Month: November 2009

By Fast Brokers – Volatility has picked up more than investors may have expected with a holiday shortened week in the U.S.  The Cable has dropped to the 1.63 area after sinking below our previous 2nd tier uptrend line.  However, the Cable is presently finding some support at previous November lows as U.S. markets come back online and investors digest the concerning news emanating from Dubai.  As most investors know by now, Dubai World is requesting a debt restructuring of what could be up to $80 billion of credit.  Although actual losses incurred are presently unknown, some European and UK banks could have considerable exposure.  This week’s news concerning Dubai’s debt has shocked FX and equity markets as investors worry that the development may indicate forthcoming problems from other emerging economies.  As a result, Asian markets have been under intense selling pressure, and European/U.S. equities look set to open sharply lower.  Meanwhile, the FX markets are experiencing a broad based appreciation of the Dollar and Yen as gold crashes back below $1150/oz.

As for the Cable, the Pound has been hit a bit harder than the Euro since Sterling was already being weakened by cautious comments from BoE Governor King earlier this week.  King explained that considerable obstacles remain on the path to recovery and the use of further alternative liquidity measures aren’t out of the question.  However, this week’s economic data wasn’t so bad, meaning the risk trades could hold their more important technical supports ahead of Monday’s data releases.  Although early Monday will be relatively quiet data wise, activity will pick up in the evening session as China releases its Manufacturing PMI data along with a monetary policy decision from the RBA.  Britain will follow with HPI and its own Manufacturing PMI data on Tuesday.  That being said, a string of positive economic releases could restrain a bit of the investor uncertainty stemming from Dubai’s debt issue and allow the Cable to hold its more important technical supports.

Technically speaking, the Cable’s more critical technical levels seem to be previous November lows along with our 1st tier uptrend line.  Our 1st tier uptrend line runs through October lows, meaning a failure of our 1st tier could potential result in a retracement towards the 1.57 area.  However, before we get ahead of ourselves, we will have to see how November lows and our 2nd tier uptrend line hold up should they be tested.  As for the topside, the Cable faces multiple downtrend lines along with the psychological 1.65 level.  Hence, there are quite a few near-term topside obstacles, and the immediate-term goal for bulls will likely be stabilization and to create a new bottom to build a base from.

Present Price: 1.6326

Resistances: 1.6341, 1.6374, 1.6395, 1.6427, 1.6457, 1.6489, 1.6532

Supports: 1.6301, 1.6285, 1.6257, 1.6242, 1.6212, 1.6183, 1.6153

Psychological: 1.65, November Lows

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 tumbling towards 11/20 lows after breaking through October lows and surging towards 1.5140.  Today’s whipsaw movement comes in reaction to a broad-based exit from the risk trade in reaction to news from Dubai.  As most investors know by now, Dubai World is requesting a debt restructuring of what could be up to $80 billion of credit.  Although actual losses incurred are presently unknown, some European and UK banks could have considerable exposure.  This week’s news concerning Dubai’s debt has shocked FX and equity markets as investors worry that the development may indicate forthcoming problems from other emerging economies.  As a result, Asian markets have been under intense selling pressure, and European/U.S. equities look set to open sharply lower.  Meanwhile, the FX markets are experiencing a broad based appreciation of the Dollar and Yen as gold crashes back below $1150/oz.  Hence, it seems short-sellers have finally received the psychological trigger they were waiting for to unwind the bull-run in the risk trade.  The question now becomes whether equities and currencies can stabilize before heading below more meaningful technical levels.

As for the EUR/USD, the Euro’s present relative strength is helping the currency pair to hold up above 11/20 lows along with our 1st and 2nd tier uptrend lines.  Wednesday’s surge past October lows was a very bullish move, allowing the EUR/USD to weather today’s storm thus far.  As a result, both the EUR/GBP and EUR/AUD are performing rather well.  However, the EUR/USD may be forced to follow suit should equities and other major Dollar crosses continue their downward movements.  That being said, investors should keep an eye out for our 1st tier uptrend line should it be tested.  Our 1st tier runs through November lows.  Hence, a movement below the 1st tier may indicate a more protracted pullback towards the 1.460 area.  As for the topside, the EUR/USD faces multiple downtrend lines once again along with the psychological 1.50 level.

