Month: October 2010

Source: ForexYard

With a week relatively light on US data, investor eyes will be squarely zeroed in on Federal Reserve speakers. The Fed could offer clues about a possible plan to stimulate the US economy through a fresh round of asset purchases this week; discussion of which has weighed on the dollar lately. 

Economic News

USD – USD Under Pressure following QE Assessment

After falling to a low of $1.3829 yesterday, as a wave of profit-taking that began on Friday continued into Monday, the pair recovered overnight, briefly breaching the $1.4000 level. The dollar has since recovered with the pair currently trading around $1.3906.

Despite an overall bearish sentiment on the dollar, analysts are saying that the downside looked limited as short dollar positions were extended and the euro faced strong resistance at $1.40. Investors are more certain there will be further easing after Fed Chairman Ben Bernanke on Friday offered his most explicit signal yet the US central bank was set to relax monetary policy further. The question now is the amount.

With a week relatively light on US data, investor eyes will be squarely zeroed in on Federal Reserve speakers. The Fed could offer clues about a possible plan to stimulate the US economy through a fresh round of asset purchases this week; discussion of which has weighed on the dollar lately.

EUR – EUR Sees Mixed Results after Trichet’s Weekend Comments

The EUR experienced mixed results yesterday against its currency counterparts. Against the Japanese yen the euro had fallen, but pared its losses to currently trade little-changed at 113.26 as of this morning. Against the British pound, the 16-nation single currency rose modestly, climbing towards 0.8800, but falling just short before turning back downwards.

The euro lost somewhat against the US dollar yesterday after weekend comments from European Central Bank (ECB) President Jean-Claude Trichet supported the bank’s purchase of government bonds issued by weaker euro zone members. Trichet’s remarks contrasted with those of the head of the German central bank, who last week said the ECB should wrap up its bond-purchasing program.

Today traders are expecting the release of the ZEW economic sentiment report from Germany and the region in general. Forecasts are for a decline in both figures, which will no doubt put sell pressure on the EUR going into a light news week.

JPY – Yen Little Changed against Currency Rivals

The Japanese yen bounced back against the EUR yesterday as ECB President Trichet’s remarks over the weekend caused modest bearish pressure on the European currency. The pair dropped as low as 112.40 before paring those losses and climbing back towards 113.60 in yesterday’s late trading sessions.

The JPY was little changed against the dollar, however, as the pair stagnated around the 81.20 price level. Concerns about another Japanese monetary intervention appear to have passed into the background this week as many analysts are expecting few such maneuvers ahead of this weekend’s G20 meetings. Traders may be expecting a sharp revaluation following the weekend’s meetings, but for the moment the JPY appears to be holding steady against most currencies.

Crude Oil – Oil Prices Higher as Analysts Debate its Forecasted Direction

Crude Oil prices spiked yesterday as the US dollar weakened against a basket of currencies. After falling as low as $80.50 a barrel, the price of oil quickly ascended over $3 in value to currently trade at $83.71. The rapid price swings experienced by oil lately have many analysts at odds over the direction of crude prices.

With OPEC claiming that production is where it should be and oil fundamental picking up, many were expecting a steady range-trading behavior by oil. This expectation was shattered, however, as the USD began to plummet against all of its currency rivals and driving commodity prices higher. Expectations now appear confused as oil prices are continuing to reach upward.

Technical News

EUR/USD

There appear to be fresh bearish crosses on the weekly Stochastic (slow) and daily MACD, both suggesting a downward movement is imminent for this pair. As the price floats in the over-bought region of the weekly RSI, short positions appear to be growing in relevance.

GBP/USD

This pair has been experiencing mild downward movements over the past 48 hours and long-term technical appear to be pointing in that direction. The weekly Stochastic (slow) shows a fresh bearish cross, as does the daily MACD. Going short may be a wise tactic today.

USD/JPY

After such a long and sustained bearish movement this pair’s technical indicators are beginning to consolidate into a signal for an upward correction. The daily and weekly MACD suggest bearish crosses are impending, and the price seems to be floating deep within the over-sold region of the daily and weekly RSI. Going long may turn out to be a favorable position as the day wears on.

