Month: October 2009

Source: ForexYard

The Dollar is set to be at the forefront of forex trading today. This is after the USD fell against its major counterparts on Thursday, after a string of gains in recent trading sessions. Yesterday’s behavior was the results of the confirmation that the U.S. economy returned to growth in the 3rd quarter, boosting investor optimism, leading to the equity market to rally, and curbing the need for the greenback’s relative safety.

Economic News

USD – Dollar Slides on Better than Expected U.S. GDP

The USD headed for a 4th monthly drop against the EUR, its longest stretch since 2004, as America’s return to growth renewed optimism that a global recovery will quicken, aiding demand for higher-yielding assets. The Dollar weakened as much as 1% to $1.4859 per EUR in the biggest intraday drop since September 8.

The U.S Dollar rose against the EUR in the previous three sessions as evidence of a stalled U.S. economic recovery, including an unexpected decrease in New Home Sales in September reduced demand for riskier assets. The greenback dropped against the EUR for the first time in 5 days, as investors saw data showing the U.S. economy returned to growth in the third quarter. U.S. Gross Domestic Product (GDP) grew at a 3.5% annual rate in the 3rd quarter, after shrinking in the previous four quarters, the U.S. Commerce Department reported.

The solid Gross Domestic Product reading renewed optimism about a global economic recovery, prompting traders to buy higher-yielding currencies, eroding the greenback’s safe-haven allure. The U.S Dollar will be under heavy pressure on Friday, as investors may continue selling-off the USD on Thursday’s optimistic news. Traders are advised to follow key U.S. releases later today, such as the Chicago PMI and Revised UoM Consumer Sentiment report. These publications will be crucial in determining the USD’s key crosses today.

EUR – European Currency Remains in the Uptrend

The EUR traded higher against the U.S Dollar and the JPY after a report showed German unemployment unexpectedly fell in October to 8.1%. The nation’s economy, the Euro-Zone’s largest, returned to growth in the 2nd quarter. The currency rose for the first time in 4 days to $1.4859 vs. USD compared to $1.4713 late Wednesday.

The EUR was also supported by other economic data. The European Commission’s economic sentiment indicator posted a bigger-than-expected October rise. The index for the 16-nation Euro-Zone rose to 86.2 from 82.8 in September, compared to expectations for an increase to 84.5.

The 16-nation currency may rise for the first time in 4 days against the British Pound today on speculation that a German report will show retail sales rebounded in September, adding to signs the recession in the 16- nation region is over. Retail sales in Germany, Europe’s largest economy, rose 1% in September after a revised 2.4% decline in August, signaling a recovery in the Euro-Zone economy.

JPY – Yen Records Mixed Results against the Majors

The Japanese Yen is set for the biggest monthly slide against the EUR since May, after a government report showed Japan’s jobless rate unexpectedly dropped for a 2nd month, reducing demand for the relative safety of the Japanese currency. The Japanese Yen has been the most sensitive to risk aversion trading, falling when investors are more interested in riskier assets such as equities. Against the Dollar, the JPY slid to 91.27 Yen, from 90.33 Yen on Wednesday.

The Yen extended gains vs. the Australian and New Zealand Dollars, as investors took profits on a number of growth-linked trades that had been in vogue in recent months. Both currencies have been favored plays against the low-yielding Japanese Yen this year as investors have anticipated higher Interest Rates in economies seen as recovering faster from the global downturn. The JPY hit a 3-week high of 80.85 per Australian Dollar, before trimming gains to 81.05 Yen. Against the NZD, the Japanese Yen rose 0.8% to 64.80 Yen.

Crude Oil – Oil Gains Due to Optimistic U.S. GDP

Crude prices rallied more than 4% Thursday, briefly lifting the price of a barrel above $80, as confirmation the U.S. economy returned to growth boosted optimism over energy demand. Crude Oil rose by $2.91, or 4%, to $79.97 a barrel, after rising as high as $80.43. It last traded above $80 a barrel on October 23.

Oil rose sharply due to optimistic U.S. GDP data, which in turn raised hopes that economic conditions will improve and raise demand for petroleum products. The U.S. economy data was higher than expected, leading to a rebound in the commodities market. The focus now is on potential economic growth, which may support the Crude prices further.

