Month: April 2009

By GCI Fx Research

€

The euro moved sharply higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3515 level and was supported around the US$ 1.3220 level.  Group of Twenty officials meeting in London appeared poised to announce details of plans to combat tax havens and increase funding to the International Monetary Fund.  Officials noted “We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4%, and accelerate the transition to a green economy.”  Also, G20 leaders pledged to “refrain from competitive devaluations of our currencies.”  The common currency rallied today after the European Central Bank reduced its main refinancing rate target by 25bps instead of the widely expected 50bps cut.  The ECB has reduced its key rate by 300bps since October 2008.  ECB member Stark said next month will be the proper time for the ECB to decide on non-conventional policy measures.  In U.S. news, February factory orders were up 1.8%, below expectations, from a downwardly revised 3.5% decline in January.  Also, weekly initial jobless claims grew 12,000 to 669,000 last week while continuing jobless claims extended their move higher.  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥99.90 level and was supported around the ¥98.40 level.  The yen was given across the board as risk appetite returned to markets following gains in U.S. equity markets and a sense that Group of Twenty officials could be making progress at their London summit.  Bank of Japan is expected to broaden its quantitative easing framework in the near future, possibly by purchasing a greater range of asset-backed securities.  The Nikkei 225 stock index climbed 4.40% to close at ¥8,719.78.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥134.25 level and was supported around the ¥130.30 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.90 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.85 level.  In Chinese news, the U.S. dollar closed at CNY 6.8340 in the over-the-counter market.

₤

The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4750 level and was supported around the $1.4445 level.  Data released in the U.K. today saw March construction PMI rise to 30.9 while March Nationwide house prices were up 0.9% m/m and off 15.7% y/y, the first monthly rise since October 2007.  It was also reported that ISD median pay increases fell to +3.4% y/y in the three months to February.  Cable bids are cited around the US$ 1.4515 level.  The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.9085 level and was capped around the ₤0.9170 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

The European Central Bank cut its interest rate today by 25 basis points  to mark a new all-time low rate level for the eurozone. Today’s rate reduction was less than the 50 basis point cut economic forecasts were generally expecting and brought the rate from 1.50 percent to 1.25 percent. The ECB now has reduced its rate by 300 basis points since October 8th when it participated in coordinated rate reductions with central banks around the world.

Jean-Claude Trichet, the President of the ECB, commented in his press conference today that “today’s decision takes into account the expectation that price pressures will remain subdued, reflecting the substantial past fall in commodity prices and the marked weakening of economic activity in the euro area and globally. The latest economic data and survey information confirm that the world economy, including the euro area, is undergoing a severe downturn. Both global and euro area demand are likely to remain very weak over 2009, before gradually recovering in the course of 2010.”

Trichet also did not rule out further rate reductions and that any “nonstandard” bank measures implemented would be discussed at the next rate meeting in May.

US Weekly Jobless Claims rise to highest since early 1980’s.

Weekly U.S. initial jobless claims rose more than expected in the week that ended on March 28th according to the U.S. Labor Department today. Jobless claims totaled 669,000 unemployed workers, an increase of 12,000 from the week prior that had 657,000 initial jobless claims. The jobless increase marked the highest level since 1982 and surpassed forecasts expecting claims to number approximately 650,000. A 4-week moving average of unemployed workers showed an increase of 6,500 from the prior week to 656,750 workers.

Meanwhile, workers seeking continued claims for unemployment benefits for the week ending March 21st grew by 161,000 workers to a total of 5,728,000 unemployed workers. The four week moving average of continuing claims grew by 163,500 workers from the previous week to 5,496,500 workers.

US Dollar falling in forex trading today.

The U.S. dollar has been falling in forex trading today against the major currencies as stock markets have rallied on positive sentiment of the G20 meetings and new flexibility in mark-to-market rules. The Dow Jones Industrial Average has gained by over 250 points at time of writing to pass the 8,000 threshold.  The Nasdaq has gained by 50 points while the S&P500 has advanced over 25 points.

The dollar, meanwhile, has fallen against the against all the major currencies today except the Japanese yen.

