Month: December 2009

By Fast Brokers – The Cable is testing its November lows as investor sentiment has turned sour following Friday’s optimism stemming from a combination of encouraging U.S. employment data and the BoE’s Darling stating that he believes the UK economy has turned a corner.  We have since witnessed a risk-aversion trend since Friday’s events as investors react to Bernanke stating that the U.S. economy still faces considerable headwinds.  It seems Bernanke is trying to curb speculation that the Fed will begin tightening liquidity sooner than anticipated due to Friday’s data.  Bernanke’s cautious public address has sent U.S. equities lower and the Dollar and Yen higher.  In addition to Bernanke’s impact on the market, investors are also reacting to Moody’s statement that the UK and U.S. are ‘testing the boundaries’ of the Aaa ratings.  Moody’s statement has delivered a negative psychological blow to the risk trade as investors worry about the debt exposure of these two industrialized nations.  Furthremore, investors are monitoring Dubai’s debt situation as it seems Dubai World will need to delay its Dec 14th debt payment.  New uncertainties surrounding Dubai World’s ability to settle with its creditors has resulted in additional risk-aversion.  Hence, the Cable has continued Friday’s sell-off as the Dollar experiences a broad-based rally.

Meanwhile, Britain released a Manufacturing Production figure which was 5 basis points below analyst expectations (0% vs. 0.5% expected).  However, less weight is normally placed on the UK’s manufacturing data since the nation’s GDP is much more reliant on revenue from the services industry.  In addition to today’s disappointing manufacturing number, Britain’s Retail Consortium’s data showed that the growth of retail sales has slowed, led by a decline in the purchase of food products.  Invetors are presently awaiting Finance Minister Darling’s new budget plan to see how Darling plans to reduce the UK’s swelling deficit.  Most of the focus will likely be on Thursday’s BoE monetary policy decision.  The central bank has been a bit more hawkish concerning its monetary policy lately due to its more optimistic outlook on the UK’s economic performance.  Therefore, it will be interesting to see how investors approach Thursday’s policy meeting.

Technically speaking, the Cable is currently testing important near-term technical cushions in the form of November and 10/26 lows.  A failure of these lows could result in a test of our 2nd tier uptrend line.  That being said, the Cable does have some historical data from August and September of this year.  Hence, the Cable’s technical condition may not be as poor as it seems from our 4-hour chart.  However, should conditions deteriorate, the Cable’s psychological 1.60 level could also prove to be a solid technical cushion should it be tested.  As for the topside, the Cable faces multiple downtrend lines along with 12/07 and 12/04 highs.  Therefore, quite a few topside technicals are in place.

Present Price: 1.6285

Resistances: 1.6325, 1.6346, 1.6371, 1.6396, 1.6435, 1.6470

Supports: 1.6284, 1.6260, 1.6248, 1.6200, 1.6163, 1.6133

Psychological: 1.65, 1.60, November Lows and 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 declining as investors exit the risk trade in reaction to Bernanke’s cautious comments yesterday in conjunction with Moody’s warning that the U.S. and UK are testing the patience of their Aaa Ratings.  Bernanke attempted to soothe investor excitement stemming from Friday’s much better than expected U.S. employment data, resulting in a sizable Dollar appreciation.  Bernanke managed to devalue the Dollar a bit and stabilize equity markets after he stated that the U.S. economy still faces considerable headwinds.  That being said, Bernanke is attempting to clarify that the Fed is planning on maintaining its loose monetary policy for the foreseeable future.  Hence, the central bank will need further confirmation from economic data before considering shortening its policy timeframe.  Meanwhile, Moody’s stated that the UK and U.S. may ‘test the boundaries’ of their Aaa ratings if they don’t get a handle on their respective budget deficits.  The news from Moody’s, in addition to new uncertainty surrounding Dubai’s debt, has managed to trigger a risk-aversion session.  As a result, the EUR/USD, GBP/USD, USD/JPY, and gold are all trading in the red.