Technical News

EUR/USD

The daily chart is showing mixed signals with its RSI fluctuating in the neutral territory. However, the 4-hour chart’s Slow Stochastic is indicating a fresh bearish cross suggesting that a downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be the preferable strategy.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The daily chart’s Slow Stochastic provides us with mixed signals. All oscillators on the 4-hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/JPY

The typical range trading on the hourly chart continues. The daily chart’s Slow Stochastic is floating in neutral territory. However, the 4-hour chart’s Slow Stochastic is indicating a fresh bullish cross, suggesting that an upwards correction might take place in the nearest time frame. When the upwards breach occurs, going long with tight stops appears to be the preferable strategy.

USD/CHF

There is a fresh bullish cross forming on the 4-hour chart’s Slow Stochastic, indicating bullish correction might take place in the nearest future. The upward direction on the weekly chart’s Momentum oscillator also supports this notion. Going long with tight stops might be the right strategy today.

The Wild Card – Gold

Gold prices rose significantly yesterday and peaked at $1049 an ounce. And now, all oscillators on the hourly chart are giving bearish signals, indicating that Gold prices might go down. This might give forex traders a great opportunity to enter a very popular trend.

Forex 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.

Market Movers of the Day

Asia-Pacific

*Japanese Jobless Rate unexpectedly fell to 5.3% in September

*Japanese National CPI in September at -2.2%, in line with market expectations

*Japanese Tokyo CPI in September worse than expected at -2.4%

*Japanese Overall Household Spending in September slightly worse than expected at 1.0%

Europe

*EU Consumer Confidence in October at 18 as expected

*Euro-zone Economic Confidence better than estimated at 86.2 in October

*German Unemployment Rate surprised for the better falling to 8.1% in October

Americas

*US GDP annualized for 3Q much better than expected at 3.5%

*US Personal Consumption Expenditures for 3Q better than forecasted at 3.4%

*US Initial Jobless Claims worse than expected at 530K

*Continuing Jobless Claims worse than estimated at 5797K

The Overall Sentiment

Equities

US Gross Domestic Product figures for the third quarter came much stronger than expected at 3.5% against forecasts of 3.2% showing US economy returned to growth spurring a renewed wave of risk appetite all across the board. US equities rallied with the S&P advancing 2.3% and the Dow gaining 2.1%. Canadian stocks rallied as well led by gains from gold and energy companies with better-than-estimated earnings reports. In the UK the benchmark FTSE 100 Index rose 1.1% and the German DAX Index added 1.7%.  Japanese Nikkei 225 advanced 1.3% as Japan’s Jobless Rate surprised for the better falling for a second month in September.

Forex

The positive US GDP figures ignited demand for higher-yielding currencies and pushed the Dollar and the Yen lower. EUR/USD erased yesterday’s losses coming back to the 1.4850 area. The Pound also gained against the greenback with an intraday high slightly above 1.66. Commodity-linked currencies as the Aussie and New Zealand dollar were the best performers of the day against its US peer advancing around two full cents each. The Yen was the biggest loser of the day weakening against all its major counterparties.

Commodities

Commodities came back with strong gains as the weakening Dollar spurred demand for alternative investments. Gold advanced over $15, its biggest daily gain in three weeks, to trade over $1045. Silver climbed above $16.60 regaining most of yesterday’s losses. Oil added almost $3.5 surpassing the $80 mark.

The Day Ahead

The day will start in the UK with the Gfk Consumer Confidence Survey shedding light on consumers’ sentiment about economic conditions and potential impact on consumer spending. In Japan the BoJ will release its Interest Rate Decision where analysts expect no changes for the 0.10% rate. For German Retail Sales market estimations point to a rebound in September to a positive 1.0% after a 2.4% drop the previous month. Euro-zone CPI Estimate is expected to improve to -0.1% from a previous reading of -0.3% and EU’s Unemployment Rate is forecasted to rise to 9.7%. Great activity is expected for the Canadian dollar with the release of Canada’s GDP where a 0.1% growth is forecasted. Finally, an important stream of data will be coming from the US with the release of Personal Consumption Expenditures, Chicago PMI and Michigan Consumer Sentiment Index making it an interest session for the Dollar after the surprising US GDP.

