates by 50 basis points last week, in concert with a global interest rate cut, the markets are expecting further rate cuts by year end. Investors should pay close attention to the release of the Consumer Price Index (CPI) today, as well as the figures coming out of the U.S., as these will be the strongest driving forces in the market throughout the day. JPY Analysts Forecasting an Appreciation for the JPY Recent speculation that the U.S. Treasury's plan to inject $250 billion into financial institutions would not prevent a recession in the world's largest economy has caused the JPY to rise for the first time in five days against the dollar. The forthcoming data from the U.S. is predicting that the nation's retail sales have fallen at a faster pace recently as job losses and housing slumps hurt consumption, these factors may have strengthened the JPY versus the USD. The Japanese currency could also get support from the stock market decline as it shows that investors aren't completely ready to take on risk. The U.S. and Asian stocks have fallen recently, damping investor confidence in higher-yielding assets. The currency was traded at 101.35, up from 102.07 yesterday. Since Japan isn't as adversely affected as the U.S. and Europe are by the credit crisis, the JPY remains a safe-haven currency and is likely to be bought further in today's trading. It has climbed 9% versus the EUR this month as mounting credit-market losses encouraged investors to shed higher yielding assets funded by low-cost loans in Japan. As market concerns over a U.S. recession intensify, these worries may lead to a buying session for the yen. Oil Will the Price of Oil Continue to Drop During the Winter Season? Unable to break through the price barrier of 77.80, the price of Light Sweet Crude continues to test its lower limits. How long it will test this price before breaking through, or climbing back to higher levels, is yet unknown. As always with the price of Oil, the USD and the American economy play an important role. With fears of a recession looming over investors countered by hopes of the recent financial bailout package, the market seems confused about which direction to take. One certainty is that recent market anxiety has lowered the demand for Crude Oil, which is showing its effects by the steady drop in price over the last two weeks regardless of supply. As the winter season approaches the northern hemisphere, the price of Crude Oil is typically forecasted to climb as the large industrialized nations of Europe and North America start buying up heating oil for their populations. With the recent slump in demand, however, the price of Crude Oil may indeed continue to fall despite winter demand. For today's trading, investors should continue to keep an eye on the American economic indicators as they will be the market movers throughout the day. Labels: forex, Forex Analysis |