Month: December 2010

So after being routed by Japanese yen for the last three years, it seems like the US dollar‘s recent rally will extend at least in the near term. Earlier today, the Bank of Japan, which is headed by Governor Masaaki Shirakawa, decided to keep its interest rate unchanged for the foreseeable future to encourage spending. Japan’s core consumer price index, which measures the change in the price of goods and services consumed minus the price of fresh food, remains stuck at -0.6%. A decrease in prices suggests that overall consumption in the country is very weak. So to support growth, keeping interest rates at a very low level will jump start lending and spending. The BOJ aims to keep the rates at this level until the CPI reaches 0.1% hopefully by next year. Doing so, of course, would be bearish for the yen since it would make investments in Japan less attractive. Such would in effect encourage investors to source their funds in Japan because of the country’s low borrowing costs and place it somewhere else.

Technically, it appears that the USDJPY pair about to breakout from a cup and handle formation. In the chart, the cup’s handle would be the ascending triangle patter that I marked. A break above the formation’s neckline would swing the USDJPY towards a temporary target of 86.00. A move above this could send the pair higher to around 88.00. But over the longer term, the bias remains to be bearish for the USD and bullish for the Japanese yen given the pair’s overall downtrend.

More on LaidTrades.com …

By Sara Nunnally, Editor, Smart Investing Daily, TaipanPublishingGroup.com

We’re heading into a chaotic couple of trading weeks. With Christmas and New Year’s back to back, the financial market’s volume could be very choppy, and stock prices could be the same way.

So, instead of trying to predict where the financial markets are headed over the holidays, let’s jump into 2011 and see what we think of all the talking heads’ predictions. They’re on every major business news site, touting the top 10 investment picks for 2011, or the five best places to invest in 2011, or some variation of the two.

I sifted through a bunch of these and found some commonalities. Let’s put these investment predictions to the test…

Investment Prediction #1: Growth in Emerging Markets Spur Commodities Prices

This prediction has pretty much been the mantra for emerging market investors for half a decade or more — interrupted by the global financial crisis.

Here’s what happened then: Emerging markets were very dependent on developed economies. They needed countries like the United States to buy its cheap goods. U.S. manufacturing poured into low-cost labor countries like China.

Now, the theory is that emerging markets themselves have become major consumers — particularly when it comes to commodities.

Renee Haugerud, founder and chief investment officer of hedge fund Galtere Ltd., told Fortune, “Wealth is shifting from developed economies to developing ones. As incomes grow, you move up the protein food chain. So you eat more meat, chicken, beef, and pork, which creates more demand for grain.”

Jonathan Burton for MarketWatch writes, “Emerging nations’ ultimate goal is to create societies of comfortable middle-class consumers, but first those people need roads, bridges, houses, electricity and other modern conveniences.”

Is this true? These are certainly broad predictions…

China, which has long been the economic engine for emerging countries, is still growing at breakneck speed; Brazil has been on everyone’s mind with the coming Olympics and World Cup.

The USDA reports that China’s food imports, including live animals, have increased every year since 1998. Some of the biggest jumps were from 2006 ($9.994 billion) to 2007 ($11.5 billion), and from 2007 to 2008 ($14.051 billion).

Last Monday, JPMorgan’s analysts said that the global steel industry, of which Brazil is a major producer (and China is a major consumer), may be on the rise. Steel prices could climb in the near future with higher demand and higher inputs.

On the whole, the premise is good. Emphasis should be put on commodities and commodity-based companies, though, as emerging markets are still dependent on developed economies to some extent. Think steel or cement companies, or agricultural ETFs or ETNs.

(By the way, investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Jared Levy simplify the market with our easy-to-understand articles.)

Investment Prediction #2: Information Technology Is the New Manufacturing Era

It used to be the U.S. that made things. But now, as I said before, U.S. companies have been shipping factories and jobs overseas…

That is, except for information technology.

Jim Swanson, chief investment strategist of MFS Investment Management, said, “We do make that. We export it. We’re good at it. The rest of the world loves this. It’s a sector that has doubled and tripled the free cash flow margins and EBIT margins it had 10 years ago when people were paying 40 times earnings. Today [the information technology] sector is trading at only about 16 times earnings.”

Swanson says that valuations are low, but these IT companies are showing amazing earnings.

Take Apple, Inc. (AAPL:NASDAQ). Its earnings have increased 45% on average for the past three years.

