Month: October 2009

Source: ForexYard

Dollar trading today is set to be dominated by key releases from the U.S., such as the CB Consumer Confidence figures at 14:00 GMT. The speech by Treasury Secretary Timothy Geithner at 20:00 GMT is also set to be a market mover when it takes place at 20:00 GMT. It is also recommended that you follow the results from top U.S. companies, as this may help the U.S. Dollar continue to gain on its recent bullish trend.

Economic News

USD – Dollar Soars on Safe-Haven Status

The USD made impressive gains throughout Monday’s trading. This process was sustained, as concerns of investors rose on fears that U.S. lawmakers will make big cutbacks on tax credits for new homebuyers. If this does actually occur, then Bank of America will need to pay back its government debt by selling a large amount of its shares. As the day went by, the USD eventually recovered from the recent 14-month low vs. the EUR, as the leading U.S. equity indices, such as the S&P declined. This led to further demand for the USD on Monday, especially as Gold tumbled significantly yesterday.

The EUR/USD cross declined by a massive 190 pips to the 1.48.50 level. It is important to take into account that this behavior is set to shock the market for the rest of the current month of October. The GBP/USD pair was virtually unchanged, as it closed at the 1.6290 level. This was due in part to the GBP’s great strength throughout yesterday’s trading. The USD also made some very impressive gains vs. the JPY, CHF and Canadian Dollar. All of this remarkable behavior may tilt the top U.S. and global banks into labeling the U.S. Dollar as a safe-haven currency once again.

Looking ahead to today’s trading, there is set to be some very important economic news that is scheduled to be released from the U.S. The most important of these are the S&P/CS Composite-20 HPI at 13:00 GMT, the CB Consumer Confidence figures at 14:00 GMT and the very important speech by U.S. Treasury Secretary Timothy Geithner at 20:00 GMT. The latter of these 2 events is set to be the main driving force behind the USD’s strength today. You should also follow other releases form the leading industrialized economies, as the trading day unfolds.

EUR – GBP Rises on All Fronts

The British Pound rose on all fronts yesterday, as British business confidence rose to an 18 month high. Moreover, consumer prices are forecast to rise faster than any industrialized economy. This is as the inflation rate is expected to be 2.1% this year, far higher than that of the Euro-Zone and the U.S. The GBP continued to rise yesterday, as traders lost faith in the EUR, and realized that the Pound was undervalued. Additionally, investors, continue to realize that the GBP is over 20% undervalued, and some type of bullish correction is looming. This is especially so, as the Bank of England (BoE) may raise Interest Rates sooner than many expect.

The British currency made some massive gains vs. the EUR by nearly 130 pips to reach the 0.9119 level. The GBP/USD cross was unchanged at the 1.6290 level, as both the GBP and USD were the leading bullish currencies in Monday’s trading. The British currency also made significant gains vs. the JPY, as the pair ascended to the 150.55 level. With regards to the EUR, it declined against its major currency pairs. This was exasperated yesterday, as U.S. and European equities slid on Monday. The main benefactors of this seemed to be the GBP and USD.

Today, both the Euro-Zone and Britain are set to be publishing some very important economic indicators. These releases will be key in setting the undertone for both the GBP and EUR throughout today’s trading. From Britain, there will be the ever so important CBI Realized Sales release at 11:00 GMT. From the Euro-Zone, there will be the M3 Money Supply and Private Loans results at 09:00 GMT. Forex traders are recommended to open their positions in the majors, now, as today’s trading is set to offer some very big profits.

JPY – Yen Makes Gains vs. the Pacific Currencies

On one hand, the Japanese currency made losses vs. the USD and GBP. However, these gains weren’t worrisome, as these 2 counter currencies were the big bulls yesterday. With regards to the Pacific currencies, the JPY did make some significant gains vs. the AUD and NZD. This was due to a number of reasons. The most important of these being Japan’s Prime Minister Yukio Hatoyama’s comments on how he’ll revolutionize the Japanese economy in the coming months.