USD/CHF

The price of this pair appears to be floating deep within the over-sold region of the weekly RSI, highlighting upward pressure. A recent bullish cross on the weekly Stochastic (slow) supports this notion. Going long appears to be preferable.

The Wild Card

AUD/JPY

This pair’s recent flat trading behavior has allowed downward momentum to build up, according to a number of indicators. The weekly Stochastic (slow) shows a recent bearish cross and the weekly RSI has the price beginning to descend out of the over-bought region. The daily MACD also appears to be indicating a fresh bearish cross. All of these signals appear to be suggesting that now may be a great entry price for forex traders looking to short this pair.

Forex Market Analysis provided by ForexYard.

© 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.

USD/CAD

Daily graph: http://www.real-forex.com/charts-daily/191010/CAD_DAILY_191010.JPG

One-Hour graph: http://www.real-forex.com/charts-daily/191010/CAD_1H_191010.JPG

An important support at 1.0163 was crossed downward a few days ago. We can identify a small breach of the support during last session but it was only a test. The pair kept its current trend downward. This small test confirms the fact that the support became a resistance.

The current trend creates the opportunity for a “Short” trade which could be open by the identification of a decreasing configuration on one – hour graph.

Potential trade

Our analysts estimate the creation of the opportunity once the support of 1.0136 will be broken downward. Our transaction once the support will be broken:

• “Limit” order on “Short” position 10 pips below the mentioned the support, meaning: 1.0126.
• “Stop Loss” on the last high occurred: 1.0160
• “Take Profit” order on the next support: 1.0091

AUD/CAD

Weekly graph: http://www.real-forex.com/charts-daily/191010/AUD_WEEKLY_191010.JPG

The pair crossed a very important resistance at 0.9867 during the last 2 weeks, followed by an intensive increase in the currency.

Since the level the pair just crossed is the highest ever reached, our analyses estimate a very high probability for the current trend to increase. Such estimation suggests a great opportunity for a “Long” trade.

In order to catch the opportunity, our analysts suggest observing how the pair will behave with the resistance.  If a small reversal happens, followed by a small correction, but still stopped above the resistance, the opportunity for a “Long” will be created.

We estimate a great potential for this transaction since the highest level ever reached was just crossed.

Have a profitable day!

Real forex team.

USDCHF has reached the upper border of the price channel on 4-hour chart, suggesting that a cycle bottom has been formed at 0.9463 level. Further rally towards 0.9727 is still possible later today, a break above this level will indicate that the fall from 1.0277 has completed at 0.9463 already, then the following upward move could bring price to 1.0000 zone. However, as long as 0.9727 key resistance holds, downtrend is expected to resume, and another fall to 0.9300 is expected.

Daily Forex Analysis

Welcome to another week of FX trading! Contrary to my post last October 5 (kindly see it here), the AUDCAD did not encounter any resistance at its previous high at 0.9200. Instead, it broke right above it to form an ascending triangle pattern. In such pattern, buyers are deemed to be the more aggressive than the sellers. Here, buyers continue to buy the Australian dollar despite the increase in its price while the sellers only sell it at a specific price level. Therefore, a break out to the upside is more likely. If it does, it could spring by another 200 pips or so to even surpass the AUDCAD-parity marker (1.0000). The pair’s present uptrend is also suggesting the probability of a move higher. But in case the 1.0000 level proved to be tough to break through and the pair breaks down from the triangle, the previous high at 0.9900 and the uptrend line should provide some support.

On the fundamental side, remember that Australia was one of the very few major economies that escaped a recession. It’s central bank, the Reserve Bank of Australia (RBA), was also the first to raise its interest rates, making 2009 the year of the Aussie. The first quarter of this year, however, belonged to Canada when it posted improvements in its consumption and labor market. And as a result, the Loonie took the driver seat against as the most favored currency at least at that time away from the AUD. The gains, though, in both economies are starting to abate. So between the two, who should the market favor?