Meanwhile, it will be interesting to see whether the S&P futures can recover some of their pre-market losses as investors digest the Dubai news along with Thanksgiving turkey.  Despite the investor uncertainty spreading throughout the community at the moment, the ultimate sustainability of Dollar weakness and equity strength could likely rely upon next week’s econ data along with the RBA’s meeting late Monday EST and the ECB’s central bank meeting on Thursday.  Hence, the EUR/USD may be able to hold above 11/20 lows and our 1st tier uptrend line as investors await a confirmation from econ data and central bank policies.

Present Price: 1.4854

Resistances: 1.4860, 1.4886, 1.4904, 1.4920, 1.4946, 1.4970, 1.4999

Supports: 1.4843, 1.4826, 1.4808, 1.4797, 1.4771, 1.4754, 1.4723

Psychological: 1.50, November Highs and Lows

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 Rita Ruvinski – The European currency declined sharply in holiday-thinned trade on Thursday as renewed risk aversion prompted investors to shed riskier assets. The EUR hovered near the day’s low of $1.4960 down 1.1% on the day. The currency also hit a near 2-month low against the Japanese yen at 129.52 yen.

The EUR extended losses as ratings agency Standard & Poor’s put the credit ratings of four Dubai banks on negative outlook and stock market losses reached 3%. The negative outlook for the banks is due to their exposure to Dubai World, which is seeking a debt standstill. The Dubai World story has weighed heavily on stocks all day, prompting traders to cut back their dollar-funded positions.

The British pound trimmed early losses but remained 1.4% lower versus the U.S dollar at $1.64. The Sterling also slid 0.4% vs. the EUR to 90.93 pence. Concerns about U.K. bank exposure to Dubai weighed on the Pound, analysts said. There are concerns with regard to the extent of the U.K. banking sector exposure in Dubai so that is weighing on sterling. The underlying picture for Sterling was already fundamentally weak and this news adds further to the bearish sentiment.

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

Fears of a potential default in Dubai sent shock waves through financial markets Thursday, weighing on European and Asian equities and pulling the U.S. Dollar off of recent lows as investors sought out safe havens. Analysts said Dubai’s woes were a blow to sentiment, serving as a reminder that potential trouble spots remain in the world economy.

Economic News

USD – Dollar Rebounds From 14-year Low vs. Yen

The U.S. Dollar rebounded versus most major rivals Thursday, benefiting from safe-haven flows amid fears of a potential sovereign debt default by Dubai. Dubai’s shock move on Wednesday to restructure its biggest corporate debtor, Dubai World, and delay repayment on some of the company’s $59 billion in liabilities, dented risk appetite across asset markets on Thursday, to the U.S Dollar’s benefit.

On Thursday, the greenback headed for its worst month since December against the Japanese Yen, before a report next week that economists say will show U.S. business activity has declined, supporting the case for the Federal Reserve to keep borrowing costs near zero. The U.S. currency traded at $1.4945 per EUR from $1.5019 yesterday.

However the Dollar edged up from its lows against the Yen in early trading Friday as renewed risk aversion prompted investors to shed riskier assets, giving pause to broad Dollar selling. Market players also refrained from re-testing lows on the Dollar as trade thinned for the U.S. Thanksgiving holiday.

However the Dollar-bearish sentiment remained intact on views U.S. interest rates would stay low for some time and on pressure for the Dollar to weaken to correct the U.S.’ imbalances.

EUR – Euro Falls 1% below $1.5 as Stocks Stumble

The European currency declined sharply in holiday-thinned trade on Thursday as renewed risk aversion prompted investors to shed riskier assets. The EUR hovered near the day’s low of $1.4960 down 1.1% for the day. The currency also hit a near 2-month low against the Japanese Yen at 129.52 yen.

The EUR extended losses as ratings agency Standard & Poor’s put the credit ratings of four Dubai banks on negative outlook and stock market losses reached 3%. The negative outlook for the banks is due to their exposure to Dubai World, which is seeking a debt standstill. The Dubai World story has weighed heavily on stocks all day, prompting traders to cut back their dollar-funded positions.

The British Pound trimmed early losses but remained 1.4% lower versus the U.S dollar at $1.64. The Sterling also slid 0.4% vs. the EUR to 90.93 pence. Concerns about U.K. bank exposure to Dubai weighed on the Pound, analysts said. There are concerns with regard to the extent of the U.K. banking sector exposure in Dubai which is weighing on Sterling. The underlying picture for Sterling was already fundamentally weak and this news further adds to the bearish sentiment.