The JPY lost ground against both the Dollar and the Pound. However, it made some gains vs. the EUR. The JPY rose 65 pips vs. the New Zealand Dollar to reach the 66.80 level. At one point yesterday, the JPY was trading higher by nearly 70 pips vs. the AUD, to eventually close at the 84.50 level. The most important release to follow from the Japanese economy today is the Retail Sales figures at 23:50 GMT. In the meantime, open your positions in the JPY’s main crosses now.

OIL – Crude Oil Slides on Rising Dollar

Oil fell significantly on Monday, as the U.S. Dollar made significant gains. Crude dropped nearly a Dollar to close at $78.81. This was originally sparked by fears in the U.S. over the government cutting tax credits for homebuyers. This sent fears through the equities market. Thus the obvious loser of all of this was Crude Oil, as the USD gained as global investors seeked a safe-haven currency in Monday’s trading.

Crude’s losses are notable, as the black gold had been trading as high as $81.58 on Monday. The other factor that also played on the mind of traders yesterday was that demand of U.S. consumers may slide in the coming weeks as the pace of the U.S. economic recovery slows, and U.S. unemployment continues to rise. If the USD continues to rise today, then we may see Crude Oil continue to decline.

Technical News

EUR/USD

A bullish cross may be forming on the hourly chart, indicating a potential price movement towards the upper resistance level of 1.4985. The daily chart’s Bollinger Bands are tightening, indicating that a violent breach may take place in the next few hours, supporting the potential bullish movement

GBP/USD

On the 30 min chart the pair continues to range trade in the upper half of its Bollinger Bands. Both the 1 hour and the 4 hour charts are providing mixed signals with no significant breach. Such a range trading floating nature may provide a good opportunity for traders to safely buy on the lows and sell on the highs while profiting from the relatively predictable range trading.

USD/JPY

The bullish trend is loosing its steam and the pair seems to be consolidating around the 92 level. The 4-hour chart shows a fresh bearish cross that has just formed, indicating a future downward price movement. Supporting this is the RSI on the daily chart which is floating in the overbought territory. Traders may look for the pair to reach a lower support line of 91.55.

USD/CHF

There is a very accurate bearish channel forming on the hourly chart, as the pair has consecutively dropped for the past 2 days. Currently, as the RSI on the daily chart is floating below the 50 line and the Slow Stochastic is pointing down, the pair might extend its bearish trend. Going short might be the right choice today

The Wild Card – Oil

Oil prices are once again dropping, and a barrel of Oil is currently traded at around the 78.80 price level. And now the RSI on the 30 min chart broke above a bearish trend line indicating that oil prices might go up. 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

Australian PPI at 0.1% versus 0.3% expected

Europe

German Gfk consumer confidence disappointed with a reading of 4 against 4.5 expected

The Overall Sentiment

Forex

Although the stream of economic data was rather thin the Dollar regained strength rather aggressively against most of its peers, as a reaction to circling rumors the tax relief program for home buyers in the US might be terminated soon. The rumors coming in the midst of the earnings season caused worries over the heath of the economy to refloat once more. The rising bets on lower growth pushed the Dollar higher against the high yielders in a typical risk aversion play. The Dollar moved to a one week high against the Euro trading around 1.4850 $, edged around 1.2 against the Swiss Franc and bottoming around 0.9125 versus the Aussie. The Kiwi also gathered much attention amid comments from the Prime Minister of New Zealand that the strong Kiwi is helping to offset inflationary pressures. The statement coming ahead of the expected rate decision in New Zealand dented bullish momentum for the Currency  pushing it to as low as 0.744$.

Equities

Sentiment was strongly bearish in reaction to worries over the termination of the tax relief program to US home buyers. The circling rumors alongside downgrades for some of the US largest banks pulled shares of the Banking sector and homebuilders south into red territory, causing benchmark indexes to sink lower. Among the out standers were Bank of America and American Express with BofA falling more than 5% as investors speculated the bank will be forced to raise more capital. On the contrary American Express outstood on the positive side as the credit card company posted better than expected earnings with shares edging slightly higher. Benchmark indexes ended in the red across the board with S&P closing -1.17% lower, the FTSE lower by approximately -1% and the DAX by -1.71%.

Commodities

Sentiment was rather bearish in tandem to stronger Greenback and lower yield on Treasuries. Oil fell more than 3.5$ before settling bellow the 80$ mark at 78$, Gold moved bellow the 1050$ support and settled around 1040$ an ounce and silver fell below 17$ before rebounding slightly to 17.2$ an ounce.

