Month: November 2009

Source: ForexYard

The U.S Dollar bounced off a 15-month low yesterday and the EUR dipped below $1.50 as investors paused to assess whether the global outlook justifies a recent rally in higher-yielding currencies and assets. The British Pound in particular struggled on Tuesday after Fitch ratings agency told Reuters that Britain was the major economy most at risk of losing its top AAA credit rating.

Economic News

USD – Dollar Recovers modestly off 15-mth Lows

The U.S Dollar edged up on Tuesday, reversing some of its recent losses but staying close to a 15-month low against a currency basket, as concerns over the UK’s sovereign rating prompted some demand for the safe haven of the U.S. unit.

The Dollar may extend its advance from a 15-month low against the currencies of major U.S. trading partners on speculation waning demand for riskier assets will force investors to exit bets against the greenback. The USD gained 0.1% to $1.4980 per EUR yesterday. It touched $1.4626 on Nov. 3, the strongest level in almost a month.

Analysts said investors lacked any catalyst to take the U.S Dollar much lower after its recent sharp falls, but added that the trend towards Dollar weakness remained in place.
Expectations that U.S. interest rates will stay near zero well into next year have encouraged investors to use the U.S Dollar to fund carry trades in higher-yielding assets, particularly when equity markets rally.

EUR – The Euro Rises vs. Pound on Stocks

The EUR advanced against the British Pound as European stocks rebounded and Fitch Ratings said the U.K.’s credit rating is most at risk among top-rated nations. The EUR traded at 89.86 U.K. pence, from 89.49 pence yesterday. The single European currency, which fell against the Yen and the U.S Dollar after a report showed German investor confidence declined in November by more than economists estimated, erased losses as stocks rise.

The GBP dropped against all but one of the 16 major currencies, after a warning on the UK from ratings agency Fitch. The currency sold off sharply during the European session after David Riley, Fitch Ratings’ co-head of global sovereign ratings, said in an interview Tuesday that the U.K. has the highest risk of major economies of losing its AAA status.

The Sterling slipped as far as $1.67 well below a 3 month high of $1.6844 reached on Monday. Despite the Pound’s recent strength, and also the relatively positive rate decision, the British economy is still in trouble, and the bearish sentiment may hold on.

JPY – Yen Extends Gains vs. U.S Dollar

The Japanese Yen gained broadly after the orders for Japanese machinery report rose more than twice the pace economists estimated, signaling that a recovery in the world’s second-largest economy may be sustained. The Yen climbed to 89.61 per Dollar from 89.76 before the report was published, building on the currency’s 7% advance in the past three months.

Reports today showed the recovery in China, Japan’s largest market, is gathering steam providing more support for the Yen. Also figuring in the foreign-exchange action, Japan’s current-account surplus unexpectedly rose 0.2% in September compared to the same month last year, government data showed.

Crude Oil – Oil Trades near $79 After Falling on Stockpiles

Crude Oil prices briefly traded above $80 a barrel Tuesday, but turned lower as U.S. stocks fell and the Dollar strengthened, pressuring Dollar denominated Oil prices. Oil sank further in late trading, slipping below $79 a barrel, after the American Petroleum Institute said U.S. Crude Oil stocks rose more than anticipated.

Oil declined 0.5% yesterday after the American Petroleum Institute said Crude inventories increased 1.22 million barrels last week to 337.5 million. The U.S. government will report supply figures tomorrow. The weekly EIA inventory report will be released a day late on Thursday due to the U.S. Veteran’s Day holiday.

Technical News

EUR/USD

A bearish cross is evident on the daily Slow Stochastic, as well as the 4 hour MACD with the pair’s RSI floating in neutral territory. Going short on the day with tight stops may be advised.

GBP/USD

The pair is currently range trading with most indicators floating in neutral territory. The daily chart, however, shows a fresh bearish cross on the Slow Stochastic with the RSI floating in the over bought territory. Going short with tight stops may be advised for the day.

USD/JPY

A fresh bullish cross is evident on the hourly and 2 hour Slow Stochastic. A breach of the lower Bollinger Band is evident on the 2 hour chart. Furthermore, the RSI is floating in the oversold territory on the hourly and 4 hour charts. Going long on the day may be a good choice.

