Source: ForexYard
U.S. New Home Sales affected Friday afternoon trading as the greenback quickly made gains against its major currency rivals. Also, concerns about Spain’s requesting a bailout were largely responsible for losses that both the euro and gold took in morning trading.
This week, all eyes will be focused on the euro-zone data coming out on Wednesday and the U.S. news to be released on Thursday and Friday, especially Friday’s U.S. Advance GDP report. Analysts are predicting an increase over last quarter’s U.S. Advance GDP numbers, which will continue the gains seen from Friday if actualized.
Economic News
USD – FOMC Statement Release On Tap
Investors saw the release of positive U.S. New Home Sales Friday, which signaled a strengthening U.S. economy. Some pairs, like the NZD/USD, dropped significantly in trading upon the U.S. New Homes Sales release. The U.S. dollar steadily rose against the Swiss Franc Friday recouping small losses from last month’s declining trend.
Turning to this week, investors will see a bunch of big U.S. news events on Thursday: Unemployment Claims, Core Durable Goods Orders, and Pending Home Sales. But, it’s the quarterly release of the U.S. Advance GDP on Friday where investors may see the biggest impact on trading. Attention should also be given to Wednesday’s New Home Sales data and the Federal Open Market Committee (FOMC) statement release. Today’s investors should note Federal Reserve Bank of Cleveland President Sandra Pianalto’s speech regarding interest rates, if the forecast comes in better than expected, the dollar may continue to make gains in the market.
EUR – Spanish Bailout continues to affect Euro
The euro slipped against the dollar on Friday as a perceived lack of progress on a Spanish bailout request curbed demand for the single common-currency. Conversely, the EUR/AUD saw a low of 1.2578 in Friday’s midday trading before recouping its losses.
This week, euro traders will want to continue monitoring developments out of Spain, Germany, and Greece. Friday’s Spanish Unemployment Rate may be a good indicator towards Spain economic recovery. In addition, Wednesday contains a lot of important German economic news, such as the German Flash Manufacturing PMI, German 10-y Bond Auction, and German Ifo Business Climate. Positive signs could help the euro recover some of Friday’s losses.
Gold – Gold Falls Due to Spanish Concerns
Friday morning, Gold dropped to the price of $1731.21 an ounce before trending upward due to concerns regarding the euro zone bailout for Spain. In afternoon trading, Gold fell as expected on the positive news of U.S. New Existing Home Sales data.
This week, gold traders will want to pay attention to a batch of euro-zone and US news for clues as to the level of risk appetite among investors. Gold may recoup some of Friday’s losses if economic news towards recovery in Spain, Greece, and Germany are good out of the euro-zone. That being said, any better than expected news out of the U.S. could lead to dollar gains, which may further weigh down on the price of gold.
Crude Oil – Crude Oil Falls with Positive U.S. News Release
By early afternoon Friday, crude oil rose to the price of $93.02 a barrel due to less than positive news from Canada and the euro zone. Against expectations in Friday afternoon trading, crude oil fell on the positive news of U.S. New Existing Home Sales data.
This week, oil traders will want to monitor a batch of US news, most importantly Friday’s U.S. Advance GDP figures. Additionally, the Unemployment Claims, Core Durable Goods Orders, and Pending Home Sales could all potentially have an impact on the price of oil. Better than expected news may signal to investors that demand for crude oil in the US will go up, which could boost prices.
Technical News
EUR/USD
There is a fresh bearish cross forming on the weekly chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the daily chart’s Momentum oscillator also supports this notion. Going short with tight stops might be the right strategy today.
GBP/USD
The GBP/USD cross has experienced a bearish trend for the week. However, it seems that this trend may be coming to an end. The Williams Percent Range of the weekly chart shows the pair floating in the oversold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.
USD/JPY
The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic Slow signals that a bearish reversal is imminent. Going short with tight stops might be a wise choice.
USD/CHF
The cross has been dropping for the past week now, as it now stands at the 0.9260 level. The Slow Stochastic of the weekly chart shows a bullish cross has recently formed, indicating that an upward correction is imminent. This view is also supported by Williams Percent Range. Going long might be a wise choice.
The Wild Card
Gold
Gold prices are once again dropping, and it is currently traded around $1724.60 per ounce. And now, the 8-hour chart’s RSI is giving bullish signals, indicating that gold prices might go up. This might give forex traders a great opportunity to enter a very popular trend.
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.
