Source: ForexYard
Following weeks of speculation regarding how Facebook’s debut on the New York Stock Exchange would turn out, investors were mildly disappointed with the social media site’s performance on Friday night. Facebook closed out the week at 37.96, slightly below its opening price. What direction Facebook takes from here is a hotly debated topic among market analysts. Some are warning that the site may be overvalued already, and Friday’s disappointing performance could be a sign of things to come. That being said, any moves by Facebook to expand its already massive subscribership could generate excitement in the marketplace which could help boost the value of this site.
Economic News
USD – Dollar Comes off 4-Month High vs. Euro
The US dollar turned bearish against most of its main currency rivals on Friday, as investor concerns regarding the political situation in Greece have begun to stabilize. A recent Greek poll found growing support for one of the political parties that favor Greece remaining in the European Union. As a result, the EUR/USD came off its recent four-month low to gain well over 100 pips before closing out the week at 1.2776. Against the British pound, the greenback was down close to 95 pips. The GBP/USD finished Friday’s trading session at 1.5818.
This week, traders will want to pay attention to several potentially significant US economic indicators. The Existing Home Sales and New Home Sales figure, scheduled for Tuesday and Wednesday, respectively, are forecasted to show growth in the US real estate sector. If true, the dollar could see gains against the Japanese yen. In addition, Thursday’s Core Durable Goods Orders and Unemployment Claims figures may generate volatility in the marketplace, with any better than expected data likely to give the dollar a boost.
EUR – EUR Stages Recovery but Investors Remain Skeptical
The euro bounced back from recent lows against its safe-haven currency rivals on Friday, as investor fears regarding the Greek political crisis have begun to subside. Furthermore, the euro received a boost as investors expected world leaders to express their support for the euro at the weekend’s G8 summit. In addition to the 135 pip gain against the US dollar, the euro was up over 80 pips vs. the Japanese yen. The EUR/JPY closed out Friday’s trading session at 100.94. Against the British pound, the euro was up 50 pips for the day while the EUR/AUD closed out the week up over 150 pips.
Turning to this week, analysts are warning traders that it may be difficult for the euro to sustain Friday’s gains. With so many uncertainties remaining in Greece, not to mention the potential impact the current situation could have on other euro-zone countries, investors remain cautious about placing their funds with higher-yielding currencies. That being said, attention should be given to Thursday’s French and German Flash Services and Manufacturing PMI’s. As the two biggest economies in the euro-zone, indicators out of France and Germany tend to have a significant impact on the common currency. Any positive results could lead to euro gains.
Gold – Gold Maintains Upward Momentum
After recently falling to a four-month low, gold extended its bullish trend for a second consecutive day on Friday. The precious metal was up over $20 an ounce to close out the week at $1592.56. Investor fears regarding the Greek political crisis have calmed in recent days which has helped boost demand for precious metals. Friday’s gains helped give gold its strongest week in over a month.
Whether gold is able to maintain its current upward momentum this week will largely depend on euro-zone news. Any signs that anti-austerity political parties could be victorious in next month’s Greek elections may renew fears that the country will have to exit the euro-zone. This may lead to renewed risk aversion in the marketplace which could drive the price of gold down.
Crude Oil – Crude Oil Hits 6-Month Low
Decreased demand for oil in the United States, combined with poor global fundamental indicators resulted in another bearish trading session for crude oil on Friday. Crude was down just over $1.50 a barrel for the day, hitting $90.91 before staging a slight upward correction to close the week at $91.29. Friday’s losses brought the price of oil down to a six-month low.
Turning to this week, the direction oil takes will largely be dependent on euro-zone news. Despite small positive signs last week that Greece will stay in the euro-zone, the situation in the region is still extremely fragile. In addition, debt worries in Spain also have the potential to generate significant market volatility. Any negative news out of Europe may weigh heavily on commodities, which could result in crude oil extending its recent losses.
Technical News
EUR/USD
The MACD/OsMA on the weekly chart has formed a bullish cross, indicating that this pair could see an upward correction in the coming days. This theory is supported by the Williams Percent Range on the same chart, which has dropped into oversold territory. Going long may be the wise choice for this pair.
GBP/USD
Most long term technical indicators show this pair range-trading, meaning a definitive trend is difficult to determine at this time. Traders will want to keep an eye on the Relative Strength Index on the daily chart, as it is close to dropping into oversold territory. Should the indicator drop below the 30 line, it may be a sign of an impending upward correction.
USD/JPY
The weekly chart’s Williams Percent Range has crossed over into oversold territory, indicating that this pair could see upward movement in the coming days. Additionally, the MACD/OsMA on the daily chart has formed a bullish cross. Opening long positions may be the wise choice for this pair.
USD/CHF
The weekly chart’s MACD/OsMA has formed a bearish cross, indicating that a downward correction could occur in the near future. Furthermore, the same chart’s Williams Percent Range has drifted into overbought territory. Traders may want to open short positions ahead of possible downward movement.
The Wild Card
EUR/AUD
The daily chart’s Slow Stochastic has formed a bearish cross, indicating that this pair could see downward movement in the near future. Furthermore, the Williams Percent Range on the same chart has drifted into oversold territory. Forex traders may want to go short in their positions ahead of a possible downward breach.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