You see, Australia has China to back its economy. In case you do not know, Australia is one of China’s major suppliers of raw materials. I would like to mention as well that one of these input materials happens to be gold which is now trading at an all time high. So with China’s economy expanding by 10.3% during the second quarter and is seen to have grown again by another 9.3% during the third, Australia’s export industry at the very least should not have any problem. Now juxtapose this with Canada and the US. It’s been in the news for more than a week now that the Fed is planning to flood the market with more dollars in order to bring down the market interest rate to encourage more lending and spending, thus, stimulating business activity. This only means that the present business condition in the US are very much anemic. Such would of course negatively affect Canada since the US its major trading partner. In other words, poor business condition in the US would also mean the same for Canada.

Aside from the impact of Canada’s and Australia’s major trading partners in their respective economy, the currencies’ interest rates also play a big part why I’m more bullish on the Aussie than the Loonie. The Aussie has a 4.5% interest rate while the Loonie only has 1.00%. This means that if one goes long on the AUDCAD, he could also net 3.5% in interest rate differential as a bonus aside from the potential to have capital gains.

More on LaidTrades.com …

By Corporate Fx

The current perceived instability of the currency markets have left some SMEs shaken. Fearful to enter a market perceived as continuously fluctuating and risky, over 50% of SMEs suggest that currency fluctuations seriously influence their abilities to trade overseas and 42% of those that do trade overseas suggest currency fluctuations also effect profitability of the business. It is clear that SMEs feel the burn of currency risk.

However despite these fears, the untapped foreign markets are seen as integral to Britain’s recovery via the export market. Encouraging SMEs to forgo the risks of currency fluctuations is an important step in developing Britain’s export market and doing so requires an explanation about methods to tackle the fluctuations. So what can SMEs do when it comes to trading overseas? One option is to agree an acceptable rate of currency and trade on that currency at an agreed point in the future after the transfer of products or conclusion of the service has been carried out. Or put more simply arrange a “forward contract”.

By definition a foreign exchange forward contract is a way to enable a seller to lock a buyer into a selling price for an asset with the transaction set in the future. It relies on both a buyer and a seller to agree on a fixed price point, this price can be influenced by additional factors depending on what is being traded, and the date of settlement.     Whilst this method could be applied to any transaction that might be influenced by fluctuations in the product’s value, currencies have a certain affinity with this method of trading and as such forward contracts are seen as a way of managing the risk of a fluctuating currency.

So why should you care about forward contracts? Apart from the fact that they can avoid the pitfalls of a fluctuating currency market they can also enable you to protect your profit margin. For example, let’s say that you are a UK based small retail business interested in selling apparel to Australian markets. You have a distributor who is interested in your stock however you want to ensure that the trade happens at a favourable rate. By setting the rate of exchange based on today’s rate you can ensure that your profit will remain the same despite the actual date of trade. In the event of a fall in value for GBP vs AUD you can ensure that you retain exactly the same rate as previously agreed upon and thus a locked profit margin. Of course the same occurs for when the value drops – you retain a static rate of exchange and thus have a protected profit margin.

It is clear why you should use a forward contract if you are worried about the effect of a fluctuating currency market on the ability to trade, however one question remains: how do you actually set up a forward currency contract?

In the example above if you were selling your product then you could set up a forward contract with a Forex dealer to sell currency at a set point in the future. This enables you to trade your product at a set price with your foreign client in their currency. Funds from your client would go to your forex dealer who would then honour the forward contract essentially buying the currency from you at a rate that was defined in the forward contract at the date agreed.

Forward contracts are the simplest solution against currency fluctuations and as such offer SMEs the opportunity to trade in foreign markets with a certain sense of ease. To find out more about forward contracts simply visit a corporate foreign exchange specialist.

About Corporate FX

Corporate FX is a privately owned company. Registered in 2001 and based on Cornhill in the City of London since 2007, we are a market leader in supplying commercial forex trading services and hedging strategies including trading Forex Spot.

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Chicago Mercantile Exchange, showed that futures speculators slightly pared their bets in favor of the euro and the other major currencies against the US dollar. Non-commercial futures positions, those taken by hedge funds and large speculators,were overall net short the US dollar by $29 billion against the other major currencies, down from a total short position of $30.5 billion on October 5th, according to data published by Reuters.