JPY – Yen Advances vs. the U.S Dollar on Risk Aversion

The Japanese Yen strengthened to a 14-year high against the U.S Dollar, rising past 85.00 to the greenback on speculation renewed risk aversion will enhance the allure of the Japanese currency as a refuge.

The Yen climbed as high as 85.83 per Dollar, the strongest since July 1995, before trading at 85.20 from 86.59 yesterday. The currency advanced to 128.87 per EUR from 130.03, after hitting 126.91, the highest since April 29.

Japan’s currency did pare some of its earlier gains after Japan’s Finance Minister told reporters in Tokyo he will contact authorities in the U.S. and Europe about currencies if necessary. Shizuka Kamei, Japan’s financial services minister, also urged an international response to halt the rise in the country’s currency. The market showed paid attention to the warning from the government today and bought back the USD. However the impact of verbal intervention may not last long unless the government takes actual action analysts said.

Oil – Crude Oil Slips to a Low Near $76

Crude oil traded below $76 Friday, poised for a weekly decline on concern that the pace of fuel demand recovery in the U.S., the biggest energy- consuming nation, may stall. Prices fell as the U.S dollar strengthened against the EUR after Dubai’s attempt to reschedule debt spurred investors to seek the safety of assets perceived as lower risk. A stronger Dollar reduces the investment appeal of commodities.

According to analysts there seems to be anxiety across the markets, commodities and equities, stemming from concerns over Dubai’s possible default on debt. The markets are weighing what the implications of Dubai’s debt will be on the global economic recovery, they said.

Crude has remained locked in a tight range for most of this month with gains capped by weak fundamentals and a generally weak U.S. dollar curbing losses. Over the past 28 trading days oil has been bounded between $74.50 a barrel and $78 a barrel, and could spend most of the remaining days of this year within a somewhat broader $75-$82-a-barrel range.

Technical News

EUR/USD

The EUR/USD went increasingly bearish yesterday, and currently stands at the 1.4920 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 4-hour chart’s Stochastic Slow signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

GBP/USD

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

USD/JPY

The cross has been dropping significantly for the past week now, as it now stands at the 86.10 level. The RSI of the daily chart is already in the oversold territory, indicating that an upward correction is imminent. This view is also supported by the RSI of the 4-hour chart. Going long with tight stops may turn out to be the right choice today.

USD/CHF

The daily chart is showing mixed signals with its RSI fluctuating in neutral territory. However, there is a fresh bearish cross forming on the 4- hour chart’s Slow Stochastic indicating a bearish correction might take place in the near future. When the downward breach occurs, going short with tight stops may be the correct strategy.

The Wild Card – Crude Oil

Oil prices are once again dropping, and a barrel of oil is currently traded at around $75.25. Now the RSI on the 4-hour chart are giving bullish signals, 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

*New Zealand Trade Balance worse than expected at -487M

*Japanese Jobless Rate Better than forecasted at 5.1%

*Japanese Tokyo CPI slightly below expectations at –2.2%

*Japanese National CPI worse than estimated at -2.5%

*Japan’s Overall Household Spending better than expected at 1.6%

Europe

*German CPI beats market’s expectations at 0.3%

*UK CBI Retail Sales Index better than expected at 13

Americas

*US – Thanksgiving Day

The Overall Sentiment

Equities

Markets tend to stay calm when Wall Street is closed for holidays but that wasn’t the case this Thursday. Stock markets plummeted around the world on worrying news about Dubai’s state investment company, Dubai World, which is believed to have debts of nearly $60 billion and has asked its creditors to postpone their payment dates. This has led to fears about a possible debt default infecting the global financial system. In Asia, China’s Shanghai index lost 3.6%, its biggest one-day drop since Aug. 31, while the Japanese Nikkei 225 declined 2%. In Europe, the FTSE 100 index of leading British shares was down 3.18% while Germany’s DAX lost 3.25% and France’s CAC-40 plunged 3.4%.

Read more about Dubai’s debt affecting the markets

Forex

A big wave of risk aversion triggered by the news about Dubai’s debt flooded the markets with investors looking for shelter in the Dollar and the Yen. The EUR/USD retreated from yesterday’s high falling back below 1.50. Losses on Gold and Crude Oil spurred a huge sell-off in commodity-linked currencies. Canada’s dollar lost the most in four weeks against the greenback sending the USD/CAD back above 1.06. Investors moved away from riskier currencies making the crosses on the Yen the biggest losers of the day. The Pound dropped from above 1.67 to under 1.6450 against its US counterpart. The Yen climbed to a 14-year high versus the Dollar sending the USD/JPY to an intraday low underneath 85 but quickly pulling back to remain in the 86 area.