USD/CHF

A fresh bullish cross is forming on the hourly and 4 hour MACD. A bullish cross is also evident on the daily Slow Stochastic. Going long for today might be a good strategy.

The Wild Card – USD/MXN

After it recent bearish streak a correction may be imminent. A fresh bullish cross is evident on the hourly and 2 hour Slow Stochastic with the RSI floating in the oversold territory on the hourly and 4 hour charts. Forex traders have an opportunity to take advantage of the impending correction.

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

Australia’s Westpac Consumer Sentiment came out worse than expected at -2.5%

New Zealands IBD/TIPP Economic Optimism fell to 47.90

Europe

Germany’s CPI figure came out as expected at 0.1%

France and Italy’s industrial production fell by -1.5 and -5.3%, respectively

Englands DCLG House Price Index showed minor improvement and came out at -4.1%

Americas

ABC/Wahsington Post Consumer Confidence came out worse than expected at -46.00

Equities

It was a quiet day on Wall Street yesterday as the major indices bounced back and forth across their opening market.  Even though the indices received a boost at the start of the session, backed by Monday’s extreme intraday rally, they quickly lost their steam going forward. Furthermore, minor strength from the Dollar yesterday, sent stocks back to their starting mark as investors remained cautious going forward.

From a technical point of view, one must note that even though the Dow Jones has now broken its prior high, the S&P500 and Nasdaq are still trading around their previous peaks. The Dow finished the session with a gain of 0.2%, while the S&P closed in negative territory, with a loss of 0.14%.

According to the monthly blue chip survey, economists are still optimistic and reckon that the U.S economy is now on a healthy path back to economic growth. According to the survey the economic growth should increase by 2.7%, but unemployment will drag along and decrease at a very slow rate. Approximately 52% of the economists speculated that unemployment will decrease to 7%, only in 2013.

Financials lagged for most of the session, but failed to present a major drop due to AIG. According to Bloomberg, Moody’s said that the insurer will be able to repay most, or all of Treasury’s investment, if the financial markets continue to show stability.

The lagging sector of the day was the Industrial sector, finishing with a loss of -0.58%

Forex

On the Forex market, the Dollar index presented relative gains and closed the session just under the 75 mark. Even though most of the currency pairs finished the day with a minor change, the intraday session was a volatile one.

The GBP/USD dropped after forming a breakout on Monday, but regained its strength throughout the second half of the day. The dramatic move came after an official from Fitch Ratings stated that the U.K could be the first major economy to lose its AAA status. Even though recent economic data in England are showing a slight improvement, recent actions by the BOE shows that the U.K is still in dire straits. One must note that at the BOE’s last rate decision, officials decided to pump further Pounds into the system to further help the economy. If the labor conditions in the U.K don’t start to improve along with healthy economic growth, the Pound could lose its appealing status as a “risk appetite” currency.

From a technical point of view, the GBP/USD is now trading above its recent break out of $1.6667. Even though this pair is showing minor weakness, a move higher could send this pair to its prior false- break high of $1.7.

EUR/USD and the AUD/USD both held on to relative strength as the day progressed. The AUD/USD caught most investor’s attention as the pair finished the session around $0.9327. Similar to the equity market the AUD/USD is trading around its prior high. When taking a glance the chart below one can see that this pair is trading around a critical level, especially as a drop could turn this pattern into a double top scenario. A break above current levels will confirm the continuation of the trend. One must note that the RSI is currently showing negative divergence.

Ahead

Similar to yesterday’s trading day, the U.S won’t be releasing any major market moving data. During morning hours, most of the data will come from England, releasing their unemployment rate and BOE inflation report, among others. During U.S hours New Zealand and Australia will both be releasing results including unemployment figures and Retail Sales. All unemployment numbers are expected to rise with the U.K expected to release an 8% figure and Australia expected to come out with a number of 5.8%.