The EU releaesd a couple disappointing data points which aren’t helping out the EUR/USD’s cause.  Yesterday German Factory Orders printed -2.7% below analyst expectations (0.6%).  The decline in factory orders is likely a symptom of the EUR/USD’s solid run last month.  Furthemore, Germany printed an Industrial Production figure today which was also well beneath analyst expectations (-1.8% vs 1.1% exepcted).  Therefore, it seems Germany’s economic productivity is cooling off a bit.  The disappointing data points are likely adding to the downward pressure on the EUR/USD already being inflicted by the aforementioned psychological developments.  The EU will be relative quiet on the data wire over the next couple sessions, leaving its movements in the hands of Thursday’s BoE meeting followed be the release of China’s Industrial Production number in the PM EST.

Technically speaking, the EUR/USD is currently testing the strength of our 1st tier uptrend line, which could carry some weight since it runs through September lows.  However, the currency pair does have some technical cushions resting nearby in the forms of 10/30 and 11/03 lows.  Furthrmore, the psychological 1.45 level could work in the EUR/USD’s favor should conditions deteriorate.  As for the topside, the EUR/USD now faces multiple downtrend lines along with 12/08 and 12/07 highs.  Additionally, the highly psychological 1.50 area should serve as a tough psychological barrier again should it be tested.

Present Price: 1.4756

Resistances: 1.4778, 1.4795, 1.4812, 1.4841, 1.4859, 1.4875

Supports: 1.4754, 1.4738, 1.4715, 1.4682, 1.4672, 1.4650, 1.4631

Psychological: 1.45, 1.50, 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 Sylvain Vervoort – In many stocks technical analysis applications averages are used to smooth short term price swings, to get a better indication of the price trend. Let’s have a look at different moving averages and how some of the lag, typical to an average, can be compensated.

Averages are trend-following indicators. A moving average of daily prices is the average price of a share over a chosen period, displayed day by day. For calculating the average, you have to choose a time period. The choice of a time period is always a reflection upon, more or less lag in relation to price compared to a greater or smaller smoothing of the price data. There are a lot of different averages used. I will limit this overview to the common ones.

First let’s talk about the simple moving average that is calculated by adding all prices within the chosen time period, divided by that time period. That way, each data value has the same weight in the average result. The simple average has the best smoothing, but generally also the biggest lag after price reversals.

An exponential moving average gives exponentially more weight, based on a selected percentage, to the more recent prices in a range based on this formula: EMA= (price * EMA %) + (previous EMA * (1 – EMA %))
Most investors do not feel comfortable with an expression related to percentage in the exponential moving average; rather, they feel better using a time period.
If you want know the percentage in which to work using a period, this formula gives you the conversion: EMA Percentage(%) = 2 / (Time period +1)
Compared to the simple moving average, the exponential moving average will therefore follow closer the price evolution. This will result in less smoothing compared to the simple moving average.

A weighted moving average puts more weight on recent data and less weight on older data. A weighted moving average is calculated by multiplying each datum with a factor from day “1” till day “n” for the oldest to the most recent data; the result is divided by the total of all multiplying factors. In a 20-day weighted moving average, there is 20 times more weight for the price today in proportion to the price 20 days ago. Likewise, the price of yesterday gets 19 times more weight, and so on. The weighted average follows the price movement the closest and moves in general smoother than the exponential average.

Determining which of these averages to use depends on your objective. If you want a trend indicator with better smoothing and only little reaction for short time movements, the simple average is best. If you want a smoothing where you can still see and react to the short period swings, then either the exponential or weighted moving average is the better choice.

The 20-, 50-, and 200-days simple moving averages were mostly used in the past before the advent of personal computers. A simple average was used because the calculation was simple; longer periods were used because the movements in those days took time to take off and to complete. This tradition is still alive today in the sense that investors still watch these averages. That is the reason why prices generally experience support and resistance at the level of these averages.