The Day Ahead

The Day will be loaded with consumer data across the Globe. Starting with UBS Consumption indicator in Switzerland and then moving to the CBI Distributive Trades survey which will indicate on the consumption trend in the UK .In the US highly regarded Consumer data is due with the Consumer confidence at 14:00 GMT followed by the ABC/Washington post consumer confidence later in the day. The concluding consumer data for the Day will be the Retail Trade data in Japan due at the end of the trade with investors eager to see more positive news on the Japanese consumer. All in all investors will look for signs of a consumer recovery  with any positive surprise pushing the low yielders mainly the USD and the Yen lower as risk appetite could rise. The speech by Treasury secretary Timothy Geithner will be at the background and could weigh on the potential anti-Dollar sentiment, in case an exit strategy will be mentioned.

Technical Analysis

NZD/USD

After falling sharply to the 0.744 area the pair has stabilized and could potentially regain strength. The 0.744 is in line with the bullish trend line making it a good benchmark to start another bullish cycle. The 0.7550 area should be closely watched as it poses a strong resistance and only a break of that level would confirm the resumption of the bullish trend. A substantial break of the 0.744 level downwards could invalidate this scenario and push the pair to a deeper retreat.

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 Fast Brokers – Gold has highlighted the relevance of the wedge pattern we spotted last week by bouncing off of our 2nd tier uptrend line once again. Meanwhile, our downtrend line is gradually converging with our 2nd tire uptrend line, implying gold may wake from its consolidative slumber soon. Fortunately for bulls, gold continues to set higher lows while hinting at a topside preference by continually resisting a noteworthy retreat below the highly psychological $1050/oz level. All eyes remain on the Dollar, particularly the Euro and Aussie crosses. Gold has seemed to follow the EUR/USD and AUD/USD more closely than the GBP/USD and USD/JPY due to the erratic behaviors of the BoE and BoJ, respectively. Therefore, investors should eye the EUR/USD’s ability to move higher and create some space between present price and the currency pair’s psychological 1.50 level. We notice a similar consolidative pattern in the AUD/USD, so investors should watch to see if the currency pair can break above its own October highs. A breakout in either major cross could result in a similar movement in gold.

Meanwhile, the S&P futures are in a topside battle of their own. The S&P has had a lot of trouble breaking through its psychological 1100 level. A large movement above 1100 in the S&P would likely come with a broad-based depreciation of the Dollar, thereby pushing gold higher due to correlative forces. As a result, investors should pay attention to the S&P’s reaction to upcoming Q3 earnings reports and econ data releases, most notably tomorrow’s CB and HPI data along with Wednesday’s Advance GDP and Durable Goods numbers. That being said, the presence of key econ and earnings releases among key psychological levels across the board presents the opportunity for high volatility should results steam in either highly positive or negative.

In terms of technicals, the topside barriers remain our makeshift downtrend line along with previous 2009 highs and the psychological $1075/oz and $1100/oz levels. As for the downside, the psychological $1050/oz level continues to serve as an important technical cushion along with our 1st and 2nd tier uptrend lines.

Present Price: $1058.50/oz

Resistances: $1058.75/oz, $1061.40/oz, $1065.15/oz, $1068.06/oz, $1070.66/oz

Supports: $1055.46/oz, $1051.91/oz, $1048.62/oz, $1045.32/oz, $1042.96/oz

Psychological: $1050/oz, $1075/oz, $1100/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The USD/JPY is consolidating around our 2nd tier downtrend line while maintaining its upward bias from last week. Positive U.S. Q3 earnings and econ data have given investors renewed faith in the U.S. economy as a whole, allowing investors to feel more comfortable with the USD/JPY risk trade. By sending the USD/JPY higher last week, investors are showing their support for the belief that the Fed will be able to raise rates before the BoJ, making the Yen the preferred funding currency once again. The USD/JPY has successfully created some breathing room between present price and the psychological 90 level while knocking down a few downtrend lines. However, the currency pair still faces quite a few topside technical barriers to overcome considering the extent of its pullback from August highs.