Daily Forex 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 retraced to $1100/oz following yesterday’s break above as investors snap up the Dollar in reaction to overbought conditions and disappointing econ data points from both Britain and the EU.  Meanwhile, the S&P futures are staring at their own psychological 1100 level along with previous 2009 highs.  Therefore, today’s consolidation appears healthy thus far as investors take a breather in anticipation of tonight’s wave of econ data from China.  China will release Industrial Production, CPI, CPI, and Fixed Asset Investments.  Investors will likely be paying particularly close attention to China’s econ data since the nation’s economy has been an engine in the global recovery.  An outperformance in China’s data could give the risk trades a nice boost, whereas a cool down could result in further Dollar strength.  Therefore, strong econ data out of China could help gold separate itself from $1100/oz despite today’s retracement.  On the other hand, disappointing China data could lead investors to close out some risk trades as well as take profits in gold.

Technically speaking, we’re still unable to place any sort of reliable downtrend line on gold due to a lack of historical perspective.  Therefore, gold’s key barrier to further topside gains appears to rest in the hands of the psychological $1100/oz level.  As for the downside, gold several uptrend lines serving as technical cushions along with 11/06 lows.  Meanwhile, investors should keep an eye on the EUR/USD’s battle with 1.50.  Gold has been strongly correlated with the EUR/USD.  Therefore, any significant breakout in the currency pair could help drive gold higher.

Present Price: $1101.85/oz

Resistances: $1105.32/oz, $1108.20/oz, $1110.59/oz

Supports: $1100.97/oz, $1097.65/oz, $1094.78/oz, $1091.43/oz, $1087.59/oz

Psychological: $1100/oz, $1075/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 Robert Folsom – The following text is courtesy of Elliott Wave International. Until Nov. 11, EWI is allowing non-subscribers to download their latest market analysis and forecasts for free, including Robert Prechter’s latest Elliott Wave Theorist and Steve Hochberg’s and Pete Kendall’s latest Elliott Wave Financial Forecast. Learn more about FreeWeek, and download your free reports here.
…

By Robert Folsom, Senior Writer for Elliott Wave International

As you read and look at this page, please know that the chart is the star of the show. My description will add only a few details.

The chart published less than two weeks ago in Bob Prechter’s Elliott Wave Theorist. The rectangular box is plain to see: It envelopes the huge S&P 500 rally that began last March — a gain of 61.5% and 430 points, as of Oct. 18.

But there’s a two-part truth to the rally — and that is what the box really shows.

Part one shows the “wall of worry” — basically March through August. That’s when the media and experts were overwhelmingly negative about stocks. They were surprised by the rally. Remember?

Part two shows the more recent time of “euphoria” — basically September and October. The media and experts turned positive. The market was all about “green shoots” and “recovery.”

You see when most of the rally unfolded. Six months of serious worry produces a 373-point climb, whereas “two months of euphoria produces only 57 S&P points.”

Now, the two-part truth about this rally is an easy story to tell. It’s literally a few lines and notations on a price chart. Yet have you seen or read ANYTHING like this in the past two weeks? Has anyone else pointed out that over the past two months, the stock market “rally” has in fact slowed to a crawl?

As you looked at the chart, perhaps you noticed that the decline, which began in 2007, and in turn the recent rally, are both on a similarly large scale. The full version of this chart shows how important that “similarity of scale” really is (Elliott labels were excluded in consideration of Theorist subscribers).

Price action in the stock market this week has only strengthened the analysis in Bob Prechter’s October Theorist issue.

What’s more, you can read the very latest forecasts in the just-published November issue of the Elliott Wave Financial Forecast — both publications (plus the tri-weekly Short Term Update) are yours for free — only during FreeWeek (now through Nov. 11).

Learn more about FreeWeek, and download the November Theorist for more about the above chart.

By Fast Brokers – The Cable has pulled back from yesterday’s highs after Britan’s Trade Balance came in much weaker than expected (-7.2 bill. Vs -6.1 bill forecast).  The Trade Balance number is a bit disappointing since it works against the recovery we’ve witnessed since January lows.  Furthermore, the rising trade deficit is concerning considering the recent improvement in Britain’s manufacturing production data.  Therefore, this implies that the cause for the rising trade deficit may be more of a symptom of rising imports rather than declining exports.  Either way, the combination of disappointing Trade Balance data along with broad-based strength in the Dollar has been enough to knock the Cable back below our 4th tier downtrend line.  On the other hand, the Cable has avoided a retest of 1.65, and the technicals appear to be working in favor of a near-term uptrend.  As a result, investors shouldn’t become too discouraged by today’s pullback.