The 50-day moving average gives direction to the medium-time period. The 200-day moving average is important for a look at the long-term trend. Around the 50- and the 200-day averages, you will almost always notice some form of support or resistance. It is therefore a good idea displaying the 50- and 200-day moving averages on your price chart. The 20-day moving average is most useful as an inclination indication for short term trend lines.

If you are a trend following medium term trend trader, you probably keep an eye on one or the other average. Of course you like a smooth average to stay in the trade as long as possible. Smooth means a longer time period. The disadvantage will be too much lag at the main turning points. So you could make use of a technique to limit as much as possible the lagging nature of the average. The principles for limiting the lag of an average were introduced by Dr. Joe Sharp in Stocks & Commodities magazine, January 2000. Using a 50-days zero-lagging simple moving average for example will clearly show much less lag compared to the 50-days standard simple moving average.

Another interesting average that can be used to smooth larger chunks of data without the disadvantage of a larger lag is the TEMA average or Triple Exponential Moving Average. This average was introduced by Patrick Mulloy in Technical Analysis of Stocks & Commodities magazine, February 1994. Averages of 100 days and more will only show little lag, while the smoothing will be quite good. TEMA is not simply a triple exponential moving average, as you probably would assume from the name. The intention of TEMA is to limit the typical lag of an average.

An ‘n’ day exponential average (EMA) has a smoothing factor alpha of:

Alpha = 2 / (n + 1) and a delay of:

Delay = (n – 1) / 2. The larger the average period n, the better the smoothing, but, unfortunately, the larger the delay. TEMA uses a technique of John Wilder Tukey to compensate the delay. The data is sent several times through the same filter and combined afterward:

TEMA = (3*EMA – 3*EMA(EMA)) + EMA(EMA(EMA))

The application of the TEMA average makes most sense if you want to smooth larger data periods, whereas the delay must remain as small as possible.

Of course you can start making all kinds of combinations with the different averaging techniques, combining simple, exponential or weighted moving averages with the TEMA and zero-lagging average techniques. That way you can create your own average that fits best your way of trading.

About the Author

Want to learn more about averages and their application? You will find a lot of learning material about basic technical analysis techniques for free at my website: http://stocata.org. Sylvain Vervoort is a trader and author with regular contributions in Stocks & Commodities magazine.

By Anton Eljwizat – Crude oil prices have dropped significantly yesterday and peaked at $73.50 per barrel. However, as I will demonstrate below, the price of crude oil may very well be heading for a reversal. Forex traders can take advantage of this impending movement by having their Entry Orders in place to capture this reversal. Don’t forget your Stops and Limits!

• The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI) and MACD.

• Point 1: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 2: The RSI signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• Point 3: The MACD indicates an impending bullish cross, which may signal an upward movement is going to occur in the near future.

Crude Oil 4-Hour Chart

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

*Swiss Adjusted Retail Sales better than expected at 3.1%

*EU Sentix Investor Confidence worse than expected at -5.5

*German Factory Orders surprised for the worst at -2.1%

Americas

*Canadian Building Permits beat market forecasts at 18.0%

*Fed’s Chairman Bernanke speech

The Overall Sentiment

Equities

US stock markets advanced as Federal Reserve Chairman Ben Bernanke stated in his speech that US economy confronts “formidable headwinds” to sustain expansion at a moderate pace. Bernanke added that inflation is likely to remain subdued suggesting that the Fed will not raise interest rates in the near future. The S&P was up 0.3% and the Dow 0.5% after Bernanke’s declarations. In Europe, the British FTSE 100 slid 0.2% driven by losses from natural resources companies as metal prices continued to decline. The German DAX Index dropped 0.6% as Factory Orders unexpectedly fell in Europe’s largest national economy. The Japanese Nikkei 225 added 1.5% led by electronic companies as the strength of the Dollar against the Yen improves conditions for Japanese exporters.