Investors will get a better idea of the BoJ’s current monetary stance towards the end of the week when the central bank makes its scheduled policy decision late Thursday/early Friday EST. The recent upturn in the USD/JPY supports the BoJ’s more hawkish monetary stance. Therefore, analysts are expecting the BoJ will stick to its tighter approach towards monetary policy considering the USD/JPY is back above 92. Japan will roll out a couple econ releases between now and then, including Retail Sales late Tuesday EST followed by Prelim Industrial Production late Wednesday EST. While investors are expecting an improvement in Retail Sales due to the appreciation of the Yen, Prelim Industrial Production should carry more weight since Japan’s economy is export-focused.

Technically speaking, the USD/JPY’s potential encounter with our 3rd tier downtrend line is an important development since it runs through 8/28 highs. Our 3rd and 4th tier downtrend lines carry a heavier weight since they represent the USD/JPY’s ability to extend its present upward movement towards the psychological 95 level. Besides our downtrend lines, 9/21 highs could serve as a formidable technical barrier should they be reached. That being said, the USD/JPY’s topside obstacles are wearing thin, and an accelerated near-term breakout is becoming more probable. As for the downside, the USD/JPY’s recent run has created several technical cushions, including multiple uptrend lines along with 10/23, 10/22, 10/21, and 10/20 lows. Speaking of which, this set of higher lows is normally a positive technical sign trend-wise.

Present Price: 91.90

Resistances: 91.93, 92.05, 92.18, 92.38, 92.51, 92.67

Supports: 91.70, 91.57, 91.41, 91.19, 91.08, 90.88

Psychological: 90

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The GBP/USD has balanced along our 2nd tier uptrend line after getting pummeled on Friday. Britain’s Prelim GDP data printed 6 basis points below analyst expectations (-0.4% vs 0.2%), shocking investors and igniting speculation that the BoE will keep its QE package open. This sentiment contradicts recent optimism garnered from strong Services PMI and CCC data points. However, investors should keep in mind that the Cable’s incredible run from 10/13-10/23 was provoked by a more neutral monetary stance emanating from the BoE. Therefore, one can only speculate how the BoE will approach its monetary policy over the near-term. As we explained in our previous post, there’s a chance the BoE changed its tone in advance to Prelim GDP data to help put the Pound in a more favorable position once the news hit the wire. Regardless, the BoE will likely continue its psychological tango with investors to move the Cable in a direction it deems appropriate for Britain’s economy.

Investors will receive more heavily-weighted econ data from Britain tomorrow with the release of CB Realized Sales. A positive consumer-oriented release could help stem the bleeding and allow the Cable to right itself. However, it’s difficult to imagine tomorrow’s CB number coming in ahead of expectations since Britain’s last two Retail Sales numbers have flat lined (0%). Regardless, investors will be keyed in since Friday’s GDP number has put the spotlight on Sterling for the time being. The U.S. will be releasing important econ data of its own, including HPI and CB Consumer Confidence figures along with a public address from Treasury Secretary Geithner. Activity in the U.S. will only heat up as the weak progresses with Durable Goods and New Home Sales tomorrow along with Advance GDP on Wednesday. The S&P futures haven’t been able to break through 1100 time and again. The S&P’s resistance at 1100 has been a problem for the Cable since the two are positively correlated. Therefore, the performance of upcoming U.S. data and Q3 releases should have a noticeable, broad-based impact on the Greenback. On the other hand, the Cable has had a mind of its own this Autumn, showing its direction ultimately relies upon the BoE’s perceived monetary policy.

Technically speaking, the Cable is suddenly facing four fresh downtrend lines and 1.65 is serving as a psychological barrier once again. The GBP/USD’s last run topped out beneath 9/11 highs, meaning the currency pair has its work cut out for it to the topside since a reversal into a longer downtrend isn’t out of the question. As for the downside, the Cable has managed to avoid a retest of 9/21 lows thus far. Our 2nd tier uptrend line should play an importance role in preventing such an occurrence. Meanwhile, though far away, the Cable still has our 1st tier uptrend line to fall back on along with the psychological 1.60 level and previous October lows should the situation deteriorate further. Therefore, the Cable’s uptrend is salvageable as long as near-term technical cushions hold up.