The euro has advanced versus the dollar for the second day in a row as the EUR/USD has gone from today’s 1.3272 opening exchange rate at 00:00 GMT to trading at approximately 1.3476 in the US trading session at 1:39pm EST according to currency data by Oanda.

The British pound has increased today versus the American currency as the GBP/USD has gone from 1.4494 to trading at 1.4722 dollars per pound.
The USD has declined against the Swiss franc with the USD/CHF falling from the 1.1439 opening to trading at 1.1334. The dollar has also decreased against the Canadian dollar as the USD/CAD dropped from the opening at 1.2549 earlier today to trading at 1.2371 later.

The Australian dollar has traded higher versus the USD as the AUD/USD trades at 0.7168 after opening today at 0.7026 while the New Zealand dollar has gained versus the USD and trades at 0.5806 after opening at 0.5678.

The dollar has advanced against the Japanese yen today as the USD/JPY has gained from its 98.72 opening to trading at 99.33.

EUR/USD Chart – The Euro advancing today against the US Dollar in Forex Trading and trading above its 21-day moving average in blue(Daily Chart).

Source: ForexYard

Market participants are eagerly awaiting key data pieces due be released today. The European Central Bank is expected to cut Interest Rates by 50 basis points and weekly U.S. unemployment numbers are predicted to be high. These two events will be the main drivers of currencies in the forex market today.

Economic News

USD – U.S. Unemployment Claims on Tap

The U.S. Dollar weakened during yesterday’s trading session, correcting the sharp gains against the EUR and GBP seen last week as steep job losses in the private sector rekindled fears of a prolonged U.S. recession. After yesterday, the USD fell slightly against the EUR, pushing the oft-traded currency pair to 1.3270. The Dollar experienced similar behavior against the Pound and closed at 1.4490.

The ADP Non-Farm Employment Change released yesterday showed an additional 742K individuals lost their jobs in the U.S during the month of March. The number was far higher than economists had previously forecasted. This is indeed another sign that any economic recovery in the U.S. will be slow to commence.

Another leading indicator released yesterday was U.S. Pending Home Sales. This number handedly beat market expectations but failed to provide strength to the Dollar as investors may be waiting for key data due to be released today to implement their trading strategies.

As for today, the leading U.S. data will be the Unemployment Claims. The survey is expected to show 649K individuals have filed for unemployment insurance for the first time during the past week. Such a result will be a direct continuation of the recent troublesome figures delivered lately from the U.S. economy and is threatening to hurt the USD. Traders should follow it closely, as any crucial information might ignite a new trend in the market.

EUR – EUR Fluctuates as ECB Interest Rate Decision due Today

The EUR finished yesterday’s trading session with mixed results versus the major currencies. The 15-nation currency saw moderate gains versus the USD. Versus the JPY, the Euro-Zone currency range-traded throughout most of the day, as much of the market data from yesterday was focused on the greenback.

Retail Sales in Germany unexpectedly fell in February and the rate of unemployment rose, fueling fears about job security. As a result, European companies have stepped up efforts to reduce production and cut jobs as the worst global slump since World War II. German business confidence fell to the lowest level in more than 26 years in March and unemployment increased for a fifth straight month.

As a result, the ECB is expected to cut its Interest Rates today while other governments embark on state-sponsored investment programs. The market may view the ECB action of a rate cut as a step to restore investor confidence, and to mitigate the economic fallout from the financial crisis.

In the last year, the ECB has been less aggressive than the Federal Reserve in monetary policy and as the financial crisis has worsened in Europe, the EUR has steadily fallen against the USD. However, the ECB plans for cutting Interest Rates might have an effect on the Euro-Zone economy and could reassure the European banking sector that they could rely on the ECB to keep liquidity circulating and also bring more confidence to the markets.

JPY – Yen Experiences Mixed Results against Major Currencies

Japan’s business confidence hit a record low after slumping global demand has halved the nation’s exports, pushing the country into one of its worst recessions. Rising unemployment and falling spending data a day earlier already showed the worrisome trend that the drop in external demand was affecting Japan’s domestic economy. Analysts expect the Japanese economy to continue to contract in the first half of this year, lending a record five straight quarters of negative economic growth.