Forex

The Dollar continued to advance after the surprisingly strong Nonfarm payrolls on Friday but gave up some gains after Fed’s Chairman Bernanke’s views on the US economy. EUR/USD fell to the 1.4750 area but corrected above 1.4850 as Bernanke’s declarations suggested no rate hikes for the time being. GBP/USD extended its decline as well, briefly falling below 1.6320, but recuperated to trade above 1.6450. The Canadian dollar rose as Canada’s Building Permits came much stronger than expected with an 18% gain in October. The Yen strengthened across the board with USD/JPY failing to hold above 90 after last week’s rally.

Commodities

Gold continued to weaken as the Dollar advanced touching $1135 an ounce intraday but managed to climb above $1155 as the Greenback gave up gains. Silver traded below $17.85 before Bernanke’s speech and corrected to settle in the $18.15 area. Crude Oil extended losses for a fourth straight day falling below $74 a barrel.

Technical Analysis

GBP/JPY DAILY

GBP/JPY has been trading in a volatile manner with swift changes in direction. After a steep fall that took the cross to a brief visit below 140 came an equally sharp bullish movement to the critic area around 148.50.  This price level acted in the past as a resistance as well as a support, and the current failed attempt to break above it suggests that GBP/JPY’s next move could be a bearish one.

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.

The US Dollar fell today after Federal Reserve Chairman Ben Bernanke gave comments concerning the slow recovery of the U.S. economy which may keep inflation low. This hints towards a continued Fed policy of lower interest rates for the foreseeable future and short-term pressure on the USD.

Crude Oil prices continued declining for the fourth consecutive trading session following Bernanke’s speech and estimations for lower inflation and a weak U.S. economy. The price of Crude ended the day down at $74.14 after an opening price of $75.60. This was a price drop of almost 2%.

• 9:00 GMT – GBP Halifax Housing Price Index (HPI):
The leading indicator of the housing industry’s health shows the change in housing prices and can influence the movement of the Pound. The rate is expected to decline by 4%.

• 9:30 GMT – GBP Manufacturing Production:
The number is associated with the previous month and is a large percentage of total industrial production. The release is considered to be a good indicator of England’s overall economic health.

• 14:00 GMT – CAD Overnight Rate and Accompanying Rate Statement:
The Bank of Canada will announce its decision on the overnight rate which is not expected to change, along with the release of the accompanying rate statement. The explanation may contain hints at the future direction of Canadian monetary policy.

The major stock indexes are the wrong place to look

By Robert Folsom

A well-known business magazine recently published a story with this headline:

Stocks: The “Loss” Decade
A disastrous ten years for the stock market ends in just a month. Will the turning of a new decade change investors’ luck?

One sentence from the story itself tells you most of what you need to know: “The ten years since Y2K are on track to produce the worst total returns for investors since the 1930s.”

Of course, no one should really be surprised by a story that says the stock indexes did poorly over the past decade. That’s not news. The facts in the article more or less repeat what our own Elliott Wave Financial Forecast reported last March, complete with this chart:

The proof of the market is in its charts. Professional market technicians know something you don’t. A solid grasp of the most successful technical analysis methods can help you cut through the hype and give you the big-picture, unbiased perspective you need now more than ever. You can now download a FREE 50-page Technical Analysis Handbook from the largest independent technical analysis provider in the world. Learn more about technical analysis, and download your free 50-page ebook here.

It’s safe to say that this business magazine article is the first of many the media will run before the year’s end, as part of their “decade wrap-up” stories. And like this story, most or all those like will share the same basic assumption: stock investors did poorly because the stock indexes did poorly.

And that assumption, dear reader, is erroneous. The truth is far uglier.

Here’s what I mean. If you want to know how real stock investors really behave, the major stock indexes are the wrong place to look. Published results from firms like Dalbar and Vanguard consistently show that, over the past 25 years, individual investors and mutual fund shareholders have had average returns that are half (at best) of the annual returns of the broader stock market.

So, for example, in 20 years from Jan. 1, 1989 through Dec. 31, 2008, the S&P 500 showed a 8.35% gain (Dalbar). Over that same period, equity investors showed a 1.87% gain. And if you include the 2.89% inflation rate in those years, investors show a 1.02% loss.

