Source: ForexYard
The US dollar saw significant gains against virtually all of its main currency rivals yesterday, as positive US fundamental data helped boost confidence in the US economy. The AUD/USD dropped to an 11-week low, while the EUR/USD has fallen close to 200 pips since Tuesday’s session. Today, investors will be eyeing the weekly US Unemployment Claims figure, which is forecasted to show additional gains in the American labor sector. If true, it may give the dollar an additional boost ahead of the release of tomorrow’s Non-Farm Payrolls data.
The US dollar continued its bullish run throughout yesterday’s session, as the contrast between positive US fundamentals and negative global data continue to boost the greenback. The currency began its upward trend on Tuesday following the latest FOMC Meeting Minutes, which calmed investor fears that the Federal Reserve would initiate another round of quantitative easing in the near future. The news sent the dollar soaring against virtually all of its rivals, including the AUD, EUR and JPY.
Turning to today, traders will want to keep their eyes on the weekly US Unemployment Claims figure, scheduled to be released at 12:30 GMT. At the moment, analysts are predicting the figure to come in at 355K, which if true would signal additional growth in the US employment sector and may help the greenback ahead of Friday’s all-important US Non-Farm Payrolls figure.
Friday’s news is widely considered the most important indicator on the forex calendar, and major volatility can be expected following its release. The dollar has been benefiting from positive US news as of late. Providing the Non-Farms figure comes in as expected, the greenback may be able to extend its recent bullish trend.
The euro continued to fall throughout yesterday’s trading session, as a combination of negative euro-zone indicators continued to weigh down on the currency. Investor fears that the euro-zone has slipped back into recession combined with debt concerns out of Portugal and Spain have sent the common currency tumbling vs. the dollar. The EUR/USD has fallen close to 200 pips since it began falling on Tuesday. Similar losses were seen vs. the safe-haven Japanese yen.
Turning to today, traders will want to continue monitoring any news out of the euro-zone, particularly with regards to Portugal. The country is widely seen, along with Spain, as the most likely to require a restructuring of its debt. Any negative announcements with regards to its economy may weigh down on the euro. Additionally, should the weekly US Unemployment Claims figure show additional growth in the American labor sector, the dollar may be able to extend its bullish trend vs. the euro.
The AUD posted losses across the board during yesterday’s session following news that Australia was running a trade deficit. Analysts had been forecasting the Australian Trade Balance figure to come in at 1.12B, instead of its actual -0.48B. The news was followed by an announcement that the Royal Bank of Australia may cut national interest rates as early as next month. As a result, the AUD/USD tumbled to an 11-week low, while against the safe-haven JPY, the aussie fell over 100 pips.
Turning to today, a bank holiday in Australia means that any movements from the AUD are likely to be determined by news outside of the country. With investor sentiment still bearish toward the aussie, the currency may continue to fall against the greenback if positive US employment data shows additional gains in the American economy today.
Following the US dollar’s broad gains during yesterday’s trading session, the price of crude oil extended its bearish run throughout the day. Dollar based commodities, like oil, typically fall when the USD is strong, because it makes them more expensive for international buyers. The price of crude slipped within reach of $103 a barrel yesterday. This week, the price of oil has fallen well over $2.
Turning to today, oil traders will want to continue monitoring US data, particularly the weekly Unemployment Claims figure, set to be released at 12:30 GMT. A positive result may lead to further losses for oil ahead of tomorrow’s all important Non-Farm Payrolls data.
Most long term technical indicators place this pair in neutral territory, meaning that no major market movements are expected at this time. That being said, traders will want to keep an eye on the weekly chart’s Relative Strength Index, which is currently near the overbought zone. Should the indicator go above 70, it may be a sign of impending downward movment.
The weekly chart’s Williams Percent Range is currently at -20, which can be taken as a sign that this pair could see downward movement in the coming days. At the same time, most other long term indicators place this pair in neutral territory. Taking a wait and see approach may be the right choice.
Both the Williams Percent Range and Relative Strength Index on the weekly chart are hovering close to the overbought zone, indicating that this pair could see downward movement in the near future. Traders may want to go short in their positions ahead of a possible bearish correction.
According to the Bollinger Bands on the weekly chart, this pair could see a major price shift in the near future. The Williams Percent Range on the same chart is showing that the shift could be upwards. Going long may be a wise choice for this pair ahead of a possible upward breach.
A bullish cross on the daily chart’s Slow Stochastic appears to be forming at this time, indicating that this pair could see upward movement in the near future. This theory is supported by the Williams Percent Range on the same chart, which has dropped below the -80 level. Forex traders may want to go long in their positions ahead of possible upward movement.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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