Today, the JPY will be absent from the economic calendar, however, traders should follow overseas events in order to determine the JPY’s direction for today. Special attention should be given to the ECB Press Conference and U.S. Unemployment Claims figure that will be published at 11:45 and 12:30 GMT respectively, and will be today’s leading publications that could affect the Yen’s crosses.

OIL – Crude Oil Sinks below $49 a Barrel

Oil prices fell slightly during yesterday’s trading session and closed below $49 a barrel as more signs of a sick economy fueled worries about energy consumption. The International Energy Agency (IEA) said that Crude Oil inventories rose to 359.4 million barrels, which is 15.5% above levels from one year ago, the highest level since 1993. Some analysts have said Crude Oil is waiting to break out from it’s price slump but the negative inventories data may have held that rally in check..

Oil prices rose sharply last month from $35 to above $54 taking their cue from a rally in equity markets. But a new sign of a prolonged recession which has crushed energy demand around the world is again pushing prices lower below the psychological price level of $50.

Technical News

EUR/USD

After testing and breaking the resistance line of 1.3300, the hourly chart is showing a bearish cross on the Slow Stochastic with the pair’s RSI floating in the oversold region. This may indicate an imminent downward correction for the pair. Going short could be the right play today.

GBP/USD

The bullish momentum seen this morning may have left the pair in an oversold position after failing to breach the 1.4600 price level. The 4-hour chart’s RSI is currently floating in the oversold region while a bearish cross has formed on the Slow Stochastic, indicating a downward move. This could be a good opportunity to go short.

USD/JPY

The daily chart is showing bearish trends as the pair trades near the 98.75 level. The daily chart displays the Relative Strength Indicator trading in the upper range and an imminent bearish cross is forming on the Slow Stochastic Oscillator. This may indicate the potential for the pair to head lower today. Going short may be the right move.

USD/CHF

There appears to be a leveling-off in the price of this pair as the Bollinger Bands on the 4-hour chart appears to be tightening, signaling an impending volatile price movement. Most oscillators show a lack of distinct direction. On the other hand, range-trading allows traders to cut profits from buying on dips and selling on highs.

The Wild Card – EUR/GBP

The pair’s downward thrust early this morning continues the bearish trend. However, the 4-hour chart is providing extensive bullish signals. A bullish cross has formed on the Slow Stochastic and the pair is floating in the oversold range on the RSI. The Bollinger Bands on the daily chart continues to tighten, indicating a volatile correction may soon occur. Forex traders can take advantage of this imminent volatile movement by setting long positions with tight stops.

Market Analysis provided by Forex Yard.

© 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.