Meanwhile, the EUR/USD is battling 1.50 while the S&P futures and gold battle their respective 1100 levels.  Furthermore, the USD/JPY continues to hover around its psychological 90 area.  Therefore, consolidation is the risk trade appears to be a sign of healthy hesitation in the wake of large gains and the face of important psychologicals.  Although the news wire should be pretty quiet in the U.S. today, activity in the FX markets could pick-up later when China releases a wave of economic data late Tuesday EST.   China will release Industrial Production, CPI, CPI, and Fixed Asset Investments.  Investors will likely be paying particularly close attention to China’s econ data since the nation’s economy has been an engine in the global recovery.  An outperformance in China’s data could give the risk trades a nice boost, whereas a cool down could result in further Dollar strength.  Britain will also keep its news flowing with the release of CCC data tomorrow morning along with the BoE inflation report.  BoE Governor King will address the general public as well and investors will be looking for hints of the BoE’s present monetary stance.

Technically speaking, the Cable faces topside technicals in the form of our 4th tier downtrend line, 11/09 highs, and the psychological 1.70 level.  As for the downside, the GBP/USD still has several uptrend lines serving as technical cushions along with 11/06 lows and the psychological 1.65 level.

Present Price: 1.6704

Resistances: 1.6714, 1.6730, 1.6761, 1.6797, 1.6812, 1.6838

Supports: 1.6688, 1.6662, 1.6615, 1.6598, 1.6574, 1.6530

Psychological: 1.70, 1.65, August Highs

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 pulling back from 1.50 and our important 2nd and 3rd tier downtrend lines as we witness a consolidation of the risk trade across the marketplace.  Investors are hesitating at significant levels in both the EUR/USD and the S&P futures as they approach their highly psychological 1.50 and 1100 levels, respectively.  Furthermore, we are witnessing a retracement in gold towards its own psychological $1100/oz level.  Such consolidation is healthy considering the relative lack of economic news along with the significance of these psychological levels in terms of future trends.  Although the news wire has been somewhat quiet so far today, the EU did release its ZEW Economic Confidence data.  The ZEW numbers printed roughly 10% below consensus estimates, deflating optimism generated from Germany’s positive Industrial Production release yesterday.  Although the ZEW data is continuing its decline from September highs, the slope is gradual and could be part of a healthy pullback.  Therefore, it may be too early to jump to any conclusions based off of this one data release.  Regardless, investors didn’t get the stream of positive data they were looking for, halting the EUR/USD ascent towards October highs.

Speaking of technicals, our 2nd and 3rd downtrend lines are still intact despite yesterday’s impressive rally.  These downtrends should be considered heavily-weighted since their run through October highs.  Therefore, a solid movement above these two trend lines could yield a nice near-term pop.  Meanwhile, the 1.50 level continues to play a lead role as far as resistance is concerned.  As for the downside, the EUR/USD still has multiple uptrend lines serving as technical cushions along with 11/09 and 11/06 lows.  Therefore, the EUR/USD has a solid support system in place.

Despite today’s calm thus far, activity could heat up late Tuesday EST with the release of key China econ data.  China will release Industrial Production, CPI, CPI, and Fixed Asset Investments.  Investors will likely be paying particularly close attention to China’s econ data since the nation’s economy has been an engine in the global recovery.  An outperformance in China’s data could give the risk trades a nice boost, whereas a cool down could result in further Dollar strength.

Present Price: 1.4956

Resistances: 1.4966, 1.4981, 1.4999, 1.5019, 1.5037, 1.5049

Supports: 1.4947, 1.4923, 1.4905, 1.4887, 1.4873, 1.4856

Psychological: 1.50, October Highs

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 Adam Hewison – The Dow jumped to new highs for the year, extending its gains from the lows seen in March.

What does this mean for the future?