Present Price: 1.6341

Resistances: 1.6366, 1.6391, 1.6413, 1.6445, 1.6467, 1.6493

Supports: 1.6329, 1.6295, 1.6265, 1.6247, 1.6227, 1.6205, 1.6185

Psychological: 1.65, 1.60

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The EUR/USD is continuing its consolidation around the highly psychological 1.50 mark after Germany’s Consumer Climate number came in weak as anticipated. Despite the miss, the EUR/USD is showing little reaction since today’s data reading could be just a bump in the road to improvement and doesn’t confirm a material slowdown. Psychologically, the Euro is getting a bit of support today after a Chinese official released a statement implying that it would be in the country’s best interest to diversify more of its reserves away from Dollars towards the Euro and Yen. While the official did reiterate the Dollar’s prevalence as the global monetary standard, his comments nonetheless support China’s waning confidence in the Greenback. However, the Yen is actually weakening this morning, and it remains to be seen whether this news will have a noticeable impact on the Dollar.

Today’s session will be light on the data front, meaning prevailing near-term trends may play through. Although the EU will be releasing its M3 Money Supply number tomorrow, investors will likely be paying closer attention to British and U.S. data points. Britain sent a shock through the FX markets last week after printing a Prelim GDP figure 6 basis points weaker than expected (-0.4% vs 0.2%E). Britain’s GDP number rattled investor confidence. Therefore, investors will likely be paying close attention to tomorrow’s CBI Realized Sales data. However, it’s difficult to expect positive Realized Sales numbers tomorrow considering the last two Retail Sales releases have come in flat at 0% growth. On the other hand, outperformance of tomorrow’s release could provide a bit of relief to investor anxiety and help buoy the Pound. As for the U.S., investors will receive CB Consumer Confidence along with some S&P HPI data. More strong U.S. data could drive the Dollar lower and help the EUR/USD create a little separation from 1.50.

Meanwhile, the Euro has regained its footing against the Pound, signified by Friday’s solid pop in the EUR/GBP. Britain’s surprisingly weak Prelim GDP figured has reignited speculation that the BoE will keep the liquidity window open. However, it will be interesting to see if the ECB reiterates its desire for a stronger Dollar this week. For the time being the EUR/USD continues to float around its highly psychological 1.50 level. We’ve highlighted the significance of 1.50 in our past commentaries, and it seems growing investor uncertainty in other risk currencies is preventing the EUR/USD from creating topside separation. However, the technicals and fundamentals are still working in favor of the Euro, and considering the lack of topside technicals all the EUR/USD may need is a little boost before taking off towards 1.55. On the other hand, any underperformance in U.S. Q3 earnings or econ data next week could undermine the EUR/USD’s uptrend.

Technically speaking, the EUR/USD is right around where we left it last week. Our makeshift 3rd tier downtrend line and 1.50 continue to serve as the only foreseeable topside barriers separating the currency pair from accelerated upward movements. As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 10/22, 10/20, and 10/19 lows. Therefore, while the EUR/USD has seemingly hit at wall at 1.50, near-term technical supports appear to outweigh resistances, normally a positive sign.

Present Price: 1.5030

Resistances: 1.5052, 1.5086, 1.5127, 1.5146, 1.5183

Supports: 1.5013, 1.4981, 1.4942, 1.4921, 1.4880, 1.4860

Psychological: 1.50

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

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Source: ForexYard

The U.S dollar fell against the EUR and the Yen in Asian trading this morning after an official newspaper of the Chinese central bank said China should cut its USD holdings, adding to concerns over the unit’s global reserve currency status. The greenback could weaken further later in the day, particularly against the risk-sensitive EUR, which is also benefiting from stronger stock markets, analysts said.

Economic News

USD – Dollar Sees Mixed Results against the Majors

The Dollar saw an extremely volatile session during last week’s trading. The Dollar dropped to a 14-months low against the Euro, as the pair crossed the 1.50 level. However the Dollar appreciated against the Yen, and saw mix results against the Pound.

It appears that the mixed results of the major economic publications from the U.S economy could explain the irregular trading of the Dollar. On the positive side, the housing sector continues to recover. The Existing Home Sales, which are the number of residential buildings that were sold during September, rose to 5.57M from 5.37M on August. In addition, the Building Permits, which measures the number of new residential permits issued during September, remained at a high level as well.