Technical Analysis

SILVER DAILY

After topping just above $18 and trading in range for two weeks Silver corrected to stall slightly above $16. The first gaining session after five losing ones in a row came in line with the bullish trend that set the tone for the last three months. The Silver market presents the opportunity to open a Long position to take advantage of a fresh round of buying power in an attempt to reach higher highs once again.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By CountingPips.com

The U.S. economy expanded by more than expected in the 3rd quarter of 2009 and brought an end to the deep recession according to a release by the U.S. Commerce Department. The advance estimate report released today showed that the U.S. Gross Domestic Product grew at an annual rate of 3.5 percent in the July to September quarter following a real 0.7 percent contraction in the 2nd quarter. The GDP numbers surpassed economic forecasts expecting growth of 3.2 percent. The economy declined by 6.4 percent in the 1st quarter and had contracted for four straight quarters before today’s news. This was the best quarter for U.S. GDP since the 3rd quarter of 2007 (3.6%) and is the clearest sign yet that the economy is turning the corner from the worst recession since the 1930’s.

Contributing largely to the gain in GDP for the 3rd quarter was an increase in consumer spending which makes up approximately two-thirds of U.S. economic activity. Consumer spending jumped by 3.4 percent in the quarter after decreasing by 0.9 percent in the 2nd quarter and marked its largest gaining quarter since the 1st quarter of 2007.  Durable goods purchases surged by 22.3 percent for the quarter after a decline of 5.6 percent. Consumer spending and durable goods purchases were boosted by the government’s “Cash for Clunkers” program and the housing tax credit.

Exports also contributed positively to the GDP numbers as exports of goods and services increased by 14.7 percent in the quarter after falling by 4.1 percent in the 2nd quarter, the last of a string of four declining quarters. Imports advanced in the 3rd quarter by 16.4 percent following a decline of 14.7 percent in the 2nd quarter.  Gross private domestic investment  showed a gain by 11.5 percent in the 3rd quarter after falling for seven consecutive quarters.

The advance estimate GDP data is subject to revision as the 2nd estimate version is released at a later date and is scheduled for November 24th 2008.

US Dollar falls on risk taking after GDP news.

The US Dollar has been on the defensive today in forex trading against the other major currencies as investor’s increased risk appetite has pushed the American currency lower and the stock markets higher. The dollar has been losing ground to the euro, British pound, Australian dollar, New Zealand dollar, Swiss franc and the Canadian dollar while edging up versus the Japanese yen at 2:13 pm EDT in the afternoon of the US trading session according currency data by Oanda.

The US stock markets, meanwhile, have surged higher today on the GDP news with the Dow Jones gaining by over 150 points, the Nasdaq increasing over 30 points and the S&P 500 advancing by over 17 points at the time of writing.  Oil has traded higher to around $80.29 while gold has also advanced by $13.00 to trading around the $1043.00 per ounce level.

EUR/USD Chart – The Euro gaining today versus the US Dollar as the positive GDP news has spurred risk taking and dollar weakness. The Euro had fallen for the past three days in a row.

By Adam Hewison – That is the big question on many traders’ minds as gold fell from a high around $1,070 to the lows seen earlier today.

In my new video that was shot at noon on Tuesday 10/27, I go into detail on what I think is going to happen to this market. I think you will see a refreshing view of the gold market and also the strategies that we’re employing to take advantage of the next big move in gold.

As always our videos are free to watch and there is no registration requirement.

Watch the New Video Here….
All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

By Adam Hewison – There is compelling evidence that we may have seen a top in the S&P index. In my new short video, I show you the evidence that I have found which may point to the fact that we are going to see a correction in this index.

While the S&P index needs to put in more work to create a major top, there are early signs that this may be happening. I think when you watch this video you will come to the same conclusion as I did in regards to this market.

As always our videos are free to view and require no registration.

Watch the Video Here….

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

Source: ForexYard

The surprise drop in New Home Sales in the United States yesterday has resulted in a sudden buy-up in USD as investors flock to safe-havens. With a market that appears to be lacking a clear direction recently, major reports such as the New Home Sales report yesterday and today’s Advanced GDP data become that much more important to watch as more investors await their release before trading.

Economic News

USD – Dollar Rises despite Negative Data

The US Dollar extended gains against the EUR after a report showed an unexpected fall in U.S. new home sales for September. The data offset solid durables goods numbers and stoked fear the rally in risky assets in recent months has run ahead of fundamentals. As a result, the USD finished yesterday’s trading session 100 pips higher against the EUR at the1.4716 level. The greenback also saw bullishness against the CHF and closed at 1.0260.