Walter Price’s Allianz RCM Technology Fund has returned 31% this year, as reported by Bloomberg Businessweek. Price thinks the sector will continue to see good cash flow and earnings from most companies in the tech sector.

“This scenario will continue to foster investment in technology,” he said.

Investors are divided on Apple’s stock price, however. Abhay Deshpande, who runs funds at First Eagle Investment Management, says it’s too high.

Bernstein analyst Toni Sacconaghi, on the other hand, says, “The stock is definitely not overpriced, especially not for a company so well positioned in such fast-growing markets.” And once it’s out from under the AT&T contract, Apple will be able to access main wireless carriers in China, Japan, and South Korea. And let’s not forget companies like Verizon here in the U.S.

The question is: Is all this potential priced in?

Maybe not… On Sunday, a comScore report notes that Americans spent $27.46 billion in 47 days buying online… up 12% from this time last year. And online sales of computer hardware are up 25% from 2009. That’s more than likely because of the iPad, but we won’t know for sure until Apple releases its sales report in January.

To me that means you might want to play Apple with options, rather than buying the stock outright. Whether you believe Apple’ stock is overpriced or not, it’s still a hefty price tag for many investors.

The rest of the tech sector will be on fairly solid ground, so long as the economy continues to recover in 2011. Buying the makers of semiconductors and electronics might suit your portfolio better than buying the big box stores like Best Buy or Radio Shack next year.

But let’s get back to talking about the recovery. The one thing that rang completely true for me in all these articles was the commentary on bonds.

Investment Prediction #3: Bond Bubble Will Sideswipe Investors

Wally Weitz, manager of Weitz Funds, says, “All the flows we see are into bond funds, and it’s over our protests because there’s really nothing very good that can happen from 0% interest rates.”

This happens in times of economic uncertainty. People look for investment that will give them guaranteed income, only now they’re paying more up front for a smaller yield. U.S. 10-year Treasury bonds are yielding 3.330% as of Friday. You could get a better yield from a dividend company.

MarketWatch editor Jonathan Burton writes, “In addition to using dividend-paying stocks as bond substitutes, consider both high-yield and high-quality corporate debt, and stay with short-term and intermediate-term bonds and bond funds, which are better insulated from rising interest rates.”

This shorter time frame also means you have a better chance of having more liquid cash than buying a 10-year or 30-year bond.

I can’t say enough how much I agree with what the bond market appears to be doing.

In Barbarians of Wealth, the book Sandy Franks and I co-authored this year, I wrote, “When the United States went into a recession in 2007, the government took on an unprecedented role in the economy. It increased spending drastically to make up for the falling private sector. It sold billions of dollars in Treasury bonds and flipped the switch on the printing press.”

This duel-pronged attack on the recession flooded the market with cheap credit and devalued our ability to pay back loans… That’s what bonds are — loans from the American taxpayer. The government uses future tax revenues to pay for those bonds.

But investors may be losing their appetite for bonds.

Marilyn Cohen, head of Envision Capital Management and a bond-investing specialist, says, “The [bond] landscape has changed. We’re in for a bear market. Baby boomers have never lived through a bear market in bonds with their money in the market. They’re going to get sideswiped.”

Finding other ways to protect your wealth in 2011 — other than the overused bond market — will be a smart move.

About the Author

Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country.

As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.

USDJPY might be forming a cycle bottom at 83.50 level on 4-hour chart. Key resistance is at 84.00, a break above the level could confirm the cycle bottom and indicate that the fall from 84.49 has completed, then another rise to re-test 84.49 resistance could be seen. However, as long as 84.00 resistance holds, the pair remains in short term downtrend from 84.49, and one more fall to 83.00 is still possible.

Daily Forex Signals

By Forex Signs, Inc.

The CHFJPY pair has continued its bullish trend from yesterday’s session; there are no significant technical moves so far. With overall bias in the long term remains to the upside, its still needs a clear break above 88.011 to continue the bullish scenario targeting 88.923. On the other hand, a clear break below 86.737 could trigger further bearish pressure, testing the 86.428 support which would invalidate the buy bias for the long term. RSI (14) for the long term shows price is near overbought, suggesting a reversal at anytime may happen.