By GCI Fx Research

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3165 level and was capped around the US$ 1.3285 level.  Traders were surprised that U.S. March ISM manufacturing index rallied to 36.3 from 35.8 in February.  Albeit this represented the fourteenth consecutive month of declining activity, some economists believe the sector may have bottomed out.  Other data saw February construction spending decline 0.9%, the fifth consecutive monthly downturn.  Additionally, March pending home sales rose 2.1% from -7.7%.  Additionally, ADP reported private sector jobs contracted a major 742,000 in March and February’s total was upwardly revised to -697,000 from -706,000. Many economists believe Friday’s non-farm payrolls total could be around -675,000.  Notably, it was reported last month that some 651,000 non-farm jobs were lost in February.  Traders will also pay close attention to downward revisions to January’s and February’s non-farm payroll tallies.  In eurozone news, many dealers believe the European Central Bank will reduce its main refinancing rate by 50bps tomorrow to 1.0%.  Others believe the ECB may also announce some form of quantitative easing measures, possibly including the purchase of commercial paper, corporate debt, or the issuance of medium-term loans.  All eyes are on London as the Group of Twenty meets to discuss the global financial crisis.  European leaders are said to be pressing for increased international regulation while U.S. officials are said to be pressing for more fiscal stimulus from the eurozone.  German Chancellor Merkel reminded her colleagues that Germany passed a €50 billion stimulus in February.  Data released in the eurozone today saw the February EMU-16 unemployment rate climb to 8.5% from 8.3% in January.  Also, the EMU-16 manufacturing PMI reading improved to 33.9 from 33.5 in February.  Moreover, German February retail ales were off 0.2% m/m and 5.3% y/y.  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥98.20 level and was capped around the ¥99.45 level.   Bank of Japan’s quarterly tankan survey was released overnight and worsened to record lows with large manufacturers’ main diffusion index at -58 from -24 in December – the largest decline ever.  Similarly, the consumer sentiment diffusion index worsened to -88.9 in March, a new low.  Today’s data elevate the likelihood that Bank of Japan will enact more quantitative easing measures to reduce credit strains, possibly through the purchase of additional asset-backed securities.  The Nikkei 225 stock index climbed 2.99% to close at ¥8,351.91.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥129.85 level and was capped around the ¥131.90 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥142.80 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥140.55 level.  In Chinese news, it was announced that President Obama will visit China in H2 2009.  The White House reported President Hu “emphasized China’s commitment to strengthen and improve macroeconomic control and expand domestic demand, particularly consumer demand, to ensure sustainable growth, and ensure steady and relatively fast economic development.”

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

U.S. employment data was released today in the form of the ADP National Employment Report and showed that U.S. private employment declined the most on record. March nonfarm private employment fell by 742,000 according to the ADP report and marked the highest decrease in jobs on a monthly basis since the ADP  report started in 2001. Today’s employment report follows the February revised decline of 706,000 jobs and surpassed market forecasts that were expecting a decline of 663,000 jobs for the month.

The service-providing sector showed the largest decline for the month with a loss of 415,000 jobs while the goods-producing sector fell by 327,000 jobs. The manufacturing sector registered its 37th month in a row of employment decline with a loss of 206,000 jobs while construction jobs fell for the 26th straight month with a decline of 118,000 workers. All size of businesses slashed jobs in March as large businesses lost 128,000 jobs, medium sized businesses shed 330,000 jobs and small businesses dropped 284,000 jobs.

The market-moving US Nonfarm Payrolls report for March is to be released this Friday at 12:30 pm GMT with market forecasts predicting a decline of 659,000 jobs after February’s 651,000 decrease.

ISM Manufacturing data improves.

U.S. Manufacturing data, released today by the Institute for Supply Management, showed that manufacturing activity failed to grow in March for the fourteenth straight month but did edge up from February. March’s ISM Report On Business index readings for economic activity were at 36.3 percent following February’s 35.8 percent level. The March score did also slightly surpass economic forecasts which were expecting the ISM index reading to register 36.0 percent. A score above 50 percent is considered to be growth and less than 50 percent is considered to be a contraction.

Norbert J. Ore, chair of the ISM Business Survey Committee, commented on the report saying, “The rapid decline in manufacturing appears to have moderated somewhat, as the PMI remains in the mid-30s for a third consecutive month. While the PMI is slightly higher in March, the New Orders Index offers greater encouragement, as it rose above the 40-percent mark for the first time in seven months. The Production Index showed no benefit as yet from the improvement in new orders, as it continued to decline at a rate similar to March. The rate of decline in the Employment Index slowed slightly, and the same held true for the Prices Index. A special question was asked with regard to the Economic Stimulus Package, and five of the 18 manufacturing industries expect to derive some benefit from the stimulus.”

Most of the manufacturing sectors tracked for March showed improvement over the February report with supplier deliveries and inventories being the exceptions. Supplier deliveries fell by 3.1 percent for the month while inventories decreased by 4.8 percent in March.

New orders, production, employment, customer inventories, prices and the backlog of orders all showed increased readings for March. The exports index registered a 1.5 percent increase for March while imports also increased by 1.0 percent.

Pending Homes Sales in US increase.

U.S. Pending Homes sales rose more than expected for the month of February according to the monthly report produced by the National Association of Realtors. The NAR report showed that pending home sales contracts signed by buyers increased 2.1 percent in February following a 7.7 percent decline in January.