Commodities

Gold dropped from a new record as news about Dubai’s debt hit the markets strengthening the Dollar. The yellow metal rose as high as $1195 in early trading hours retreating to an intraday low of $1180 to finally settle around $1186. Crude Oil lost around a dollar and a half but managed to remain above $76.

The Day Ahead

A thin stream of data will close the week in a Friday with no US economic releases. During the European session a reading of 0.4% is expected for Germany’s Import Price Index, up from -0.9% in October, and positive figures are forecasted for EU’s Consumer and Economic Confidence adding to signs of belief in economic improvement. Swiss KOF Leading Indicator is expected to climb to 1.80 from 1.45 the previous month. Canada’s Current Account for the third quarter will be the only report coming from the Americas.

Technical Analysis

NZD/USD DAILY

After topping slightly above 0.76 NZD/USD slipped below the overall bullish trend line that has shown the way for around eight months. The pair came back up with some bullish momentum to test the trend in an attempt to set new highs. Failing to do so, NZD/USD encountered the trend line acting now as a resistance signaling that the market was up for a bearish move. The pair currently trades around 0.71 and while the 0.70 level might offer some struggle a break below it could trigger further declines.

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 Nial Fuller – Success in the markets is a result of a mastery of self-control and discipline. This is the exact reason why so few people excel at trading and why most give up after losing most or all of the money in their trading account. A simple one or two day lack of discipline can start a chain of emotional mistakes that has the power to erase much of the progress you have made in the markets. Some traders maintain discipline and self-control for years only to find themselves unintentionally losing their discipline in the markets. Any trader who has a year or two of live trading experience under their belt will attest to the fact that you can lose money in the markets in the blink of an eye while it seemingly is much more difficult to make it.

Trading is essentially a game of risk management. The traders who make it to professional status are the ones who understand that protecting their money from their own emotional weakness is the key to long-term profitability. Many people have the opposite mindset when they first start trading; they are very unaware of the risks they are facing and as a result of how easy trading seems on the surface they risk way too much and then the snow-ball effect of mistakes begins. Once you master your own emotions you are well on the way to becoming a profitable trader.Mastering one’s emotions means consciously controlling how you respond to situations. In the forex markets this means constantly monitoring your reactions to the market. You have to stop and ask yourself after every trade you make if what you are feeling is conducive to your trading plan or is a result of emotion. Often after a good trade we fear the market less than we should and want to jump back in and make more money, this is emotional trading and usually leads to a loss. This subsequent loss will offset the positive feeling you just had from your winning trade and will probably cause you to try and make back what you just lost. You can see where this is going. It is a vicious cycle and unless you are consciously aware of it and the fact that you might be kicking it off at anytime while interacting with the market you aren’t going to last long.

Generally a mastery of the market will be evident in other areas of your life. The mind set that it takes to consistently profit from trading is the same one that will lead you to accomplish other long-term difficult goals. Persistence and discipline in the face of pressure and constant emotional temptation makes for well rounded people and for well rounded traders. If you are getting a thrill out of your trading activities than you are not doing something right. Trading should not be that exciting. You should know what you are going to do before you do it so that there are no surprises. If you plan out how you will react to a market situation before it happens than you will not react emotionally if it does happen. This will prevent you from starting down the very slippery slope of emotional trading.

About the Author

Check Out Nial Fuller’s Price Action Forex Training Website here –Learn Forex Trading.

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Source: ForexYard

The Dollar slid against its major currency counterparts following a rally in global equity markets. The rally prompted investors to turn to higher yielding riskier assets and away from the USD. With recent market optimism, traders may continue to see a small downward trend in the U.S. Dollar as its positions are unwound in exchange for higher yielding assets.

Economic News

USD – Dollar Falls to a 15 Month Low

The dollar dropped to a 15-month low against most of its major currency pairs yesterday, as generally upbeat U.S. economic data and gains in world stocks eroded the greenback’s safe-haven appeal. By yesterday’s close, the dollar fell 1.4% against the JPY to 87.35, it’s lowest since January. The dollar experienced similar behavior against the EUR and closed at around 1.5130.