You can shift to a timeframe which excludes the bear market that started in 2007, but it doesn’t change the basic story. From January 1984 though December 2002, the Dalbar data shows that equity investors earned an annual average of 2.6%, vs. the S&P 500’s 12.2% annual average. The annual inflation rate for period was 3.14%.

What’s more, similar studies and surveys also show that most investors are overconfident in the decisions they make. Put another way, they don’t even know that they are their own worst enemy.

It can be different for you. Market prices move in recognizable patterns: Those patterns can also reveal specific price levels that help confirm the direction of the trend, or identify the time to step aside. Respecting the price, pattern and trend is the first step toward discipline, instead of yielding to emotions.

The proof of the market is in its charts. Professional market technicians know something you don’t. A solid grasp of the most successful technical analysis methods can help you cut through the hype and give you the big-picture, unbiased perspective you need now more than ever. You can now download a FREE 50-page Technical Analysis Handbook from the largest independent technical analysis provider in the world. Learn more about technical analysis, and download your free 50-page ebook here.

By Anton Eljwizat – After hitting new highs against the U.S. Dollar in trading last week, the Scandinavian Kroner reversed their gains following the release of better than expected American unemployment figures. Last week the Norwegian Krone reached near-record highs against the dollar, trading at 5.572 Thursday morning. Additionally the DKK was fairing particularly well against the greenback at this time, trading at a weekly high of 4.9173.

These gains were reversed following the American unemployment figures released on Friday. Currently, the currencies are trading at 5.6699 and 5.0318 respectively against the Dollar. Traders may want to take this information into account with regards to this week. Most analysts are predicting a Dollar resurgence, and the Scandinavian currencies will likely be affected by this.

The Scandinavian Kroner were able to fair significantly better against the Euro. Currently the Norwegian Krone is trading at 8.4724 against the Euro, compared to levels approaching 8.5500 last week. Comparatively, the Danish Krone is currently at 7.4413 against the Euro compared to 7.4424 a week ago. As the Euro is also currently weak due to the Dollar gains, traders may want to take the advances made by the Kroner into account.

Technical Analysis

• The chart below is the 4-hour chart of the USD/SEK currency pair.

• The indicators used are the Slow Stochastic, Williams Percent Range, and RSI.

• Point 1: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure.

• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The Williams Percent Range has peaked at the 0 marker and has turned bearish; this means that there may actually be a strong level of downward pressure.

USD/SEK 4-Hour Chart

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.

Is Gold getting Cold?

Last week US unemployment unexpectedly fell to 10% from 10.2% with Nonfarm payrolls at   -11,000 against market expectations of a -130,000 drop, investors reacted strongly to the news pushing the Dollar sharply higher against all currencies gaining around 3% against the Yen and 2% against the Euro. But the currency market was not the only market shaken by this Dollar gain, Gold which is considered by many as the only real currency and posses an important anchor for many portfolios was hammered vigorously by the latest Dollar strength, falling from its peak around 1,226$ an ounce to as low as 1,147$, close to a 6.5% decline in two days. Why was Gold pushed south so swiftly? Since Gold does not pay anything such as bonds or stock that can pay dividends and unlike other metals Gold does not have an underline industrial demand worth mentioning, Gold’s price is purely depended on interest rates and excess liquidity. Having low rates and excess liquidity drives Gold prices up, but if investors are expecting that to change Gold can be pushed down very rapidly in favor of more yielding assets. Last week investors’ reaction was linked to that very assumption, lower unemployment means a rate hike in the US is closer than previously anticipated and if a rate hike in the US is closer many central banks which so far have been timid to raise rates would feel more comfortable to do so. When rates will be higher it would be less attractive to hold the Yellow metal that pays virtually nothing.

So how should you roll the dice?