The Dow is now within 100 points of being into thin air as it has retraced close to 50% of its down move. The NASDAQ has already done this, and the S&P 500 has come very close to achieving this goal. Clearly the trend continues to be positive for the Dow with today’s new highs. The other two indices, while closing very well and on an upbeat note, must clear their previous highs to start another push to the upside. It remains to be seen whether or not that will take place.

Clearly this is an emotional market that’s been driven more by sentiment then hard economic news.

Having said that, one must take into consideration the perception of the marketplace, and as of right now that perception continues to be friendly towards the long side of these markets.

In my new video I show you some of the key points to look at in terms of where these markets could potentially break down, and possibly reverse to the downside.

Watch the New Dow Video Here for Free…

All the best,

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

By Greg Holden – Following last week’s employment data from the United States it appears as if the US Dollar has entered a free-fall and many other global currencies are reaping the benefits. The Scandinavian currencies have largely entered bullish trends against the greenback, but also surprisingly against the EUR.

While some analysts were concerned about a swift Swedish recovery due to the Baltic crisis, most countries in the northerly region have seen strong and steady growth. Norway’s economy has benefited largely from climbing Crude Oil prices and Denmark’s debate about entry into the EU’s legal regulations has helped its economy find direction.

The NOK, SEK and DKK have all climbed to 2-week highs versus the USD, as well as a near-2-week high against the EUR. Following Norway’s decision to hike interest rates recently, the region appears to be on the receiving end of recent risk appetite. If this continues, Scandinavia may find itself leading the broader region out of this economic downturn.

Technical Analysis

– The chart below is the 2-hour EUR/SEK chart by ForexYard.

– The indicators used are the Relative Strength Index (RSI) and the Stochastic (slow).

– Point 1: The RSI shows that this pair is currently over-sold and experiencing upward pressure.

– Point 2: The Stochastic (slow) shows a deep bullish cross followed by an upward cascading price movement. This suggests that there is momentum behind the current upward correction.

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.

By Yan Peters – Looking at the EUR/CAD 4-hour chart, it appears that the uptrend may have reached its peak at the 1.6000 level. The chart provides several signals for a trend reversal, and an opportunity to open a short position might be getting closer.

• The chart below is the EUR/CAD 4-hour chart by ForexYard.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD/OsMA and the Relative Strength Index (RSI).
• It can be noted that the pair had several failed attempts to test the 1.6000 level in the past month.
• A sequence of bearish crosses can also be observed in the Slow Stochastic, indicating that the bullish momentum might have reached its end.
• The MACD is also providing a bearish cross at the moment. If a sharp drop will be followed, the pair is likely to go in the same direction.
• The RSI has recently reached above the 70 line, in what is known as the Over-Bought zone. The RSI then dropped back down, signaling a trend reversal.
• There appears to be two significant support levels on the chart. The nearest one is located at the 1.5765 level. If the pair will breach through this level, it is likely to reach the next one which is located at the 1.5650 level.

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 Dollar is expected to be the driver of the forex market today. This is following yesterday’s bearish session for the U.S. currency. Traders will be very mush focused on Federal Reserve Bank of Atlanta President and key Federal Reserve FOMC (Federal Open Market Committee) member Dennis Lockart’s speech at 14:15 GMT, and the IBD/TIPP Economic Optimism release at 15:00 GMT. It is encouraged that you traders open big positions in the USD now.

Economic News

USD – Dollar Falls on Higher Risk Appetite

The Dollar fell dramatically on Monday against a basket of currencies on higher risk appetite. This included slipping to a 3-month low vs. the GBP. The greenback’s weakness was due to forecasts that U.S. Interest Rates will be low for the foreseeable future. The other factor playing on optimism yesterday was the recent G20 Meeting in St. Andrews on the weekend in which it was discussed that the global stimulus will only be withdrawn when a solid economic recovery is maintained. This led to an equity market rally in the U.S, which therefore pushed traders to sell-off the USD as the trading day dragged on.

The Dollar finished trading against the GBP lower at the 1.6750 level. This was despite hitting a 3-month low of 1.6842. The USD also lost considerable ground against the European currency in yesterday’s trading. The EUR/USD cross closed higher by 40 pips at the 1.4978 level. However, the pair did hit as high as 1.5018 on Monday. The USD/CAD lost considerable ground, as it sunk by 100 pips to the 1.0580 level. The greenback also went bearish against both the Yen and the Swiss Franc.