Nevertheless, the Producer Price Index (PPI), a leading indicator of consumer inflation, failed to rise, and dropped by 0.6% in September. If the relatively low inflation rate fails to rise, it is a warning sign that the U.S economy may not recover as quickly as some may expect. In addition, the employment condition in the U.S continues to be fragile. The weekly Unemployment Claims showed that 531,000 individuals filed for employment insurance for the first time during the past week – the largest number in 3 weeks.

As for the week ahead, the most impacting data expected from the U.S economy looks to be the Consumer Confidence on Tuesday, the Durable Goods Order indices and the New Home Sales on Wednesday, the Unemployment Claims scheduled on Thursday. The results of these indicators are likely to determine the Dollar’s direction for this week, and traders are advised to follow their results.

EUR – Euro Continues to Strengthen against Majors

The most significant trend in the currencies world appears to be the European currency. During last week the Euro saw a 14-months record high against the Dollar, as the EUR/USD pair reached the 1.5055 level. The Euro also extended its bullish trend against the Yen, and the EUR/JPY pair is now traded above the 138.0 level.

One of the reasons that the Euro continues to strengthen against most of the major currencies seems to be the positive data from the German economy, which shows clear signs of recovery. The German Business Climate, which is a survey of about 7,000 businesses who are asked to rate the level pf current business conditions and expectations for the next 6 months, kept an above 90 rate for the third month in a row. This indicator rose to a 13-month high, which means that German businesses are under the impression that the recession is over. In addition, several other German economic indicators have provided positive results lately. Considering that the German economy is the largest and strongest economy in the Euro-Zone, any recovery signals are likely to support the Euro.

In addition, it seems that another significant reason for the Euro’s bullish trend, is the weak, or unsettled Dollar. Due to an unclear condition of the U.S economy, the Dollar continues to drop against most of the major currencies. As long as this tend continues, the Euro could remain as the safest trend in the market.

Looking ahead to this week, a batch of data is expected from the Euro-Zone. Traders should follow the leading publications, especially from the German and French economies, as they have proven to have a large impact on the Euro. The most influencing news event looks to be the German Preliminary Gross Domestic Product on Wednesday. A positive figure, above expectations could elevate the Euro even further.

JPY – Can the Yen Drop Further?

During the last few weeks, one of the safest investments in the market was to go against the Yen. Even so the Yen saw some bullish corrections close to the weekend, last week was no exception. The Yen continues to sharply drop, especially against the Dollar and the Euro.

The number one reason for the Yen’s weakness appears to be the Bank of Japan’s (BoJ) policy. The BoJ feels that it is the Japanese interest to keep a very weak Yen. The logic behind this stance is that the Japanese economy relies greatly on its export, and thus the weaker the Yen, the more exporters will allegedly profit. The main tool the BoJ uses in attempt to reach this target is the low interest rate. Japan currently holds the lowest interest rate in the in the industrial world, merely 0.10%.

However, the BoJ’s policy may have missed its target. Last week, the Japanese Trade Balance was published. The report showed that the difference in value between imported and exported goods during September have accumulated to 0.06T, failing to reach expectations for 0.38T, and much lower than the 0.17T result from August. Currently it seems that until the Japanese export will recover and a show similar figure to the ones prior recession, the Yen is likely to continue to drop, especially against the Dollar and the Yen.

As for this week, many interesting news events are expected from the Japanese economy. Yet the most fascinating publication seems to be the Overnight Call Rate, which is scheduled for Friday. The Overnight Call Rate is in fact the Japanese Interest Rate announcement. Analysts expect that the BoJ will retain the 0.10% rate. However, if the BoJ will surprise and decide to hike rates, turmoil is expected in the market.

OIL – Will Crude Oil Continue to Slide?

Crude oil continued to rise during most of last week’s trading, and a barrel of oil almost reached $82. However, close to the weekend, prices of oil dropped, and a barrel of crude oil is currently traded for less than $80 a barrel.