Currency speculators were net long the euro against the U.S. dollar by 41,511 contracts as of October 12th. This is a decline of nearly 7,000 contracts following net long positions of 48,243 contracts on October 5th and breaks a string of five straight weeks of improving positions for the euro.

The COT report is published every Friday by the Chicago Mercantile Exchange (CME) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. Open interest is the number of open contracts that have not been closed by a transaction or by delivery.

The British pound sterling had been the last major currency on the short side against the dollar in the CME futures market but in early October the British currency positions changed to a positive net amount of contracts. The euro, Australian dollar, New Zealand dollar, Japanese yen, Canadian dollar, Swiss franc and Mexican peso all continued to have a net positive amount of contracts.

The British pound sterling positions fell slightly to a net of 8,066 contracts after being long on October 5th by 9,403 positions. The latest data interrupts a streak of four straight weeks of improvement for the British pound future positions and brings positions off the best showing for GBP contracts in over a year.

The Japanese yen net long contracts decreased slightly to 48,285 as of October 12th from 49,206 net long contracts reported on October 5th. Yen positions had climbed for two straight weeks after a notable decline on September 21st as many speculators may have decreased their yen long positions due to the Bank of Japan’s currency intervention.

The Canadian dollar positions increased higher for a second straight week to a net total of 43,786 contracts after totaling 42,678 net longs on October 5th and rose to their highest level since May.

Swiss franc long positions declined to 19,947 long contracts as of October 12th after totaling a net of 22,599 long contracts on October 5th. This reverses three straight weeks of increases that brought the Swiss franc positions to their highest level since early in December 2009 when long contracts totaled 24,725.

The Australian dollar positions edged very slightly lower for second straight week after reaching their highest level since April on September 28th. AUD futures contracts declined to a net amount of 67,691 long contracts as of October 12th from 69,036 long contracts on October 5th.

New Zealand dollar futures positions edged slightly higher to a total of 16,573 long contracts after a total of 16,334 long contracts the week before.

Mexican peso long contracts also edged just slightly higher as of October 12th to 86,218 net long positions from 85,764 longs the week prior. Peso positions are at their highest since May and have now risen for five consecutive weeks.

COT Data Summary as of October 12th, 2010
Large Speculators Net Positions vs. the US Dollar

Euro: +41,511 contracts from +48,243 contracts on October 5th
British pound sterling: +8,066 contracts from +9,403 contracts
Australian dollar: +67,691 contracts from +69,036 contracts
Canadian dollar: +43,786 contracts from +42,678 contracts
Japanese yen: +48,285 contracts from +49,206 contracts
Mexican peso: +86,218 contracts from +85,764 contracts
New Zealand dollar: +16,573 contracts from +16,334 contracts
Swiss franc: +19,947 contracts from +22,599 contracts

Go to the Commitment of Traders CME raw futures data

Further COT Resources from around the web:

Forecast The FX Market With The COT Report

The Only Indicator You Will Ever Need

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

Further dollar strength came through during the Asia session, as the market continued to digest Fed Chairman Bernanke’s speech from Friday. EURUSD traded 1.3863-1.4006 and USDJPY traded 80.89-81.68. Bernanke provided no new insights into the current state of the FOMC’s thinking, although he did see a case for “further action” and noted that measures of underlying inflation are “trending downwards”. But the absence of detail on the likely size and timing of any future asset purchases proved to be a significant source of support for the dollar, and US 10y yields ultimately closed 8bp higher. Our US economics team still expects a new round of US Treasury purchases will be announced on Nov. 3, composed of $200 bn of purchases per quarter, with a maximum five-quarter program size of $980 bn. Chicago Fed President Evans, who is due to become an FOMC voter in January, said that the US economy is in a “bona fide liquidity trap” and that much more policy accommodation is appropriate “today”. Evans noted that, given the circumstances, “targeting a higher price-level path in an effective, disciplined and limited fashion” could be justified. The US Treasury decided to delay the release of the latest currency report until after the upcoming G20 meetings. Retail sales rose +0.6% in September (cons. +0.4%) while the August and July readings were revised up significantly. The Univ. of Michigan consumer sentiment index slipped to 67.9 (cons. 68.9), while core CPI was flat m/m in September (cons. +0.1% m/m). Industrial production is due and our US economists expect it turned slightly negative in September..
EUR

