Source: ForexYard
The US dollar received a mild boost against the Japanese yen yesterday, after the US ADP Non-Farm Employment Change came in higher than analysts had forecasted. Against the euro, the dollar was relatively unchanged throughout the European session, as investors remained hesitant of opening fresh positions ahead of policy decisions out of the US and euro-zone. Today, an ECB policy meeting followed by a press conference is likely to be the highlight of the trading day. If the ECB announces any fresh initiatives to boost euro-zone growth, risk taking could return to the marketplace which may result in gains for the euro.
The US dollar was able to advance close to 30 pips against the Japanese yen yesterday, as a better than expected US ADP Non-Farm Employment Change figure boosted investor confidence in the US economic recovery. That being said, the greenback saw relatively little movement against its other main currency rivals throughout the European session, as investors remained cautious about opening new positions ahead of policy statements out of the US and euro-zone. Against the Canadian dollar, the USD moved up close to 20 pips before correcting itself later in the day, virtually erasing its earlier gains.
Today, a batch of potentially significant euro-zone news is set to create market volatility. Traders will want to note the results of a Spanish ten-year bond auction, as well as any new initiatives from the ECB to boost euro-zone growth. In addition, the US weekly Unemployment Claims figure could result in dollar losses if it comes in above the forecasted 375K. Finally, traders will not want to forget that the all-important US Non-Farm Payrolls figure will be announced on Friday. Any signs that the US economy is still struggling to add jobs could weigh down on the greenback before markets close for the week.
The euro saw a relatively light trading day yesterday, as investors were fearful that the ECB could decide to refrain from announcing new initiatives to lower Spanish and Italian borrowing costs when they meet today. Still, the common currency was able to advance more than 40 pips against the British pound during European trading to eventually peak at 0.7893. The EUR/JPY was up over 50 pips during early morning trading to trade as high as 96.43. That being said, the gains proved to be short lived, as the pair dropped down to 96.10 by the afternoon session.
Today, traders will want to pay close attention to the ECB Press Conference, scheduled to take place at 12:30 GMT. Analysts are warning that if the ECB refrains from announcing any new measures to lower borrowing costs in the region, risk aversion could return to the marketplace which may result in broad losses for the euro during afternoon trading. In addition, a Spanish ten-year bond auction, scheduled to take place before the press conference, will likely shed some light on the current state of the Spanish economy. Should demand for Spanish bonds come in lower than expected, the euro may turn bearish as a result.
The price of gold tumbled more than $20 an ounce during mid-day trading yesterday, after a better than expected US ADP Non-Farm Employment Change figure gave a boost to the US dollar. Typically, a strengthened dollar dampens investor demand for gold, as it becomes more expensive for international buyers. The precious metal traded as low as $1594.38 before staging a mild upward correction and stabilizing at the $1600 level.
Today, gold traders should pay attention to the outcome of the ECB Policy Meeting. If the ECB does announce new measures to combat the euro-zone debt crisis, investors could shift their funds to higher-yielding assets, which may give gold a boost as a result.
The price of crude oil saw upward movement during afternoon trading yesterday, after the US Crude Oil Inventories figure came in well below expectations, signaling increased demand in the world’s leading oil consuming country. Overall, the price of oil advanced well over $1 a barrel during European trading and eventually peaked at $89.14.
Today, the direction crude oil takes will likely be determined by the ECB Press Conference scheduled to take place at 12:30 GMT. If the ECB does announce new measures to boost growth in the euro-zone, risk taking could return to the marketplace which may lead to oil gains during mid-day trading.
The weekly chart’s Slow Stochastic has formed a bullish cross, signaling that this pair could see upward movement in the coming days. This theory is supported by the Williams Percent Range on the same chart, which has crossed over into oversold territory. Going long may be a wise choice.
While it appears that the MACD/OsMA on the daily chart is close to forming a bearish cross, most other long-term technical indicators place this pair in neutral territory, meaning that no defined trend can be predicted at this time. Traders may want to take a wait and see approach for this pair, as a clearer picture may present itself in the near future.
The Williams Percent Range on the weekly chart has crossed into oversold territory, indicating that this pair could see upward movement in the near future. Furthermore, the MACD/OsMA on the daily chart has formed a bullish cross. Going long may be the wise strategy for this pair.
The Bollinger Bands on the weekly chart have begun to narrow, indicating that this pair could see a price shift in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. Opening short positions may be the smart move at this time.
The Slow Stochastic on the daily chart has formed a bearish cross, meaning that downward movement could occur in the near future. Additionally, the Williams Percent Range on the same chart has crossed into overbought territory, while the Relative Strength Index is approaching the 70 level. Forex traders may want to open short positions for this pair.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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