The rising trend of crude oil, which took place on the first half of last week, came mainly as a result of the weak Dollar. Oil is valued in Dollars and thus tends to strengthen when the Dollar drops. However, later on the week, the prices of oil saw a sudden drop. The main reason for the decline in oil prices seems to be the increasing concerns about global recovery, especially regarding the U.S economy. Current expectations are that the economic recovery in the U.S will elevate demand for oil.

However, the unsatisfying data received from the U.S economy has questioned the reliability of economic recovery, and increased worries that demand for oil may not rise during the first half of 2010. As long as these concerns will remain, crude may fail to see higher prices than $80 a barrel.

As for the week ahead, traders are advised to continue follow the major economic publications from the U.S and the Euro-Zone, as they seems to have the strongest effect on oil’s value. In addition, traders should follow the U.S Crude Oil Inventories on Wednesday, as this indicator tends to have an immediate impact on crude oil’s trading.

Technical News

EUR/USD

The Bollinger Bands on the hourly chart for this pair appear to be tightening in expectation of a volatile price movement. With a recent bearish cross on the hourly chart’s Slow Stochastic, this pair may be due for a strong downward correction. As the RSI of the 4-hour chart is floating in the over-bought territory, going short may be a wise choice today.

GBP/USD

The price of this pair is apparently floating in the over-sold territory on the 4-hour chart’s RSI, signaling upward pressure. With a fresh bullish cross on the 4H chart supporting this notion, going long may indeed be a good choice today.

USD/JPY

The bullish trend is loosing its steam and the pair seems to consolidate around the 91.90 level. The daily chart’s RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/CHF

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.0070 level. The 4-hour chart’s Slow Stochastic is showing a fresh bearish cross suggesting that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

The Wild Card – Gold

Gold prices are once again dropping, and it is currently traded around $1054 per ounce. And now, the hourly chart’s Slow Stochastic 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 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.

Consolidation across the Board

‘Directionless’ was the best way to describe how the equity markets acted last week, as the major indices bounced back and forth in a volatility week of trading. Most equity traders were whipsawed by the week’s movements, as the markets pushed higher and then dropped towards the end of the week.  The benchmark S&P 500 index finished the week down 0 .75% or 8.8 points, while the leading Nasdaq closed with a loss of 0.82%.  From a technical point of view the major equity indices have now seemed to have run into strong resistance, a level that is creating extremely choppy trading.

US, European and Asian stocks climbed on Monday after the Bank of Japan said the economy has strengthened in all nine regions.  The central bank’s regional report came out after policymakers upgraded their view of the economy for the second month. Despite the good news, the market was on the defensive side on Tuesday and Wednesday as weak economic news outweighed strong earning numbers.  US Housing starts increased 0.5% in September to a 590,000 seasonally adjusted annual rate, the latest piece of data to show that the housing market is slowly stabilizing due to low prices and government tax credits. Furthermore, the Labor Department reported that wholesale prices for finished goods fell 0.6% in September, while the “core” measure that excludes volatile food and energy prices fell 0.1%, a sign that despite the current recovery, producers still have little leeway to raise prices. One must note that the Housing number where worse than expectation, and the PPI number created a fear of deflation, during the trading week.

The markets rebounded on Thursday after strong earning numbers from Caterpillar, helped to drive the indices higher. Furthermore, the Beige book, released on Thursday, helped to boost sentiment, as the report showed a recovering situation. Even though, U.S. consumer spending was weak in most parts of the U.S. during late summer and early fall, leaving unexciting prospects for economic growth into the rest of 2009, a  report showed on Wednesday that its 12 districts indicated either stabilization or modest improvements from depressed levels in many sectors of the economy. Furthermore, reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered.

The markets retreated on Friday, even after strong US existing home sales.   Home re-sales increased by 9.4% to a 5.57 million annual rate from 5.09 million in August.  Consensus estimates by economist expected a 5.5% gain in sales during September, to a rate of 5.38 million. The level of 5.57 million is now the highest since 5.73 million reported in July 2007.

Data released across the globe also had an effect on the week, showing a slow recovery.  A blow to the UK market came in the form of extremely weak GDP.  The U.K. economy saw a record sixth straight quarter drop between July and September, confounding economists’ expectations that a deep recession was coming to an end.  In its preliminary estimate Friday, the Office for National Statistics said that output fell 0.4% in the third quarter from the previous one and was 5.2% lower from the year-earlier period.  Economists were expecting the U.K. to grow by 0.1% in the third quarter, a number which would have been the first three months of growth since the start of 2008.

