Month: October 2009

By Fast Brokers – Gold is recovering from earlier losses after edging beneath our 2nd tier uptrend line and tapping its psychological $1050/oz level.  Gold was initially hit by the massive selloff in the Cable in reaction to a shockingly negative Prelim GDP release.  However, EU PMI data printed positively mixed and gold continues to take its cue from the Euro and Aussie.  As a result, gold is holding strong above $1050/oz while continuing its consolidative pattern.  We still believe the wedge applies, and we may witness an inflection point once our downtrend line collides with our 2nd tier uptrend line.  That being said, gold’s uptrend is alive and well despite uncertainty regarding Britan’s economic fundamentals.  U.S. Q3 earnings and Existing Home Sales also came in better than expected today, and increased optimism surrounding the health of America’s economy bodes well for gold’s medium-term outlook due to its negative correlation with the Dollar.  Although the Dollar is strengthening today, it’s reasonable to believe that the Euro and Aussie can head higher while the Pound slides.  After all, we’ve seen this negative correlation occur only recently.

Meanwhile, attention will remain focused on the U.S. and Britain since we will receive more important econ data early next week in conjunction with the Q3 earnings flow.  A recovery in British econ data coupled with more optimistic U.S. numbers would likely accelerate the broad-based devaluation of the Dollar and send gold higher.  However, uncertainty has re-entered the marketplace, so investors should be wary of upcoming releases.

Technically speaking, gold’s consolidation is building a solid base should the precious metal decide to head towards $1100/oz.  Furthermore, gold continues to set higher lows and has avoided the idea of heading beneath $1050/oz and 10/16 lows.  However, it seems gold will reach a breaking point in the near-future, and we will have to wait and see whether the Dollar works in favor of the precious metal.  Previous October highs continue to serve as a technical barrier along with our downtrend line.  As for the downside, gold has a couple uptrend lines serving as technical cushions to go along with 10/21 and 10/16 lows as well as $1050/oz.  For the time being, investors should pay particularly close attention to the EUR/USD’s present interaction with its highly psychological 1.50 level.

Present Price: $1057.90/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 – Investors are favoring the Dollar today after Q3 earnings continued to roll in positively, most notably MSFT and AMZN.  Furthermore, U.S. Existing Home Sales blew past estimates while Britain’s Prelim GDP printed a shocking -0.4%.  Therefore, investors are suddenly favoring the U.S. economy, and are heading towards the Dollar in speculation that the Fed may be able to tighten sooner than anticipated.  However, the excitement is a little premature since unemployment remains a thorn in the recovery’s side.  Regardless, investors are taking today as an opportunity to liquidate some of their long positions and lock in profits.  We notice pullbacks not only in the Euro, but the Aussie, Yen, and gold as well.  Naturally, the Pound is the biggest loser today and is highlighted by a pop in the EUR/GBP.  However, the Euro is holding up relatively well due to the EU’s positively mixed PMI data.

France continues to outperform Germany, whose Services PMI came in lighter than anticipated.  Though Germany’s Ifo Business Climate number also printed a bit weak, the data is altogether encouraging.  France’s stellar performance helped drive the EU’s headline Services and Manufacturing PMIs beyond analyst expectations.  The EU’s fundamental performance is holding the EUR/USD together despite the large selloff in the Pound.  The EU’s fundamental strength should carry over into next week since the union’s econ releases will be light and scattered.  The EU will release Germany’s GfK Consumer Climate data on Monday.  It’s hard to believe this number will print positively considering Germany’s econ data has been underperforming lately, and consumption is likely feeling the pinch.

Since the EU will have a quiet calendar, investor attention should remain focused on the U.S. and Britain.  The U.S. will continue to roll out Q3 earnings along with important econ data, particularly Advance GDP on Thursday.  Meanwhile, the S&P futures are having a lot of trouble breaking through their psychological 1100 level.  However, any strong movement above could give a boost of energy to the EUR/USD’s uptrend.  Therefore, investors should keep an eye on the S&P’s interaction with our uptrend lines and 1100.  In terms of Britain, today’s GDP figure is a shocker and has dented investor optimism concerning the global economic recovery.  Therefore, Britain’s upcoming econ releases will likely carry added weight.  Britain will release its Nationwide HPI and CBI Realized Sales on Tuesday.  On the other hand, we have seen the EUR/USD move in a negative correlation against the Cable recently.  Hence, underperformance in Britain’s economy doesn’t necessarily mean the Euro will get dragged down with the Pound should its decline accelerate.  As a result, investors should pay equal attention to the AUD/USD and gold since the EUR/USD was moving in tandem with these investment vehicles when it exhibited a negative correlation with the GBP/USD.