Strong Oversold Quantified by William’s Percentage Rate

At today’s trading session, the USDCHF pair opened at price level 0.9660. The pair pursued a downtrend then after at H1 chart. At the time of writing, it already fell 21 pips. Resistance level is at 0.9698 while support is at 0.9633. The foregoing downtrend will most likely pursue the entire day as it had began at yesterday’s trade. During the previous session, the pair opened at 0.9712 price level. After two candlesticks at H1 chart, the pair had a bearish breakdown then tumbled further down by 51 pips. Moving forward to today, the USDCHF pair already surpassed preceding support at 0.9646. Chances are if the pair breaks current support, the trend is looking to go more far under. In support with aforesaid statement, %R (14) at the time of writing is lingering at the oversold level. The signal is unlikely to go up yet as it has not yet reached or even near the extreme -100 value. Aside from that, the fractals agree that the pair is strongly recommended to be sold as it is far down away from the Alligator’s lips. To recall, Bill Williams’ Alligator is an indicator of whether what trend is the currency pair pursuing. At present, its three main parts are appropriately placed indicating a strong downward movement. However, MACD (12,26,9) is not yet strong enough to indicate a sell. There is a slight chance that the signal might reverse approaching the positive base.

Better Than Expected Data May Push The Lonnie Up Against Other Currencies

For the upcoming session, Canada will be releasing their data on inflation and consumer spending. Also, early reports suggest the Loonie may be able to bounce back against the US, as economists expect a better than expected reports for CPI and retails sales. Core consumer price index is expected to rise 0.2 percent for November, following an earlier increase of 0.4 percent in October. Consumer price index is also expected to increase 0.3 percent for November, after October’s rise of 0.4 percent. The increase may be attributed to rising gas prices and less price increase for food. It is believed that inflation continues to be concentrated in one sector and is not spread over other various sectors. Economists perceive this would continue to leave the Bank of Canada on the sidelines with respect to its policy interest rate; keeping it unchanged at 1.0 percent well into 2011. Retail sales is also expected to rise by 0.6 percent. This would be the third consecutive report that this indicator would post a positive growth. Core retail sales is also expected to post a 0.8 percent rise, higher than its last report 0.4 percent increase.

About the Author

Forex Signs, Inc., Founded in 2006 in Wall Street, New York City, FSI relentlessly strives to be the premier Forex brokerage company in the industry by providing exclusive and unmatched trading and investment related services while constantly developing innovative solutions that cater to the vast requirements of both individual and institutional market participants.

By Greg Holden

The dominant story regarding Gold is the bullish run we’ve experienced since the financial crisis of 2007-2008. More recent news shows a continuation of this trend, but how do we interpret the widening fluctuations in price over the past two months?

Starting July 28th the price of Gold began a sharp bull run that saw little to no retracement. On October 15th the price came down sharply, marking the first retracement since late-July, moving from $1385.15 to $1315.30 over a 7-day period. Ever since, we’ve seen the price of Gold move within a broadening range, but still bullish.

Three explanations have been circulating. The first argues that the approach of the holiday season brings wider price swings as currency values get boosted by increased retail sales and heightened travel among consumers. These price swings begin to compete with the rising price of Gold, creating broader movements.

The second takes the same approach, but downplays the holiday aspect. As winter months approach in the Northern Hemisphere, a natural increase in commodity prices (particularly Crude Oil and Natural Gas) occurs, which affects US dollar values, which in turn affects Gold. These first two explanations mirror each other rather well and there doesn’t seem to be any indication that they both can’t be right.

The third explanation has to do with end-of-year profit-taking and forecasting. The close of any calendar year brings forth article after article forecasting what will be in the new year, economically speaking. These forecasts bring with them portfolio adjustments by most traders, hedge funds, and investment firms which leads to the closure of existing positions, increased spending from year-end holiday bonuses, and a shift in exposure. As a result, we see wider fluctuations among prices as traders anticipate the unchanging yet so-called “forecast to change” market.

But what’s changed?

Gold prices are still moving up and forecasters are expecting them to continue unabated in 2011. Some estimates put the price near $1800 an ounce by this time next year. Without taking a stance as to the validity of these positions, one is reminded of the same attitude towards the housing market pre-2007.

Are we seeing the formation of a Gold Bubble?

No doubt long-term Gold traders made lucrative profits over the last two years. Such confidence building stability makes me suspect that their confidence in Gold won’t likely waver in the months ahead. But wasn’t that one of the many causes of our current economic situation: blind confidence in an asset which proves profitable time and time again?