Yesterday, government reports showed that U.S. new home sales unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery even as businesses appeared to be stepping up investment. New single-family home sales fell 3.6% to a 402,000 unit annual pace from a downwardly revised 417,000 units in August. That has helped the U.S Dollar revive its safe haven appeal.

The other factor which led to the bullish Dollar yesterday was that U.S stocks fell, which boosted demand for the USD as a safe-haven currency. Moreover, renewed demand for the Dollar comes after a sharp drop earlier in the month, when the greenback hit 14- month lows versus the EUR, as investors favored foreign currencies and other riskier assets such as equities.

Looking ahead today, the two main news events that may have a very large impact on the Dollar and its main currency pairs in today’s trading are the Advance GDP and Unemployment Claims around 12:30 GMT. These reports are very important as they are likely to impact the USD’s volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow these releases.

EUR – EUR Sliding against Rising Safe-Havens

The EUR slid to a more than two-week low against the dollar yesterday, as concern over the strength of the U.S. economic recovery added momentum to a broad correction sweeping across all asset classes. After yesterday, the 16-nation currency fell sharply against the USD, pushing the oft-traded currency pair to 1.4710.The EUR experienced similar behavior against the JPY and closed at 130.95.

The EUR surrendered gains against the U.S. Dollar on Wednesday, falling to session lows, as riskier assets such as U.S. stocks pared gains while commodities fell. Analysts also said investors felt uncomfortable pushing the EUR higher given the huge amount of bearish trades on the dollar, which suggests a near-term recovery in the U.S. currency is on the horizon.

Looking ahead to today, the most important financial indicator scheduled to be released from Europe is the German Unemployment Change at 8:55 GMT. Traders will be paying close attention to today’s German Unemployment Change announcement, as a stronger than expected result may bolster the EUR.

JPY – Yen Benefits from Stock Market Losses

The yen rose across the board on Wednesday as investors trimmed riskier positions in higher-yielding currencies. This came as a result of stocks falling after weaker than expected U.S. data pushed many back into safe-havens. By yesterday’s close, the JPY rose against the EUR, pushing the oft-traded currency pair to 132.95. The yen also saw bullishness against the USD and closed at 90.30.

A slide in European shares, led by declines in the banking and energy sectors, accelerated the high-yielding Australian dollar’s sharp fall triggered by lower-than-expected domestic inflation data, while boosting the low-yielding yen.
Further strengthening could be seen in the Yen if other nations begin to raise interest rates in order to ward off inflation. This could potentially wreak havoc on the Japanese economy by making Japanese exports relatively more expensive when compared to their foreign counterparts.

Crude Oil – Crude Oil Slips Below $78 a Barrel

Crude Oil fell more than $2 to below $77.20 a barrel on Wednesday, after data showed a surprise build in U.S. gasoline inventories, stirring fuel demand concerns in the giant consumer.

Oil prices also came under pressure after data showed sales of new U.S. homes tumbled unexpectedly in September, the first drop in six months, and feeding doubt about an economic recovery, thus helping the safe-haven USD rise; pushing oil prices lower.

Looking ahead, traders are advised to watch carefully the global stock markets and the major economic indicators which will be published from the U.S. and Euro-Zone in order to predict the next movements in oil prices.

Technical News

EUR/USD

This pair seems to be giving off mixed signals today. There is an impending bearish cross on the hourly Slow Stochastic, while the 4-hour Slow Stochastic indicates a fresh bullish cross. It seems as if short-term movement is down, while the longer-term pressure remains upward. Waiting for the upward swing and then going long appears to be preferable today.

GBP/USD

This pair continues to trade in a tight range between 1.6300 and 1.6400. Most technical indicators show that this trend will likely continue. Forex traders can benefit by buying on highs and selling on lows within this trend.

USD/JPY

The sustained down-trend of this pair has pushed many indicators into showing an impending correction. There are fresh bullish crosses on the hourly and 4-hour Slow Stochastic and MACD, and the price is currently floating in the over-sold territory on the 4-hour RSI. Going long appears to be a wise choice today.