Market forecastors had predicted the sales data would show no change or remain flat for the month. The pending home sales level is 1.4 percent below the February 2008 level.

NAR chief economist Lawrence Yun commented in the report about the increased sales figures this month, “Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we’ll see additional sales gains.”

On the state of the housing market, Yun contented that, “More buyers are getting into the market to take advantage of stimulus incentives and much improved housing affordability conditions, but it will take a few months before we could see this turn up in measurable sales contract activity.”

US Dollar mostly lower in forex trading.

The U.S. dollar has been under pressure in forex trading against the major currencies so far today. The dollar has fallen against the euro, Australian dollar, British pound, Japanese yen, New Zealand dollar and Canadian dollar while trading higher against the Swiss franc.

The euro has advanced versus the dollar as the EUR/USD has gone from today’s 1.3209 opening exchange rate at 00:00 GMT to trading at approximately 1.3233 in the late afternoon of the US trading session at 4:12pm EST according to currency data by Oanda.

The British pound has increased today versus the American currency from 1.4299 to trading at 1.4445 dollars per pound. The dollar has decreased against the Canadian dollar after the USD/CAD’s opening at 1.2674 earlier today to trading at 1.2620 later in the day.

The Australian dollar has also traded higher versus the USD as the AUD/USD trades at 0.6979 after opening today at 0.6887 while the New Zealand dollar has gained versus the USD and trades at 0.5671 after opening at 0.5572.

The dollar has decreased slightly against the Japanese yen today as the USD/JPY has edged down from its 98.69 opening to trading at 98.61.

Meanwhile, the USD has advanced against the Swiss franc today as the USD/CHF has gained from the 1.1428 opening to trading at 1.1460.

AUD/USD Chart – The Australian Dollar advancing today against the US Dollar in Forex Trading and trading right above its 55-period simple moving average(purple).

Source: ForexYard

The beginning of a new month always precedes 2 important events in the forex market: the release of immensely important U.S. economic data and an influx of trading after workers receive monthly salaries. Kicking off the month of April today, traders will notice a large portion of economic news coming from the States; particularly regarding housing, employment, inflation, and the ever-increasingly important Crude Oil inventories report. If you were waiting for the right day to begin trading forex, that day has come!

Economic News

USD – USD Viewed as World’s Dominant Currency

The U.S. currency was lower against most major currencies Tuesday, ahead of this week’s Group of 20 nations (G20) meeting. Analysts said that worries about the financial sector and signs of rising tensions ahead of tomorrows meeting of world leaders would likely limit downslide potential for the USD. Still the Dollar’s outlook remains strong and stable against the majors, despite the ongoing deluge of negative U.S. economic data.

Analysts stated that the market has started to focus on this upcoming summit of major industrialized economies in London on Thursday, with investors hoping for agreement on measures to revive the global economy. Meanwhile the U.S currency rallied to a 3-week high against the Japanese Yen to as much as 99.36 Yen. The Dollar rose more than 2% against the JPY, as weak economic data and year-end prompted Japanese investors to bring money home, reversed course as traders closed the books on the fiscal year.

The World Bank president said on Tuesday that the Dollar is likely to remain the world’s dominant reserve currency and a strong U.S. currency is a key to lifting the world out of economic and financial crisis. Given the important role the U.S. Dollar plays in the global financial system, it is incumbent upon the United States to pursue sound economic, fiscal and monetary policies.

EUR – EUR under Pressure Ahead of ECB Decision

The European currency pared gains slightly against the USD on Tuesday after data showed U.S. home prices plunged a record 19% in January from a year earlier, suggesting U.S housing remains in a deep recession. Against the Dollar, the EUR firmed 0.7% to 1.3292. Analysts believe the EUR’s gains may be limited, however, as investors look ahead to Thursday’s European Central Bank (ECB) interest rate decision. The EUR may decline against the Dollar as economists estimate that the ECB will lower rates to 1% at this month’s meeting. The EUR did rise, however, against the JPY, advancing 1.5% to 130.20 Yen.