Meanwhile, 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 all the EUR/USD needs 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 yesterday.  Our makeshift 3rd tier downtrend line and 1.50 continues 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.

Present Price: 1.5014

Resistances: 1.5021, 1.5052, 1.5086, 1.5127, 1.5146

Supports: 1.4981, 1.4942, 1.4921, 1.4880, 1.4860, 1.4834

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.

By Fast Brokers – Most of the Cable’s positive technicals were shattered after Britain’s Prelim GDP number shocked investors by printing negative at -0.4% vs 0.2%E.   Investors sent the GBP/USD tumbling on strong volume since all of the positive fundamentals from the past two weeks have now been brought into question.  Furthermore, investors are now speculating that the BoE will inject more liquidity into its QE package to keep Britain’s economy afloat.  This is a complete reversal from recent optimism surrounding King and the BoE’s less hawkish quotes as of late.  After all, the last Services PMI number came in strong and the CCC continues to drop.  Considering the services industry comprises nearly 70% of Britain’s economy, investors are hopeful the PMI number signifies future strength.  Regardless, The BoE’s upcoming monetary policy became even cloudier, and the uncertainty is likely to riddle the Pound until we hear something from Governor King or another high ranking member.

In all, we wonder whether the BoE is playing games with investor mindsets to keep the GBP/USD around par as the global economy repairs itself.  We can’t help but notice that despite all of the volatility over the past few months, the Cable is now trading at June 1st levels.  Therefore, while China steadfastly keeps the RMB pegged to the Dollar, the BoE appears to be accomplishing this feat via strategic psychological games coupled with intermittent liquidity measures.  It’s hard to believe that King and the BoE didn’t see this Prelim GDP number coming when it began shifting towards a more hawkish monetary stance over the past 10 days, sending the Cable flying higher by 1000 basis points.  The BoE’s recent comments have allowed today’s negative shock to leave the Cable in a much more favorable technical position than if they had kept quiet.  Therefore, investors should look behind future BoE quotes instead of just taking them at face value.  In fact, future comments may even give us hints in regards to upcoming econ data releases…

Meanwhile, the Cable has collapsed below the psychological 1.65 level along with our 3rd and 4th tier uptrend lines.  The Pounds relative weakness is highlighted by a solid pop in the EUR/GBP.  Speaking of which, the EU’s PMI data came in positively mixed.  Additionally, U.S. Q3 earnings continue to roll in better than expected and Existed Home Sales surged.  Regardless of positive developments in the EU and U.S., today’s collapse in the Cable could carry lasting consequences trend-wise.  It will be important for the GBP/USD to hold above our 2nd tier uptrend line and 10/19 lows.  Fortunately for bulls, investors will be greeted by more important econ data early next week, beginning with Nationwide HPI and CBI Realized Sales from Britain.  Positive econ reports might help the Cable find a bottom and stabilize.  However, any further fundamental weakness will make a BoE liquidity injection all the more likely.  As for the topside, the Cable suddenly faces multiple uptrend lines and the 1.65 will act as a topside psychological barrier.  Our 2nd tier downtrend line serves an important role once again in terms a substantial turnaround in the Cable.  Overall, we suggest investors sit on the sidelines before determining just how serious today’s pullback may be in regards to near and medium-term trends.

Present Price: 1.6337

Resistances: 1.6377, 1.6413, 1.6443, 1.6465, 1.6493, 1.6522

Supports: 1.6329. 1.6303, 1.6265, 1.6227, 1.6205, 1.6185, 1.6151

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 USD/JPY is contemplating surpassing our 3rd tier downtrend line as U.S. equities selloff and we witness broad-based strength in the Dollar. Britain’s surprisingly negative Prelim GDP figure sent shockwaves throughout the FX community, and the Dollar is benefitting as a result. A combination of positive U.S. Q3 earnings and Existing Home Sales data has given investors renewed confidence in the Dollar and the Fed’s ability to begin extracting liquidity in 2010. These factors, combined with this week’s light Japanese Trade Balance number, have allowed the USD/JPY to extend its gains above the psychological 90 level. However, a lot can change next week since we’ll receive more Q3 results and key econ data from the U.S. and Britain beginning Tuesday. Japan will print econ data of its own next week, including Retail Sales on Tuesday, Prelim Industrial Production on Wednesday, and CPI on Thursday. Additionally, the BoJ will make another monetary policy decision late Thursday night/early Friday morning EST. Therefore, it’ll be a busy week ahead for the Yen and we will see whether the USD/JPY can build its present rally into a more substantial uptrend.