U.S. data pointed to stabilization in the labor, consumer and housing sectors of the economy, boosting risk appetite and driving higher-yielding currencies such as the Australian dollar higher. Also weighing on the dollar were minutes from the Federal Reserve’s last policy meeting released on Tuesday, which described the greenback’s recent decline as “orderly” and affirmed expectations U.S. interest rates will remain low well into 2010.

Today is the Thanksgiving holiday in U.S. and there are no major economic data releases on the calendar today. However, Europe and Japan appear to be releasing the bulk of today’s news, which means we may see a day of trading with low liquidity and therefore increased volatility. Day-traders can take advantage of these intense trading days by swinging within the larger-than-normal price fluctuations.

EUR – EUR Gains as Stock Market Rallies

The EUR experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The 16-nation currency extended gains versus the dollar during yesterday trading session, to trade above 1.5130 amid a broad sell-off in the USD. The European currency finished around 60 pips higher against the GBP to finish yesterday’s trading session at the 0.9060 level.

The EUR was affected by the global stock market rally and the bearish Dollar. The U.S. stock market rally led investors to buy-back into the EUR, as they looked for returns on buying commodity-linked and higher-yielding currencies in Wednesday’s trading.

Sentiment in the Euro-Zone economy has brightened in the past week following better-than-expected news. The EUR is showing signs of resilience even though there was volatility throughout non-Euro crosses. It will be crucial for traders to identify how the preceding economic indicators from the U.S., Japanese, and other key economies will affect their positions.
Looking ahead to today, the most important economic indicator scheduled to be released from Euro-Zone is German Prelim CPI. Analysts are forecasting this figure to slightly decrease from its previous reading. Traders will be paying close attention to today’s announcement as a better than expected result may continue to boost the EUR in today’s trading.

JPY – Yen Rises against the Majors

The Japanese Yen strengthened against most of its major counterparts yesterday, continuing to prove that for the time being that this is the solid currency that traders can rely on to provide them with steady profits. The Yen extended gains versus the Dollar on Wednesday, to trade at about 87.25. The JPY also saw bullishness against the GBP and closed at 145.80. Further strengthening could be seen in the Yen if other nations begin to raise interest rates in order to ward off inflation. This could potentially wreak havoc on the Japanese economy by making Japanese exports relatively more expensive when compared to their foreign counterparts. The yen has gained around 14% against the dollar in the past year, hurting earnings for export-dependent Japanese companies.

Crude Oil – Crude Oil Rises on Weak Dollar

Crude oil rose today as the dollar dropped to a 15-month low against the EUR and a government report showed that U.S. fuel demand gained for a second week. Oil increased about 2.6% after the greenback retreated on the Federal Reserve’s signal that it will tolerate a weaker currency.
Expectations that consumers may once again want more oil when the recession bottoms have partly fueled the rally, with traders watching the stock market for economic telltales. There is a reasonable chance that oil prices will continue to be bullish going into next week, providing that the economic situation of the leading economies continues to rapidly improve.

Technical News

EUR/USD

The pair has shown much bullish behavior in the last few days, however the technical data shows that this may soon be corrected. The Relative Strength Index on the 4-hour chart indicates that the pair is veering into overbought territory, meaning a bearish reversal could happen. Going short in trading today may be the best bet.

GBP/USD

The RSI on the daily chart indicates that the pair is fluctuating in neutral territory. If the pair should break the 1.6700 mark, traders can expect a bearish correction in the near future. Going short may be a safe move for today.

USD/JPY

The pair has recorded much bearish behavior in the past two days. However, the technical data indicates that this trend may reverse soon. For example, the 4-hour chart’s Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the daily chart’s RSI. Going long with tight stops may turn out to pay off today.

USD/CHF

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 4-hour Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the near future. Going long with tight stops might be the right strategy today.

The Wild Card – Gold

With gold recording strong bullish movements in recent days, the technical analysis indicates that this may soon be corrected. The RSI on the daily chart indicates that the commodity has been overbought for some time, indicating that a bearish reversal may be imminent. Forex traders may want to go short today.