USD/CHF

This pair shows a level of short-term upward pressure with a bullish cross on the hourly Slow Stochastic. However, the longer-term pressure seems to be in a downward direction. Going short after the swing may be a good tactic today.

The Wild Card – Crude Oil

Yesterday’s bearish movement in Crude Oil has pushed a number of technical indicators into the over-sold territory. There appear to be fresh bullish crosses on the hourly MACD and 4-hour Slow Stochastic, indicating an impending bullish move. And the price has just left the over-sold territory on the hourly RSI and is now cascading upward. Forex traders involved with commodities like this can take advantage of this knowledge by going long on Crude Oil now, and at a great entry price!

Forex 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.

It all comes down to Higher-Lows to maintain this current trend

The last couple of trading days have been catastrophic for bullish traders, as the major indices and currency pairs have retraced severely after touching major resistance levels. U.S stocks experienced further selling pressure yesterday as a combination of profit taking and economic data forced the indices down to lower levels.

This time round it was housing data that battered trader’s confidence as the results showed that sales of new homes slid by 3.6%. The news was completely opposite to what analysts were expecting and dropped to 402k in September. Furthermore MBA Mortgage Applications showed a decrease of -12.3%. Even though durable goods showed a positive result during pre-market hours, coming out as expected, the data was quickly brushed aside throughout the start of the session.

From a technical point of view, one can see on the chart that investor’s sentiment has flip-sided over the last couple of trading days. Even though support levels are failing to hold, the major indices are still trading above their prior lows. The form of a higher low on the indices would confirm that the current trend is still intact.

Volatility Explodes Higher, Investors flee to the Dollar for Safe Haven

The recent change in sentiment has caused volatility to spike as investors have been quick to rush out of riskier assets and cash-in on recent gains. The VIX, an index known to measure market volatility has increased by approximately 25% over the last couple of trading days. During yesterday’s session the VIX jumped by a whopping 12.4%, due to broad selling and investor’s preference to head back into the U.S Dollar.

From under 75 points the Dollar index has bounced higher over the last couple of trading days and has even broken out of its major trend line resistance. Even though the chart patterns are showing possible signs of a start of a new trend, one must note that overall fundamentals are still pointing towards further Dollar weakness as the U.S economy is slowly crawling out of its dire straits. Will the current bounce turn out to be a fake out?

Dollar index

Surprisingly enough, the currency pair which has been presenting relative strength over the last couple of trading days, has been the GBP/USD. Other pairs such as the EUR/USD and the AUD/USD have dropped due to recent opinions that those pairs have climbed to far too fast. The GBP/USD managed to hold on to its current levels after dropping on Monday and has even presented mild gains. One must note that even though this pair is showing resilience, continued selling pressure across the board could also have an effect on this pair, eventually sending it to lower levels.

By taking a glance at the following comparison chart one can see that while the Euro has severely declined over the last couple of trading days the Pound has managed to hold its ground.

Market Data to Watch Out For

Today’s trading session should be a rocky one, as a wave of economic data is scheduled to be released. Starting in Europe, Germany will release its unemployment rate, which is expected to show a jump to 8.3%. Even though other low priority data will be released throughout the day, eyes will jump to the U.S data, as the GDP result is scheduled to come out. Even though, according to analysts the number is expected to show an increase, recent declines in consumer spending and confidence, could show a different figure and dissapoint.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By Yan Petters – The Fibonacci Retracement Lines are a fantastic tool that our platform provides you in order to detect future movements. In case you don’t how to use it, do yourself a favor and read the rest of this article.

How to set it?

First of all, open a chart, it doesn’t matter which one and make sure that the crosshair is switched on. Now, choose a certain time frame, for example the last 20 candles. The next thing you need to do is to spot the highest level and the lowest level of the frame you chose. On the chart you have the option to draw a trend line. Please click on the down arrow next to it. Various options will be opened – choose Fibonacci Retracement. Now what you need to do is to stretch the Fibonacci retracement lines from the left to the right of the frame you chose before, making sure that the highest line (the 100% line) touches the highest level of the chart, and the lowest line (the 0% line) touches the lowest level of the chart. It should look like this:

* Do you see that within the box I chose, the 100% line and the 0% line touched the highest and lowest levels within the box? It didn’t match the highest and lowest levels of the chart, but it doesn’t matter – you get to choose what will be the time frame, and this time we have limited the time-frame to the box.