Technically speaking, the USD/JPY’s 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 10/22, 10/21, and 10/20 lows. Additionally, the highly psychological 90 level is now working in the USD/JPY’s favor.

Present Price: 91.90

Resistances: 91.90, 92.03, 92.18, 92.38, 92.51, 92.78

Supports: 91.76, 91.61, 91.48, 91.26, 91.07, 90.79

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 Vadim Pokhlebkin

It’s corporate earnings season again, and everywhere you turn, analysts talk about the influence of earnings on the broad stock market:

• US Stocks Surge On Data, 3Q Earnings From JPMorgan, Intel (Wall Street Journal)
• Stocks Open Down on J&J Earnings (Washington Post)
• European Stocks Surge; US Earnings Lift Mood (Wall Street Journal)

With so much emphasis on earnings, this may come as a shock: The idea of earnings driving the broad stock market is a myth.

When making a statement like that, you’d better have proof. Robert Prechter, EWI’s founder and CEO, presented some of it in his 1999 Wave Principle of Human Social Behavior (excerpt; italics added):

Are stocks driven by corporate earnings? In June 1991, The Wall Street Journal reported on a study by Goldman Sachs’s Barrie Wigmore, who found that “only 35% of stock price growth [in the 1980s] can be attributed to earnings and interest rates.” Wigmore concludes that all the rest is due simply to changing social attitudes toward holding stocks. Says the Journal, “[This] may have just blown a hole through this most cherished of Wall Street convictions.”

What about simply the trend of earnings vs. the stock market? Well, since 1932, corporate profits have been down in 19 years. The Dow rose in 14 of those years. In 1973-74, the Dow fell 46% while earnings rose 47%. 12-month earnings peaked at the bear market low. Earnings do not drive stocks.

And in 2004, EWI’s monthly Elliott Wave Financial Forecast added this chart and comment:

Earnings don’t drive stock prices. We’ve said it a thousand times and showed the history that proves the point time and again. But that’s not to say earnings don’t matter. When earnings give investors a rising sense of confidence, they can be a powerful backdrop for a downturn in stock prices. This was certainly true in 2000, as the chart shows. Peak earnings coincided with the stock market’s all-time high and stayed strong right through the third quarter before finally succumbing to the bear market in stock prices. Investors who bought stocks based on strong earnings (and the trend of higher earnings) got killed.

So if earnings don’t drive the stock market’s broad trend, what does? The Elliott Wave Principle says that what shapes stock market trends is how investors collectively feel about the future. Investors’ mood — or social mood — changes before “the fundamentals” reflect that change, which is why trying to predict the markets by following the earnings reports and other “fundamentals” will often leave you puzzled. The chart above makes that clear.

Get Your FREE 8-Lesson “Conquer the Crash Collection” Now! You’ll get valuable lessons on what to do with your pension plan, what to do if you run a business, how to handle calling in loans and paying off debt and so much more. Learn more and get your free 8 lessons here.

Source: ForexYard

The most important issue facing the Pound’s stability is the implications of the recently released figures of the British Prelim GDP publication which shocked the market. The release indicates that the British economy is facing the longest protracted decline in recent history, and the GBP responded by dropping over 200 pips versus the USD and EUR.

The impact which this may have on the Pound in the near future may be very negative indeed. This is contrary to the recent upward trend that the GBP made over the past few days. Forex traders need to take into consideration that the Pound faces the threat of declining several hundred pips against the major currencies in the weeks ahead due to this poor economic signal.

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.

Source: ForexYard

The USD surrendered slim gains on Friday, resuming its bearish momentum against a basket of currencies on expectations Interest Rates will remain low in the U.S. Low rates make the U.S. Dollar less attractive than higher-yield currencies more closely correlated with economic recovery.