ECB President Trichet said that a majority of the ECB Governing Council is still in favour of keeping the sovereign bond purchasing program in place. Referring to the ECB’s mandate for price stability he said that raising the inflation target would be “disastrous”, and that he was also “completely against” the idea of raising inflation expectations. Again, he called on Eurozone governments to vigorously implement fiscal reforms.
EU Economic and Monetary Affairs Commissioner Rehn said that the CNY is “very undervalued” and called on China to allow it to strengthen “broadly”. Earlier, US Treasury Secretary Geithner said that China’s actions to accelerate the yuan’s rise had been recognised, but that it was important for this course to be sustained. The IMF announced that a conference of central bankers hosted by the PBoC will take place in Shanghai on Monday to continue with “the ongoing international examination of the policy challenges posed by the global financial crisis”.
Eurogroup Chairman Juncker said it would be premature to discuss an extension to Greece’s EU/IMF bailout plan, and that Greece has no alternative but to implement the terms of the original plan.
JPY

Economics Minister Kaieda said that Japan will study how to increase the quantity of international trade that is invoiced in yen, so as to help better immunize Japanese exporters from currency fluctuations.
GBP

Referring to the BoE’s asset purchase facility, MPC Member Fisher said it is not clear whether the next policy step will be “to sell the assets back or to buy more”. Also, he dismissed the idea of re-investing Gilt coupon payments received to date as “an unnecessary complication at this stage”. He reiterated comments made by Governor King in June that, when the bank eventually decides to tighten policy, it will most likely raise rates first and begin Gilt sales some time later.
Fischer’s remarks echo those of MPC Member Miles who last week was also unsure whether the next policy step would be to tighten or to ease further. So far, only MPC Member Posen has publicly called for further Gilt purchases now. Our UK economist expects the minutes of the Oct. 7 policy meeting, due for release on Wednesday, will show that Posen voted in favour of such action. We remain cautious on sterling as fiscal austerity will likely hold back economic growth and keep monetary policy accommodative.
AUD

Australian Treasurer Swan warned against trying to prevent the AUD making further gains against the US dollar. He said attempting to “artificially depress the value of the currency would be counterproductive” as to do so would risk pushing inflation and interest rates higher.

TECHNICAL OUTLOOK

AUDUSD clears 1.000 psychological resistance.
EURUSD BULLISH Pullback from 1.4159 targets 1.3775, reaction low. However, broader trend is bullish, next resistance at 1.4373 Fibonacci level.
USDJPY BEARISH Sell continues to rally towards 79.75, scope for 77.91 next. Resistance at 81.85 ahead of 83.03.
GBPUSD BULLISH Rise through 1.6018 favors extension of the uptrend towards 1.6201 ahead of 1.6379. Support at 1.5888 ahead of 1.5670.
USDCHF BEARISH Outlook is bearish; break below 0.9500 exposes 0.9225. Resistance at 0.9729 ahead of 0.9918 breakout low.
AUDUSD BULLISH After breaching 1.000 marginally, pullback eyes 0.9709 support. Expect gains to extend towards 1.0166.
USDCAD BEARISH Next support below 0.9981/31 defined at 0.9820. Recovery clears 1.0184 initial resistance thus exposing 1.0273.
EURCHF BULLISH Stalled in front of 1.3494; break of the level would expose 1.3665. Initial support lies at 1.3265 ahead of 1.3072.
EURGBP BULLISH Currently holds resistance at 0.8840 ahead of 0.8894 and 0.9039. Support holds at 0.8689 ahead of 0.8563.
EURJPY BULLISH As long as support at 111.77 holds, expect recovery towards 115.68 ahead of 116.68 Fibonacci resistance.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

Despite Friday’s recovery, the U.S. dollar fell for the fifth consecutive week against most of the major currencies. As several releases from the U.S. economy are expected today, the main question is whether the dollar is on its way to erase last week’s losses, or will the greenback drop for the sixth week.