The ECB is forecast to cut rates by 50 basis points with the possibility that it will follow other major central banks and adopt other unconventional measures to boost money supply. Yesterday’s fundamental data showed that Euro-Zone inflation plunged to an all time low of 0.6% year-on-year in March, strengthening the case for a deep interest rate cut. The inflation data underlines that the Euro-Zone is as much a victim of the current crisis as the U.S. and the UK and the ECB will be forced to adopt more aggressive measures, analysts have said.

Moreover, the Organization for Economic Cooperation and Development (OECD) forecasted this Tuesday that the European economy would shrink 4.1% this year and a further 0.3% in 2010; the most pessimistic outlook of all institutional forecasters thus far.

JPY – Yen Reverses its Earlier Losses on Auto Bankruptcy Fears

The Yen strengthened on speculation President Barack Obama will let U.S. automakers go bankrupt, reviving demand for the Japanese currency as a refuge from the global financial crisis. The Yen advanced to 98.67 versus the USD from as low as 99.47 earlier and from 98.96 yesterday. Japan’s currency also strengthened to 130.43 per EUR from as low as 131.89 earlier and from 131.13.

Yesterday, however, was not a very successful day for the Japanese currency. The Yen slid on a surge in Japanese investors’ demand for foreign currencies on the last day of Japan’s financial year. The JPY fell against the Dollar, extending its worst quarterly loss since 2001, after a Bank of Japan (BoJ) survey showed business sentiment dropped the most on record, reducing demand for the currency. The Yen also weakened versus the EUR after reports this week showed factory output dropped for a 5th month and the unemployment rate climbed to the highest in 3 years.

Crude Oil – Crude Oil Fails to Break $50

Crude Oil prices fell below $49 a barrel on speculation that a government report will show U.S. inventories rose from the highest level in more than 15 years. Crude earlier rose Tuesday, extending its monthly gains to nearly 11% as rising stock markets helped boost investment sentiment while a weakening greenback increased Dollar-denominated commodity prices. The Energy Department is scheduled to release its weekly supply update at 14:30 GMT. The report is forecast to show that inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, dropped. Oil prices rose $1.25, or 2.6%, yesterday to $49.66 a barrel as equities increased and a weaker Dollar enhanced the appeal of commodities.

The Organization of Petroleum Exporting Countries (OPEC) and the U.S. Energy Department cut their 2009 forecast for oil demand this month. They expect consumption to slump by more than 1 million barrels a day this year. Crude Oil supplies have increased as OPEC agreed on March 15th to keep output quotas unchanged, saying members have to cut a further 800,000 barrels a day to comply with existing targets. OPEC is next scheduled to meet on May 28th in Vienna.

Technical News

EUR/USD

After going through a mild technical correction, it appears that the pair has resumed its general downtrend, as it is now trading at the 1.3200 level. Currently, as all oscillators on the 4-hour chart are pointing down, it seems that going short might be the preferable decision today.

GBP/USD

For the last two days the Cable has consolidated around the 1.4250 level without making any significant movements. However, a flag formation on the daily chart implies that an uptrend is about to be initiated. Going long with tight stops might be a good strategy today.

USD/JPY

After two failed attempts to breach through the 99.50 key Fibonacci level, the pair is currently traded around the 98.80 level. A bearish cross on the 4-hour chart’s Slow Stochastic suggests that a bearish reversal is imminent. Going short seems to be the right choice today.

USD/CHF

The pair is currently traded around the 1.1430 level, and seems on its way to test the 1.1550 level one more time. If the pair will indeed breach the resistance level, a bullish trend could be lunched with the potential of reaching towards the 1.1700 level.

The Wild Card – Gold

For the past few days Gold has been traded for about $920 per ounce. A triple doji formation on the daily chart indicated that a strong breach is imminent. A bullish cross on the daily chart’s Slow Stochastic suggests that the breach could be bullish. This might be a great opportunity for forex traders to enter the trend at a very early stage.

Market Analysis provided by Forex Yard.

© 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.