Economic News

USD – The Dollar Trades near 14-Month Low

The U.S Dollar held onto modest gains on Thursday, but pared most of its earlier advance as U.S. equities rallied, signaling more willingness among investors to buy riskier assets. The Dollar’s earlier gains were triggered overnight by concerns about future Chinese growth. The move came just a day after the U.S. currency sank to a fresh 14-month low against the EUR, which breached the key $1.50 level for the first time since August 2008.

Analysts expect greenback’s downtrend to continue, with the Dollar vulnerable on expectations of low rates, a view reinforced after Chicago Federal Reserve President Charles Evans said on Thursday the Fed’s focus remained on an accommodative rate policy. The USD is poised for another weekly decline against the currencies of Australia and New Zealand as regional equities extended an earnings-sparked rally in U.S. shares.

The U.S dollar may be set for a 3rd weekly drop against the 16-nation currency before reports today forecast to show improvements in German business confidence and U.S. home sales. Also scheduled are UK 3rd quarter Gross Domestic Product numbers while in the U.S. Federal Reserve chief Ben Bernanke speaks at 12:30 GMT.

EUR – EUR Trades at $1.50 as Risk Demand Improves

The EUR traded near a 14-month high against the U.S dollar as a recovery in corporate earnings and improved prospects for the global economy revived demand for riskier assets. The European currency is also headed for a 3rd weekly gain against the Japanese yen on optimism that the 16-nation economy is on the mend.

The EUR rose before reports forecast to show improvements in an index of U.S. leading indicators and German business confidence. It appears that the Euro-Zone’s economy is recovering more quickly than what is seen in the U.S. and Japan, and the 16-nation currency will likely gain further. Adding to signs that the economic recovery is gaining traction, the Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 the previous month, according to a separate survey.

The British pound is set for a 2nd weekly gain versus the USD as the Office for National Statistics may say today that the U.K. economy expanded 0.2% in the 3rd quarter from the previous period, according to economists.

JPY – The Yen Declines vs. Majors

The Japanese Yen slipped to 91.40 per Dollar, having fallen 0.3% in the previous session. The JPY could come under a bit of pressure on expectations Japanese investors will step up overseas bond purchases. Traders are eyeing support at 91.75 and then at around 92.30 per Dollar.

The Yen may slide for an 11th day against the EUR, its longest losing run since December 2004, after a Finance Ministry report showed Japan’s shipments abroad fell 30.7% in September from a year ago, compared with a 36% drop in August.

In Asia, it seems that the pace of deceleration in exports is slowing, which is encouraging, analysts said. Therefore the Yen may tend to under perform other major currencies except for the U.S Dollar when risk appetite is pretty strong.

Crude Oil – Oil Falls Slightly on Stronger Dollar

Crude Oil prices were slightly lower Thursday, pulling back from their 1 year high of $82 a barrel, as weekly data showed a worse-than-expected picture in employment and as the U.S. Dollar rebounded against other major currencies.

Crude prices jumped on Wednesday after weekly U.S. government data showed a large drop in gasoline inventories over the past week and fuel demand rising about 4% year-on-year. The Energy Information Administration reported Wednesday that petroleum demand remained weak in the U.S., with demand for gasoline falling to the lowest level in more than 5 months.

Energy markets have looked to economic data for signs of a rebound in the economy that could bolster flagging oil demand. A stronger Dollar tends to push down Dollar-denominated commodities prices.

Technical News

EUR/USD

The EUR/USD cross has been experiencing much bullish behavior in the past 2 days. However, there is much technical data that supports a bearish move for today. The RSI of the daily and weekly charts indicates that the pair floats in the overbought territory, leading to the conclusion that a downward correction is imminent. The MACD of the weekly chart also supports this view. Going short with tight stops may turn out to pay off today.

GBP/USD

The pair has been going higher for the past 2 weeks, and it now stands at the 1.6625 level. A bearish cross has recently formed on the Slow Stochastic of the 4-hour chart, signaling that a downward move will happen anytime soon. The RSI of the weekly chart signals that the pair has run out of steam, and that a downward correction is impending. Going short with tight stops seems to be the wise choice today.

USD/JPY

The chart’s oscillators seem to be showing overwhelming evidence that a bearish move for the USD/JPY cross today is imminent. The pair is approaching the upper border of the Bollinger Bands of the 4-hour chart, indicating that a bearish move is imminent. The RSI of the 4-hour chart shows that the pair is floating in the overbought territory. Going short with tight stops may turn out to bring big profits for traders today.