Economic News

USD – Dollar Falls For the Fifth Week in a Row

The U.S. dollar saw an extremely volatile session during last week’s trading. The currency began last week with a bullish trend against most of the major currencies, including a 200 pips gain against the euro and the British pound. By midweek the dollar erased all its gains, and even reached fresh lows against the majors. By the time the weekend arrived, the dollar had corrected some of its losses, but still closed with modest losses.

The greenback declined last week due to speculations that the Federal Reserve will further ease monetary policy, debasing the dollar. In addition, several disappointing economic releases were published in the U.S. last week. The trade deficit widened more than forecasted in September. The gap grew by 8.8% to $46.3 billion, significantly below economists’ expectations for a $44 billion deficit. In addition, the weekly Unemployment Claims report showed that the labor sector in the U.S. continues to deteriorate. The number of Americans filing for unemployment benefits for the first time unexpectedly increased last week. Jobless claims rose by 13,000 to 462,000. As long as the U.S. economy continues to provide poor data, speculations regarding further monetary easing will likely continue to weaken the dollar.

As for the week ahead, many significant economic releases are expected from the U.S. Traders are advised to focus on the Long-Term Purchases, Building Permits, the weekly Unemployment Claims and the Philadelphia Manufacturing Index. Positive results on these reports may prevent the dollar from falling for the sixth straight week.

EUR – Euro Sees Mixed Results against the Majors

The euro saw mixed results against its major counterparts during last week’s trading session. The euro mainly saw ups and downs against the major currencies, without marking significant changes in value. By the end of the week, the currency was trading near its value when markets opened the previous Monday.

The euro began last week’s trading with an upward trend following positive data out of the euro-zone, specifically from the German economy. Inflation in Germany accelerated in September, led by increasing prices for heating oil and food. The inflation rate rose by 1.3% from a year ago after increasing 1% in August. In addition, the euro-zone industry expanded in September, showing gains in most sectors. The total value of output produced by manufacturers, mines and utilities rose by 1.0%, beating expectations for a 0.7% rise. However, better-than-expected British labor reports, followed by positive U.S. Retail Sales data managed to cut most of the euro’s gains, especially against the British pound.

Looking ahead to this week, traders are advised to pay attention to economic releases from Germany. Germany holds the largest economy in the euro-zone and two major reports are expected this week: the Economic Sentiment on Tuesday and the Business Climate on Friday. Positive results will strengthen speculations that the euro-zone is indeed recovering, and is likely to boost the euro.

JPY – Fears of Further Intervention by the BoJ Manage To Halt Yen’s Bullishness

The Japanese yen began last week’s trading with rising trends on all fronts. However, by midweek, the currency started to correct its gains, especially against the euro and British pound. The EUR/JPY pair is still trading above the 113.00 level, and the GBP/JPY is trading near the 130.00 level.

The positive data from the Japanese economy has added to the bullish pressure on the yen. Japanese machinery orders unexpectedly rose, in a sign that a recovery in earnings may encourage companies to spend on equipment. In addition, the uncertainty in global markets continues to support the demand for the yen. The JPY is considered to be a safe asset, and thus when risk-aversion increases, the currency tends to strengthen.

However, investors should always keep in mind that the Bank of Japan (BoJ) may move to devalue the yen, should the currency continue to strengthen. Despite international criticism, Japan has not announced that it will not intervene again. For the moment, the yen appears to have stabilized, although further upward movement may occur.

As for this week, traders are advised to continue following the announcements from Japanese officials. These announcements have had a massive impact on the yen’s value over the past few weeks, as investors look to see whether the BoJ will indeed intervene in the currency’s trading again.

Crude Oil – Crude Oil Drops Below $81 a Barrel

Crude oil fell to its lowest level in two weeks on Friday, reaching as low as $80.75 a barrel. Crude began last week’s trading around $82.50 a barrel, and was able to go as high as $84.10.

Crude oil fell close to the weekend as a result of the strengthening dollar, which reduced the appeal of commodities as an alternative investment. The dollar gains came following better-than-expected U.S. Retails Sales results in September. It appears that if the dollar will continue to strengthen against the major currencies, especially the euro, crude oil may drop further. At the moment, it has the potential to drop below $80 a barrel before the end of the week.