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

Europe

UK GDP falls –0.3% QoQ as expected

UK Index of services down –0.1%

German Gfk Consumer confidence at 3.7 slightly disappointing

Americas

US Durable goods orders fall -0.6% in Oct

US Initial Jobless claims at 466k Vs 500K expected

US Personal consumption expenditures rise 0.7% MoM

US Core personal consumption expenditure rise 0.2% MoM

US Personal consumption deflator at 0.2% MoM

US Personal income rise 0.2%

US New Home Sales strong rising 6.2% MoM

US Reuters/Michigan consumer sentiment at 67.4 largely in line with expectations

EIA Crude oil stocks change at 1M ,lower than expected

The Overall Sentiment

Forex

The broad Dollar selloff which started around May this year and seemed to trim itself into range only days ago has finally broken key resistance levels and pushed the Dollar into record lows across the board. The rally was fed mainly by better than expected US economic data with Initial Jobless claims falling under the 500K mark for the first time in more than a year reading 466K which positively surprising investors which were expecting a 500K reading according to various pulls. In addition new home sales which is considered to be closely linked with economic recovery rose strongly by 6.2% MoM mainly attributed to led tax breaks for new home buyers. The combination of the better than expected economic data and the statements coming from the Fed that it is currently not worried by the Dollar “orderly” decline spurred massive outflows from the Dollar and into high yielding assets and currencies alike ,with  counter Dollar carry trades continuing to mount. The Dollar fell to as low as 1.515$ per Euro, the Swiss Franc moved beyond parity trading a few points shy of 0.99 CHF to the Dollar and the Yen surprised by moving above a 14 Year high against the Dollar trading below 87 this morning. The Sterling also gained rather strongly against the Dollar trading around 1.67$ as the UK GDP figure was largely in line with expectations. However the Sterling which is highly linked to appetite for risk which was elevated during the trade failed to reach new highs against the Greenback.

Equities

The better than expected economic data fueled positive sentiment for Equities. In Europe benchmark indices advanced with the DAX gaining around 0.5% and the FTSE higher by 0.77%.In the US gains were more modest with the S&P higher by 0.45% and the DOW higher by a modest 0.29% but most importantly both indices reached a record for the year. Among the best performers were Caterpillar and Home depot mainly in reaction to the strong homes sales rise.

Commodities

Heavy Dollar bids, remote rate expectations and moved the Gold to yet another historical record ever so close to the 1200$ mark reaching to as 1195 an ounce marking it as one of the best performing assets for the recent period. Silver also edged higher trading around 18.8$ an ounce but failed to surpass 19$ and in the Energy space oil gained as growth bets were on and EIA crude stocks were lower than expected. The black gold edged around 78$ a barrel just 2$ short of the 80$ mark.

The Day Ahead

The Japanese Yen is expected to be at the centre of attention as the day will be largely loaded with Japanese economic data. Highly important economic figures are due, such as the National CPI ex-fresh foods  the main index for inflation in Japan and Japanese unemployment which is expected to rise to 5.4%.The combination of inflation readings which pointed deflation  in the last reading alongside the growing debate between the BoJ and the Japanese government over handling deflation and the Yen which is at 13 Years high against the Dollar is expected to bring the Japanese currency to the centre of attention with potential volatility during the Asia session.

Technical Analysis

USD/CAD, Daily

Bullish Scenario– A close above 1.0720 would signal the pair is moving to retest the bearish trend line around 1.08

Target -1.076

Bearish scenario– A break of 1.04 downwards would generate a bearish swing, targeting the 1.02 support and under.

Target A-1.02

Target B-1.012

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.

Source: ForexYard

Dollar remained mainly within range against the EUR Tuesday, however, Dollar sentiment dampened after statements from the Federal Reserve saying they believe the economy is going to recover at a slow pace and that unemployment will remain high well into 2011.

Economic News

USD – Dollar Sentiment Pressured by Fed Comments

The USD held on to modest gains Tuesday as equities and commodities declined. However, pressure on Dollar sentiment came following the FOMC Meeting Minutes. The Federal Reserve said Tuesday that officials believe the economy is going to recover at a slow rate while unemployment will remain high. These statements affirmed expectations the Federal Reserve will keep rates low for an extended period of time.

The Dollar Index, which tracks the greenback against a trade-weighted basket of six currencies, was at 75.116, compared with 75.130 Monday; remaining fairly directionless and within recent ranges against most major counterparts. The Fed’s near 0% interest rates and monetary stimulus programs have weighed on the greenback this year, since the programs have effectively printed more Dollars and flooding the markets with extra currency.