USD/CHF

There is a bullish cross forming on the 4-hour chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on the weekly chart’s RSI also supports this notion. When the upward breach occurs, going long with tight stops appears to be preferable strategy.

The Wild Card – Crude Oil

Crude oil prices rose significantly in the last two weeks and peaked at $81.60 per barrel. However, the daily chart’s RSI is floating in an overbought territory suggesting that the recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex raders to enter the trend at a very early stage.

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 all industry index surprised for the better rising 0.9% MoM

Europe

Switzerland Trade Balance was better than expected rising to 1.92B

EU Current account strongly disappointed falling to -€1.3B

UK Retail Sales at 0% growth MoM

Americas

Initial Jobless Claims at 531K worse than expected

US Housing Price Index falls -0.3% MoM

US Leading Economic indicator rise 1% MoM

Canadian Retail Sales rise 0.8% MoM better than expected

The Overall Sentiment

Forex

In Switzerland trade balance surprised substantially for the better rising to 1.92B versus analysts’ expectations of a drop to 1.56B busting speculations the CHF is heading for parity with the Dollar and even higher. The CHF peaked at 1.003 against the Dollar before retreating lower. On the Contrary European current account strongly disappointed with a deficit of -€1.3B versus an expected €2B surplus expected by analysts’ surveys. Bullish sentiment for the Euro however remained rather unaffected amid a broad Dollar weakness with the Euro peaking around 1.5062$.In the UK Retail Sales remained flat MoM confirming fears UK consumers are still under pressure and remain reluctant to spend. In the US Initial Jobless claims disappointed with 531K jobless claims around 15K more than anticipated, Housing price index fell -0.3 and the US leading indicators was slightly higher than expectations .At the day’s end the Greenback regained some of it losses against the Euro closing around 1.5 and moving to the higher end of the 91 against the Japanese Yen. Sterling remained flat and continued to hover under the 1.67$.

Commodities

Sentiment for Metals was slightly negative as a stronger Dollar towards the end of the Day triggered profit taking with Gold tapping the 1050$ zone and Silver rather steady within the 17$ range. Sentiment for petroleum was not too late to follow with some profit taking on oil pushing it towards the 80$ support and Natural Gas steady at 5$.

Equities

In Europe Sentiment was rather negative as profit taking pushed all major indexes south. In Germany and France benchmark indexes moved into the red as concerns stock prices have outpaced earnings results loomed. The GDP figure coming from China pointing China has reached its target growth for the quarter also produced some headwind for the European markets as this could lead China to unwind stimulus and thus tame demand for European exports. In the UK sentiment was largely effected by profit taking in oil futures which pushed UK petroleum stocks down weighing on the FTSE 100.At the Day’s end the DAX was lower by-1.21% ,the CAC40 was down -1.35% and the FTSE retreated by -0.96%. However in the US sentiment was broadly positive as earning largely topped analysts’ expectations. Amazon, UPS and AT&T posted strong earnings and McDonalds the fast food giant posted strong results and provided a strong outlook on the future of the business. The Dow ended higher by 1.33% and S&P gained 1.06%.

The Day Ahead

Economic data for the Day will be at the centre. Opening with the highly regarded IFO business climate in Germany the largest economy in Europe and later in 8:30 GMT the UK GDP is due with investors’ surveys pointing a consensus 0.2% growth QoQ, amid hopes the BoE aggressive measures and the weaker Pound has helped moving the Economy back to growth and out of recession. A surprise for each direction is expected to create strong swings for the Sterling with any disappointment making the Sterling look overvalued. In the US the Fed Chairman Ben Bernanke is expected to speak with investors expecting some outlook on the economy after the rather anemic Beige book review. The concluding data for the Day will be the US existing home sales with investors anticipating a 5% gain over August. A positive surprise has the potential to magnify the bullish sentiment which is already present among investors. Although Economic data is expected to stir the wheel Microsoft’s earning should also be watch as the company results could largely affect sentiment for equities.

Technical Analysis

GBP/USD

After rallying rather strongly from the 1.59 area to the 1.66 the pair has finally reached its critical point. The 1.67-1.68 resistance is rather critical as it triggered the bearish selloff which pushed the pair to as low as 1.59 to begin with. A break of this resistance would point the pair is aiming the 1.7 mark and even beyond, continuing the bullish cycle. A failure for a break however could push the pair to test the 1.59 support and perhaps switch the major trend to bearish.