Looking ahead to this week, traders are advised to follow the major news releases from the U.S. and the euro-zone, as these tend to have the biggest impact on crude oil trading. In addition, traders should pay particular attention to the U.S. Crude Oil Inventories report, scheduled for Wednesday, as this release usually has an instant impact on the market.

Technical News

EUR/USD

After peaking at the 1.4155 level, the pair has consistently dropped and is currently trading around the 1.3890 level. As the RSI on the 4-hour chart has dropped below the 30 line, the pair is likely to continue with its bearish trend, and has the potential to reach the 1.3800 level.

GBP/USD

There is significant technical evidence that that the pairs recent downward trend may be coming to an end. A bullish cross has recently taken place on the 4-hour chart’s Slow Stochastic, suggesting that an upward correction might take place. Going long with tight stops might be a good strategy today.

USD/JPY

The pair’s bearish trend failed to gain momentum over the last few days, and the USD/JPY is still trading above the 81.00 level. That being said, the MACD on the weekly chart continues to provide clear bearish signals, indicating that the downward trend still has room to grow.

USD/CHF

The pair appears to be approaching the end of its bearish trend, having dropped as low as 0.9460. Technical data is showing signs of an upward correction. A bullish cross on the daily chart’s Slow Stochastic indicates that upward movement is likely. Going long might be the right choice today.

The Wild Card

Gold

After reaching a record high at $1,386 an ounce, gold is slowly dropping and is currently trading around $1,360 an ounce. Now, all oscillators on the 4-hour chart are pointing down, indicating that the bearish correction may continue today. This may be a great opportunity for forex traders to join the trend at its beginning. Going short is the recommended strategy today.

Forex Market Analysis provided by ForexYard.

© 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 David Shaw

Having the basic knowledge of Forex trading, you can already start trading on Forex demo account for virtual money. Usually every Singapore Forex broker provides with a free demo account with a real rates. So that a trader can get familiar with a trading platform and the Forex market. Practicing in demo provides with the basic skills of trading and stops being afraid to trade. The market moves only in two directions: either down or up. Sometimes it confuses the new traders as they apply a gambling approach to Forex trading: sell or buy? Fortunately, years of research and experience of other traders gave our generation a lot of indicators, tools and strategies together with the opportunity to improve them. For example, one of the most popular and simple indicators is the moving average. It can be a good help in your online trading. Set one moving average for a long period, another for a short period. At the point of intersection of both lines of the indicator you open a trading position and wait for profits.

During the training period when a trader is practicing on demo account, the trader has a great chance to practice different trading strategies and approaches. At this stage he is learning, that’s why no risks are involved and it is a great time to develop and test different trading methods. Therefore it is not necessary to calculate all possible ways where the market will move and be under the pressure because of the coming news that can shake up the market and cause the losses. A simple method of moving average will help a trader with a probability of more than 50% predict the behavior of the market in the near future. If a trader reaches the result where the total profitable positions will be more than losing ones, then together with the implementation of some rules of money management, you can make profit. Though you make a virtual profit at this stage, it is also important, because thus you will become more confident in Forex trading and your own knowledge and skills. You don’t need to be a genius to discover a right point to open a trading position, and there is no need to climb Mount Everest to start trading Forex. It is simple and easy, sipping coffee in the morning, pushing the right button when receiving a signal.

Usually Singapore brokers provide their potential customers with an access to tutorials, seminars and trading courses to help the beginners get started on the Foreign Exchange market. Every Singapore trader can participate in different long term training courses, which may last up to 3 months. After finishing a course it will be possible to start trading on Forex market for real money with confidence. You will be able to develop your own trading strategy, optimize the use of indicators and create your own automated trading system.

As you can see Forex trading gives a great potential for any trader to make profit. Trading platforms offer different tools to help the traders. Everything you need is to learn to use them and know how to analyze the currency market and charts.

About the Author

Daniel Shaw has many years of experience in online Forex trading. Visit his site Trading in Singapore to learn more about Forex Singapore .