Looking ahead to today’s trading, we have many exciting events. The most significant publication from the U.S. will be the IBD/TIPP Economic Optimism at 15:00 GMT. Also significant will be Federal Reserve Bank of Atlanta President and key Federal Reserve FOMC (Federal Open Market Committee) member Dennis Lockart’s speech at 14:15 GMT. Traders will be very much focused on these 2 events, as they are set to be the primary determinants in the USD’s strength on Tuesday. It is encouraged that you open big positions in the EUR/USD, AUD/USD, GBP/USD and USD/JPY crosses now.

EUR – Pound Climbs to 3-Month High vs. Dollar

The British Pound climbed to a 3-month high vs. the Dollar in Monday’s trading. This came about as the British stock market rose for a 4th consecutive day. Both of these factors were driven by the weakness of the USD and the initial equity market rally on Wall Street. With regards to the EUR, it soared against the Dollar, due to Optimistic German industrial Production data on Monday. The strong EUR is a concern for the Euro-Zone, as it hurts the region’s exports to trading partners, such as the U.S. and China.

The EUR/USD cross went bullish in yesterday’s trading, as the pair rose by 40 pips to the 1.4978 level. The Pound rose to as high as the 1.6842 mark vs. the USD, as traders were very bullish on the Pound yesterday. However, the pair closed at around the 1.6750 level. Looking at the EUR/GBP cross, it rose only 7 pips, as both the British and Euro-Zone currencies were strong yesterday. It will be difficult for the Euro-Zone policy makers to weaken the EUR, due to choosing a tight monetary policy from the beginning of the financial crisis.

Tuesday’s trading offers promising opportunities with regards to both the EUR and GBP’s. The main releases that are set to be published from Britain are the Trade Balance at 09:30 GMT and the CB Leading Index at 10:00 GMT. From the Euro-Zone, the French Industrial Production will be published at 07:45 GMT and the German ZEW Economic Sentiment will be released at 10:00 GMT. These publications are set to be crucial in determining the strength of the GBP and EUR crosses, as mid-week trading approaches.

JPY – Yen Goes Volatile against the Majors

The Japanese Yen went extremely volatile against its major currency pairs yesterday. The Yen closed 15 pips higher vs. the USD at the 89.95 level. This was despite the pair trading significantly lower throughout much of Monday’s trading. The GBP/JPY and EUR/JPY moved a lot in yesterday’s trading. However, both of these pairs finished trading virtually unchanged from yesterday’s opening.

Last night, the Japanese economy released some important data. This included both the Current Account and the M2 Money Stock. The former was worse than forecast, and the latter was better than forecast. Results such as these explain the mixed feelings of traders towards the JPY. The most important release that investors need to follow from Japan later today is the Core Machinery Orders at 23:50 GMT.
Crude Oil – Oil Jumps on Weak Dollar

Crude Oil climbed for a second consecutive day, as the Dollar continued to tumble. This behavior was initiated by the weekend’s G20 meeting in which it was agreed that the financial stimulus will only be withdrawn once we see a solid recovery. Also, the U.S. signaled that Interest Rates will be kept low for the foreseeable future. All this led to a U.S. equity rally, and traders dropped the USD and bought-up Crude Oil.

Crude finally closed higher at $79.08, as investors attempted to use the black gold as a hedge against inflation. This comes as the Dollar continues to show much weakness. As today’s trading commences, Oil will continue to be the most traded commodity. In addition, Crude prices will continue to be highly correlated with the USD. Therefore, open your positions in Crude whilst trading volume is still low.

Technical News

EUR/USD

There is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the 4-hour charts also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.6620 level. The daily chart’s Slow Stochastic is showing a bearish cross suggesting that downwards correction might take place in the nearest time frame. Going short with tight stops might be a wise choice.

USD/JPY

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

USD/CHF

The 4-hour chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, a bullish cross forming on the daily chart’s Slow Stochastic implies that upwards correction might take place in the nearest time frame. Going long with tight stops appears to be preferable strategy.

The Wild Card – Gold

Gold sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

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.