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. Leading Indicators Index published by the Conference Board today increased for the sixth straight month in September. The Leading Indicator Index, which measures future economic activity, registered a 1.0 percent increase in September following a revised increase of 0.4 percent in August. September’s increase was higher than the market forecasts which were predicting a gain of 0.8 percent for the month.

The coincident index, which is viewed as a measure of the current economic activity, was unchanged in September for the second consecutive month while the lagging index edged down by 0.3 percent after declining by 0.1 percent in August.

An economist at the Conference Board, Ken Goldstein commented on the report saying, “With the sixth consecutive increase, the LEI’s six-month growth rate has improved to its highest pace since 1983.” He furthered that, “Except for average workweek and building permits, all the leading indicators contributed positively to the index this month. At the same time, the contraction in the coincident economic index has halted in recent months, but the continued downtrend in employment is keeping this index of current economic conditions from rising faster.”

Weekly Jobless Claims rise.

A release by the U.S. Labor Department showed that weekly U.S. jobless claims increased in the week that ended on October 17th. New jobless claims grew to a total of 531,000 unemployed workers, an increase over the prior week by 11,000 workers. A 4-week moving average of unemployed workers fell by 750 workers from the prior week to a total of 532,250.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending October 10th decreased by 98,000 workers to a total of 5,923,000 unemployed workers. A four week moving average of continuing claims declined by 59,250 to 6,030,750.

US Dollar higher in Forex Trading today.

The U.S. dollar has been trading higher today against the other major currencies in the spot forex market.  The dollar has been stronger versus the euro, British pound, Australian dollar, Canadian dollar, Swiss franc, New Zealand dollar and the Japanese yen in the afternoon of the U.S. session at 12:46pm according to currency data by Oanda.

Meanwhile, the U.S. stock markets have been mixed in trading today with the Dow Jones having gained by over 70 points and surpassing the 10,000 level while the Nasdaq has been down slightly by over 3 points.  The S&P500 has gained almost 3 points to trade around the 1,084.32 level at time of writing.  Gold has declined today by approximately $10.50 to trading around the $1,053.20 per ounce level while oil has edged down by $1.15 to trade at $80.22 per barrel.

EUR/USD Daily Chart – The Euro has been falling slightly today versus the US Dollar in forex trading. The EUR/USD reached its highest level of the year yesterday above 1.5040 level and today the bulls and bears are battling it out right around the psychological 1.5000 level.

By Fast Brokers – Gold continues to consolidate around the psychological $1500/oz level while setting lower highs and higher lows.  This pattern tells us there is a wedge forming, which is why we installed a downtrend line.  Gold’s sideways movement reflects investor indecisiveness in terms of whether to keep the risk rally rolling.  Analysts and bankers are barking from both sides as doubt creeps back into the broader market.  However, Q3 earnings are beating expectations and although econ data has been negatively mixed, it’s solid nonetheless.  Meanwhile, the Fed’s Beige Book shows the central bank is not even close to tightening liquidity, meaning Dollar’s near-term downward trajectory is intact.  However, the ECB is getting antsy and may opt to take some dovish action should the EUR/USD breakout to the topside again.  On the other hand, actions speak louder than words, and overall central banks continue to gravitate towards a more hawkish monetary stance.  This is good news for gold’s near to medium-term outlook since the precious metal is negatively correlated with the Dollar.

All eyes will be on the EUR/USD’s interaction with 1.50 and the Cable’s ability to separate itself further from 1.65.  We recognize consolidation in the AUD/USD and technicals continue to favor the topside in all of these currency pairs.  Therefore, gold’s present consolidation is not necessarily a bad thing since the process develops a new support base should investors decide to extend the precious metal’s rally towards $1100/oz.  The EU will be releasing a wave of PMI numbers tomorrow to go along with Britain’s Prelim GDP and America’s Existing Home Sales data.  Therefore, gold and the FX markets could experience heightened volatility as the week comes to a close.

Technically speaking, gold faces topside barriers in the form of our downtrend line along with 10/21, 10/20, and 10/14 highs.  As for the downside, gold has our 1st and 2nd tier uptrend lines serving as technical cushions along with 10/21 and 10/16 lows.  Additionally, the psychological $1500/oz level should continue to play a lead role as long as it’s in the picture.

Present Price: $1055.85/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.