Now how do we use it?

Very simple, just follow the lines. The idea is that if the pair has breached a certain level, it is likely to reach the next level, and so on. On the other hand, if the pair fails to breach a certain level, it is likely to reverse and reach its previous level once again.
Do note that the same as anything else, the wider the time-frame you pick, the more accurate the Fibonacci prediction will be. I do not recommend using this method with the 5-miutes chart or the 1-hour chart. The 4-hour chart seems to be the minimum time-frame required. Do bear in mind that using the 4-hour chart is useful only if you’re planning to keep the position open for a day or so. Otherwise, don’t waste you’re time on this strategy.

Forex Market Article 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.

Source: ForexYard

The USD continued to advance Tuesday against major currencies as a measure of U.S. consumer confidence registered an unexpected decline for October. Gold futures extended losses from the previous session as the USD rose. December Gold fell $7.40, to settle at $1,035.40 an ounce on the Comex division of the New York Mercantile Exchange and is currently trading around $1041.

Economic News

USD – USD Gains on Weak Consumer Confidence

The USD gained against the EUR for the second session in a row on Tuesday, after the release of unexpectedly weak U.S. confidence data intensified risk aversion with investors. Further concerns arose about the possibility the Federal Reserve will signal an eventual end to its stimulus policy stance at its FOMC meeting next week. The dollar index rose to 76.233, up from 76.100 late Monday, recovering from losses seen during Tuesday’s earlier session.

The Conference Board’s index of consumer confidence declined to 47.7 from a revised reading of 53.4 last month. This weakness mirrors the continuous rise in unemployment levels and undermines stabilization in other areas of the economy such as stabilization in financial markets and home prices.

Looking ahead for today, the release of the Core Durable Goods Orders at 12:30 GMT and New Home Sales at 14:00 GMT will likely cause volatility for the USD pairs. Further disappointing data may push the EUR/USD pair even lower.

EUR – EUR Down ahead of the Release of Key German Data

The EUR hit a session low at $1.4769 Tuesday afternoon, its lowest level since Oct. 13. Late Tuesday, the EUR was at $1.4802, down from $1.4865 late Monday and off a 14-month high of $1.5064 seen at the start of Monday’s session. The EUR was at ¥135.88, down from ¥137.08. The U.K. pound was at $1.6389, up from $1.6324.

Along with the disappointing U.S consumer confidence report, the EUR was down on an expectation the German jobless rate probably rose to 8.3% in October from 8.2% in the previous month before tomorrow’s report. Furthermore, according to analysts, the six month rally in stocks and commodities is probably at its peak as U.S. growth continues to lag, further hurting the appeal of riskier assets such as the EUR.

Looking ahead to today, investors should follow the release of the German CPI report which is forecasted to show consumer prices worsened, putting further pressure on the EUR

JPY – Yen Gains on Return to Risk Aversion

The JPY gained against major counterparts on speculation the global economic recovery will slow, reducing demand for high yielding assets. The Yen rose to 135.55 per EUR in today’s early trading, from 135.89 yesterday, after earlier reaching 135.43, the highest level since Oct. 21. The JPY traded at 91.50 per USD, up from 91.80 Tuesday.

The Yen traded near a one week high against the EUR ahead of reports due today and tomorrow that are forecasted to show German consumer prices and unemployment worsened, reiterating the notion that the European Central Bank (ECB) will keep interest rates low.

Japan’s retail sales fell for a 13th month in September. Sales slid 1.4% from a year earlier. The continuous poor data reinforces the idea that recovery will be slow.

Oil – Crude Prices Up ahead of Inventory Data

Crude Oil futures rose Tuesday, breaking a three day losing streak. Light, sweet crude for December delivery settled 87 cents, or 1.1%, higher at $79.55 a barrel on the New York Mercantile Exchange. A buying surge late in Tuesday’s session overturned Crude’s earlier losses caused by a stronger Dollar.