Earlier in the day the USD received some support from disappointing U.S economic data. The U.S. economy’s recovery wasn’t as strong as earlier believed with Gross Domestic Product (GDP) rising at a 2.8% annual rate July through September after falling by 0.7% in the second quarter. This was a revision from a month ago, when the estimated was that GDP rose by an annual 3.5% in the third quarter. However, The Conference Board’s U.S. Consumer Confidence Index improved to 49.5 in November from 48.7 in October, beating economists’ expectations.

Looking ahead to today, another full news day is expected from the U.S with the Core Durable Goods Orders and Unemployment Claims due to be released at 13:00 GMT and the New Home Sales at 15:00 GMT.

EUR – Pound Drops on Governor King’s Comments Regarding Economic State

The EUR was mainly higher against the Dollar Tuesday following a report suggesting that the U.S monetary stimulus program is likely to remain in place the longest among the countries which adapted similar programs. Furthermore, the German Ifo Institute’s November business climate index exceeded investors’ expectations. .

Late Tuesday, the EUR was at $1.4965, compared with $1.4968 late Monday and at ¥132.49, down from ¥133.22. The U.K. Pound was at $1.6586, down from $1.6615. The pound also fell against the EUR yesterday, trading at 90.25 pence per EUR after falling 0.2%, on speculation the U.K. Central Bank will extend its asset purchase program after Bank of England Governor Mervyn King said the U.K. economy faces “profound challenges”.

The release of U.K’s Revised GDP at 9:30 GMT today is expected to show a slight improvement, however, if results are worse then expected the GDP may exacerbate its downward trend.

JPY – Yen Gains against Most Major Currency Counterparts

Japan’s currency gained against 15 of its 16 major counterparts Tuesday, gaining broadly against the Dollar. Both the Yen and Dollar are popular funding currencies in carry trades in which these currencies are used by investors to buy equities and higher yielding currencies. As investors unwind these trades, the Yen tends to benefit against the greenback.

Japanese shipments abroad dropped 23.2% in October, compared with a 30.6% decline in September, beating economists’ expectations for a 26.8% decline. The renewed demand was fueled by demand from China and other emerging markets. Japan’s economy expanded at the fastest pace in more than two years in the third quarter, with the expansion driven by gains from exports.

Oil – Crude Prices Drop to Lowest Level since Oct. 14

Crude Oil futures for January delivery fell nearly 2% Tuesday, settling at $76.02 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 14. Crude Oil fell to $75.73 a barrel in electronic trading late Tuesday, down 0.4% after the American Petroleum Institute said U.S. crude stockpiles rose by 3.4 million barrels last week. U.S. inventories had begun to level off earlier this quarter, but weak demand has prevented any significant reduction in the surplus. The outlook for recovery in demand was further marred when the U.S. Commerce Department cut third quarter GDP growth expectations for the quarter to 2.8% from an earlier estimate of 3.5%. The release of today’s Crude Oil Inventories from the Department of Energy at 15:30 GMT is also expect to show a rise in supplies, possibly putting further pressure on Oil prices

Technical News

EUR/USD

After yesterday’s upward movement, the price of this pair appears to be floating in the over-bought territory on the RSI of the hourly chart, signaling that there is still room for a downward correction. The recent bearish cross on the 30 min. chart’s Slow Stochastic supports this notion. Going short to ride out the remainder of the bearish correction may be a wise choice today.

GBP/USD

The Cable has resumed its bullish trend and is attempting to breach the 1.6650 level. Should the breach take place, the pair might further extend its bullish run, with a potential price target of 1.6725

USD/JPY

The price of this pair has been range-trading within a bearish channel since the beginning of the week and has yet to create a significant breach. Yesterday’s downward movement has put the price near the lower border of its current channel, however. If the price succeeds in breaching through, forex traders may see a strong bullish movement. If it fails to breach, the movement will correct downwards within its current channel. Traders may want to wait to see if the breach occurs before setting positions today.

USD/CHF

The pair has resumed its bullish activity for the past couple of days and is currently trading at the 1.0078 level. However, it failed to breach the 1.014 level and has provided mixed results ever since. If the pair will indeed breach the 1.016 level, a sharp bullish move might take place

The Wild Card – NZD/JPY

The pair is in the middle of a strong bearish move ever since it dropped below 64.80, and is now traded at 64.25. The pair continues its nonstop downward journey overlooking every possible support level and shows no sign of a stop. All oscillators on the daily chart are still bearish and the trend appears to have more room to run. Forex traders should note that being short on the pair appears to be a wise move for the day.

Forex Market Analysis provided by Forex Yard.

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