For the long term-Now after Gold price fell so steeply many ask themselves is it the end of Gold’s spectacular journey north, or just classic buy on dips case? For Gold journey north to end investors need to expect not a single rate hike that would still leave rates incredibly low but consecutive rate hikes on the horizon with Fed aiming to tight monetary conditions .For this to happened you need to look primarily for unemployment to fall constantly. Although the recent fall in US unemployment is very surprising and positive one cannot ignore the proximity to the Christmas season with many Christmas temporary hiring taking place ahead of the busy season. Another important factor for constant rate hikes is the US housing sector, the Fed is very sensitive to the health of the housing sector and although weak home prices would not deter the Fed from one to two rate hikes it is certainly a factor in a long strategic tightening with higher rates burdening on the fragile mortgage borrowings.

For the Short term– until the next unemployment rate will shed some more light on the unemployment trend Gold is expected to trade a bit nervously as investors will be carful of making a long term bet to each side, Thus it is advisable to wait for more clarity for long term bets, However short term trading is a different story. Nervousness and volatility is very favorable to short term trading and by trading with a short range and being carful of significant levels you can benefit from investors’ indecisiveness.

Technical Analysis

Gold/USD, Daily

Bullish Scenario-A fail to break the 1100 zone downwards would generate momentum to swing upwards to test the higher levels although a break above the record 1,226$ is not expected.

Target- 1188$

Bearish Scenario-A daily close below 1100$ would push the pair to regain momentum at lower support levels

Target-1069$

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

Due to a much better than expected U.S Non-Farm Employment Change figures for November, the Dollar rose against all the major currencies on Friday. Moreover, this has been one of the first times since the recession began that positive data from the U.S have boosted the Dollar. Does this mean that the Dollar is on its way to recovery?

Economic News

USD – Dollar Soars on Unexpected Non-Farm Payrolls Figures

The Dollar rallied last week against most of the major currency pairs. Throughout most of the week, the Dollar continued its slow decline from the past few weeks. However, just before the weekend, the Dollar appreciated about 200 pips against the Euro, the Pound and the Yen.

Until Friday, the Dollar continued with its bearish trend due to the negative figures from the U.S economy. The Manufacturing Purchasing Managers’ Index dropped to 53.6 points from 55.7 in October. In addition, the ADP forecast for November’s Employment Change was quite gloomy. The estimate was that another 169,000 people have joined the unemployment circle in the U.S. The unsatisfying figures continued to weaken the Dollar.
However, the Non-Farm Employment Change result on Friday has put an end to the bearish trend. The end result showed that the payrolls on the U.S have declined by merely 11,000 in November, the best figures since the recession began. In addition, the Unemployment Rate has unexpectedly dropped from 10.2% to 10.0%. This result was truly unexpected, especially due to the former ADP forecast, boosting the Dollar as a result.

Looking ahead to this week, a lot of interesting data is expected from the U.S economy. Traders are advised to pay special attention to two major publications: The Trade Balance on Thursday and the Retails Sales reports on Friday. A continuation of positive figures has the potential to further boost the Dollar. In addition, traders should also follow Fed Chairman Bernanke’s speech today. Bernanke is expected to refer to the economy’s outlook, which could create volatility in the market.

EUR – Euro Drops against the Majors

The Euro tumbled against most of the major currencies during last week’s trading session. The Euro’s depreciation took place mainly against the Dollar and the Pound. The Euro dropped about 200 pips against the Dollar and the EUR/USD pair is now trading around the 1.4860 level.

It seems that there are two main reasons for the Euro’s downfall last week. The first was the European Central Bank’s (ECB) decision to leave the Euro-Zone’s Interest Rates at 1.00%. The decision has left investors confused about whether the Euro-Zone economies are truly on the verge of putting the crisis behind them, or is it still to soon to tell. The second was the sharp uptrend of the Dollar, which took place due to the U.S Non-Farm Employment Change’s unexpected positive figures. The combination of the uncertain outlook of the Euro-Zone and the upbeat data from the U.S have boosted the Dollar and weakened the Euro as a result.