A report due today at 14:30 GMT is expected to show U.S Oil Inventories increased slightly. However, despite high Oil inventories, as long as equity markets stay stable the price of Oil should go up. Strong equities support Oil Prices as was evident Tuesday; despite weak consumer confidence, there was still appetite for riskier assets such as stocks and Oil.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-sold territory on the RSI of the 4-hour chart, signaling an impending upward move. The fresh bullish crosses on the hourly chart’s Slow Stochastic and MACD support this notion. Going long appears to be a good strategy today

GBP/USD

The price of this pair has been sending mixed signals over the past few days as it continues to trade in a wide range. There appears to be a bearish cross on the hourly chart’s Slow Stochastic; however, a fresh bullish cross has just occurred on the hourly chart’s MACD. With bullish and bearish crosses on the MACDs of the 4-hour and daily charts, respectively, traders may find it difficult to choose a direction. Waiting for a clearer signal might be a wise choice today.

USD/JPY

The sustained downward movement these past few trading days has apparently generated a bullish cross on the hourly chart’s Slow Stochastic, indicating a short-term upward correction may occur shortly. As the weekly Momentum oscillator begins to turn a corner, we may very well be seeing a reversal in the making. Going long to enter this new trend may be a wise move today.

USD/CHF

Last days’ sharp upward movement appears to have pushed the price of this pair into the over-bought territory on the RSI of the 4-hour and daily charts, indicating a downward correction may be due. The volatile breach of the upper border on the 4-hour chart’s Bollinger Bands also signals strong downward pressure. Going short might be a wise choice today.

The Wild Card – AUD/USD

There appears to be a fresh bullish cross on the 1 hour chart’s Slow Stochastic for this pair, signaling an upward movement may be in the making. With its sustained downward movement over the past days, this pair is overdue for a rebound. With fresh bullish crosses on the MACD for the hourly, 4-hour charts, this rebound may indeed be developing. Forex traders can definitely take advantage of this swing by buying this pair now, and at a great entry price.

Forex 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.

Market Movers of the Day

Asia-Pacific

*Japanese Retail Trade in September better than expected at -1.4% on an annualized basis

Europe

*UK CBI Distributive Trades Survey better than estimated at 8 in October

Americas

*US Consumer Confidence worse than expected at 47.7 for October

*US S&P/Case-Shiller Home Price Index for August better than forecasted at -11.3%

The Overall Sentiment

Forex

A surprising drop in US Consumer Confidence spurred risk aversion sending investors to play it safe pushing the Dollar higher against riskier currencies as the Aussie and New Zealand dollars. The Dollar continued to advance against the Euro driving the EUR/USD below 1.48. The Yen also beneficiated from the negative sentiment for higher-yielding currencies and with better-than-expected Japanese Retail Trade data climbed against most of its peers. The Pound strengthened against most majors and rose against the Euro for a second day after UK CBI Distributive Trades Survey positive figures. EUR/GBP broke below 0.9050 aiming for the 0.90 level.

Equities

Sentiment continued to be bearish for US stock markets after US Consumer Confidence surprised for the worst with an unexpected drop in October showing consumer worries about job losses and future earnings could have an impact on spending in the upcoming holiday season. The S&P lost 0.3%. UK equities managed to climb in spite of the negative sentiment coming from the US led by Europe’s second largest oil company, BP Plc, whose Q3 earnings reports surprised for the better beating market forecasts. The FTSE gained 0.2%. Japan’s equities dropped driven by losses coming from technology companies after disappointing earnings reports. Honda Motor was the best performer after tripling its profit forecast. Overall, Japanese Nikkei 225 fell 0.7%.

Commodities

The strengthening Dollar pushed Gold below $1035 in a four-day straight decline. Silver followed to trade below $17. Oil recovered from yesterday’s drop but remained under the $80 mark.

See more info on Gold

The Day Ahead

The day will start with Australian Consumer Price Index shedding light on the country’s inflation. German CPI will follow in a day with a thin stream of data coming from Europe. Moving to the US session, Durable Goods Orders report is expected to show that orders rose 1.0% in September and a gain of 2.6% is expected for New Home Sales. It will be a big day for New Zealand with the release of its Trade Balance for September and the RBNZ Interest Rate decision where no change is expected for the record-low 2.5% official rate.

Technical Analysis

USD/CAD DAILY

After sharply falling more than 700 pips to bottom at 1.02 USD/CAD recuperated regaining lost ground to reach the 1.07 mark. The pair currently trades at a very interesting spot where a daily closing above 1.07 will confirm its bullish momentum with more territory to advance but it also could be a good opportunity now to enter a Short position to take advantage of a correction after such a steep gain.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.