Currency Pairs Get Stuck For the Week

The currency market, similar to the major equity averages hit a wall of resistance last week, as a mixed week on Wall Street had its affect on tradable assets. Even with strong fundamental news the EUR/USD could not break through the $1.50 zone.   As shown on the chart below, the EUR/USD is now trading around strong resistance.

The euro-zone economy grew at the fastest rate since the end of 2007 in October, according to a survey of purchasing managers at manufacturers and service providers Friday. Markit Economics said the composite Purchasing Managers Index — a measure of private-sector activity — rose to 53 in October from 51.1 in September. One must note that a reading above 50 indicates an expansion.  Last week’s number was the third straight month in which the PMI indicated that private-sector activity grew, and it was the highest measure since December 2007.

Moving on to the GBP/USD, this pair had a nice run during the middle of the week, as the Dollar lost further ground.  UK house prices continued to show signs of revitalization with Rightmove reporting further gains in October. Across the UK, prices rose 2.8% from a month earlier, the seventh gain in the past nine months. Friday’s session presented the most movement, after the U.K’s GDP number showed a decline of .4% for the quarter. The sterling was hammered and erased all of its prior gains.

The minutes from Australia’s Reserve Bank policy meeting on October 6^th emphasized the prospect of further rate hikes in coming months. The minutes described the previous policy with rates at 3% as ‘very expansionary’ and, crucially, ‘possibly imprudent,’ strongly reinforcing the sense that the central bank is firmly on a hiking agenda.  The minutes pointed out that even though inflation was due to fall in the coming year, the ‘trough’ was significantly higher than the bank had expected. Policymakers welcomed the strength in the currency for its possible contribution to keeping a lid on inflation.  This news continued to effect the bull trend in the AUD/USD.

The Week Ahead

Next week market participants will be watching numerous economic indicators.  On Monday, Australian PPI is scheduled to be released, followed by US Consumer Confidence and Japan’s Retail Trade on Tuesday.  Wednesday the US has on its list Durable Goods and New Home Sales.  Market participants will be watching to see if the New Home Sales number match Existing Home Sales improvement, released on Friday.  On Thursday the US will release GDO which is followed by EMU IFO and UK Housing Prices on Friday.

In addition to all the standard news, investors will deal with 2 rate decisions, from the New Zealand bank and from Japan. Both banks aren’t expected to make an surprise announcements.

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 British pound today fell sharply in forex trading as the U.K. economy has continued to be stuck in its longest economic slump since 1955.  Preliminary third quarter results for the U.K. gross domestic product showed that the U.K. economy fell by 0.4 percent according to the Office for National Statistics. This marked the sixth straight quarter of decline and the longest recession since 1955 when official economic records began.  The GDP decline surprised economic forecasters that were expecting a 0.2 percent rise for the July to September quarter.  The second quarter GDP had declined by 0.6 percent while the first quarter fell by 2.5 percent.

On an annual basis, GDP fell by 5.2 percent in the third quarter from the 2008 third quarter level following a 5.5 percent decrease in the second quarter. Contributing to the decrease was a 0.7 percent decline in the production industries and a 0.2 percent fall in the service industries.  Manufacturing fell by 0.2 percent for the quarter while construction dropped 1.1 percent and mining & quarrying decreased 3.5 per cent.

The GDP data sent the British currency plunging against the other major currencies today after the pound had a gaining week last week on speculation that the Bank of England may discontinue its quantitative easing program. The news today has pushed speculation back to the other side as the BOE may need to extend the program to help its struggling economy.

The pound has declined by over 300 pips today against the US dollar while also falling by more than 200 pips against the Swiss franc and Canadian dollar.  The euro has advanced versus its currency rival by over 150 pips while the Japanese yen has jumped by over 180 pips against the British currency.

GBP/USD Chart – The British Pound Sterling falling against the US Dollar in forex trading after the UK’s 3rd quarter GDP data came in lower than expected. The GBP/USD trades right around its 200-hour moving average (black) after falling more than 300 pips today.