As for the week ahead, a lot of potentially deep impacting economic publications are expected from the Euro-Zone. The German Industrial Production report for October is expected on Tuesday. The German economy is providing relatively positive data lately, and if this report will continue along this line it is likely to support the Euro. Traders should also follow the ECB President Trichet’s speech today, scheduled for 13:00 GMT. If Trichet decides to refer to the possibility that the ECB will hike rates in the near future it could strengthen the Euro back towards last week’s levels.

JPY – Has the Yen’s Bullish Trend Reached its End?

The Yen underwent a trend reversal during last week’s trading session. The Yen dropped against all the major currencies, including the Dollar, the Euro and the Pound. The Yen saw its sharpest slide against the Pound as the GBP/JPY pair rose by 600 pips and is currently trading around the 148.30 level.

The Yen’s downtrend came as a result of the negative Japanese economic data which was published last week. The Preliminary Industrial Production report for October rose by 0.5%, failing to reach expectations for a 2.5% rise. In addition, the Japanese Capital Spending report, which measures the change in the total value of new capital expenditures made by businesses for this year’s third quarter, dropped by 24.8%. This has shown that the Japanese economy has yet to recover from the recession, and that recovery may take longer than expected. Also last week, the Bank of Japan (BoJ) decided to leave Interest Rates at 0.10%, the lowest rates in the industrial world. This has also contributed to the weak Yen.

As for this week, a batch of data is expected from the Japanese economy. Nevertheless, traders are advised to follow the Core Machinery Orders report scheduled for Wednesday. This is a leading indicator of production, and if the end result will be negative as well, the Yen could be further weakened.

OIL – Crude Oil Stabilizes around $75.50 a Barrel

Crude oil saw a very volatile session during last week’s trading. Crude oil began the week with a rising trend, reaching $78.85 a barrel. However, as the week continued, oil lost most of its gains and is currently trading around $75.50 a barrel.

Crude oil rose earlier last week due to hopes that economic recovery is on the horizon. The expectation that the U.S Non-Farm Payroll’s result would show another halt in the unemployment condition led investors to believe that demand for energy will strengthen. The surprising end result, which showed that the Unemployment Rate in the U.S has improved during November, had two effects. First, expectations for a global recovery have supported crude oil prices, and the immediate reaction was a rise in crude oil’s value. Second, the Dollar strengthened as a result. Considering that crude oil is valued in Dollars, an appreciation of the Dollar usually means a drop in crude oil prices. This is exactly what happened.

Looking ahead to this week, traders are advised to follow the main publications from the U.S economy, as they tend to determine oil’s value. In addition, traders should also follow the U.S Crude Oil Inventories report on Wednesday, as this report has proven to have an instant impact on the market.

Technical News

EUR/USD

There appears to be a bullish cross forming on the 4-hour chart’s Slow Stochastic, indicating an upward correction is expected in the near future. However, almost all other oscillators are stuck in neutral signaling that this pair may be less volatile than expected. Going long with tight stops might be the right strategy today.

GBP/USD

The pair continues to hold its range-trading pattern with no clear sign of direction. The price sits evenly between the Bollinger Bands on all charts, and continues to float in neutral territory on all oscillators. Waiting for a clearer signal might be the right choice today.

USD/JPY

There appears to be a bearish cross forming on the hourly chart’s Slow Stochastic, signaling an imminent downward correction. The Bollinger Bands on the 30 min. chart also appear to be tightening, indicating some volatility could take place in the near future. Going short might be the right strategy today

USD/CHF

On the daily chart the moderate bullish price movement continues within the upwards channel which still has yet to be breached. The 4-hour chart is also joining that notion with the Slow Stochastic pointing to the continuation of upwards momentum. Next testing point should be around 1.0195. Going long appears to be preferable today.

The Wild Card – AUD/USD

There is still a bearish configuration on the daily chart, indicating that the momentum is still down. The RSI floats high supporting the notion that there is still room to run for this trend. In the shorter time frame there is a bullish cross forming on the 4 hour chart indicating that there might be a small bullish correction before the bearish move resumes. Forex traders can maximize profits by selling on highs and taking advantage of a currently bearish trend.

Forex Market Analysis provided by Forex Yard.

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