After all is said and done, Gold still looks to continue rising in 2011. Traders may expect some downward retracements at the starting months of 2011 from a post-holiday/post-winter cooldown in spending combined with an eventual warming temperature. But overall, the adage “the trend is your friend” seems to apply.

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.

The Euro gained against the US dollar in overnight trading as Chinese top official Wang Qishan gave supporting remarks on measures taken by International Monetary Fund and European Union to stabilize euro zone’s debt situation.  As per Qishan remarks at EU-China High Level Economic and Trade Dialogue the measures by EU and IMF will soothe European financial markets.

The Euro surged to day’s high of 1.32 against the US dollar on the remarks of Wang Qishan but later on settled around $1.3160 as compared to $1.3123 on late Monday. Where Qishan remarks gained investors confidence but on the other hand Moody’s decision to place Portugal’s sovereign debt rating under review for a downgrade further facilitated selling pressure in the Euro.

Head of Foreign Exchange Strategy, Kit Juckes at Societe Generale commented, “A sharp decline by the euro, and a further deterioration in the credit quality of euro-zone debt, is not in China’s interests,” he further added, “However, the image of a Chinese knight arriving in full armor on a white charger to ‘save the day’ is a bit far-fetched, what we are reminded of this morning however, is that with the weight of opinion and probably positions tilted so heavily against the euro, it does not take much to trigger a small bounce.”

The dollar index DXY which measures the greenback’s movement versus its major six rivals declined to 80.429 in overnight trading session as compared to 80.611 on late Monday.

However the Pound Sterling declined to 1.5487 versus the US dollar as compared to $1.5517 on Monday. The British Pound dropped on the increased public sector borrowing in UK as reported by Office of National Statistics.

The US Dollar declined to 83.69 against the Japanese Yen as compared to 83.83 as on Monday. As compared to other Asian currencies, the Australian dollar surged 0.3 percent to 99.59 versus the US dollar as the Reserve Bank of Australia decided keep its key cash rate at 4.75 percent.

Daily forex trading news written by Rehan from DailyForexTrade.com

By Greg Holden

One of the less-frequently analyzed pairs is providing us with signs of an impending bearish run.

The EUR/CAD appears to be forming what looks like a head-and-shoulders pattern on the daily chart, suggesting we could see long-term bearishness as we head into 2011.

The pair’s steep decline over the first half of 2010 led to a record low of 1.2466 in early June, but it looks to have been recovering since.

What we see now, however, looks to be signaling that the down-trend was not actually over, but stalling within a larger cycle.

If what is shown on the chart below turns out to be a head-and-shoulders formation, then traders should look to see the pair finding support at the 23.6% Fibonacci line and moving up towards the 1.36-37 range before entering another steep decline with targets near the record low of 1.2466.

EUR/CAD – Daily Chart

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 GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar came under pressure after China’s Vice Premier Wang said China supports the measures taken by the EU to stabilise markets. Risk appetite in general got a significant boost from these remarks, which helped to support the euro, the Australian and New Zealand dollars, as well as Asian equity markets. Elsewhere, the BoJ made no change to policy. EURUSD traded 1.3110-1.3194, USDJPY 83.57-83.84. St Louis Fed President Bullard, a non-voter on the FOMC in 2011, said he had some concerns that the Fed’s QE2 program could feed through into higher commodity prices, although he conceded that there has not been very much evidence of this as yet. He also said recent US data could point to a stronger recovery than anticipated. There were no major data releases and there are none scheduled until Dec. 22.

EUR

Greece Prime Minister Papandreou said he is unconvinced that the decisions taken at last week’s EU leaders summit are enough to stabilize the situation.

The ECB settled EUR603 mn of bond purchases last week versus EUR2.67 bn the prior week. The ECB tenders this week will command attention with about EUR200 bn of 3m and 1y tenders maturing on Dec 23.

JPY

The BoJ left policy unchanged at the end of a two-day meeting today. The central bank confirmed that it has begun purchases in all asset categories signaled previously, and that these would continue. The policy statement noted that although core inflation remains in negative territory, the pace of deflation has continued to moderate.

TECHNICAL OUTLOOK

EURUSD BEARISH Move below 1.3061/48 support zone would expose 1.2969. Resistance at 1.3360 USDJPY BULLISH Break of 83.60 exposes 82.84. Resistance holds at 84.51

GBPUSD BEARISH Sell-off found support at 1.5454 ahead of 1.5297. Initial resistance at 1.5645 USDCHF BEARISH Outlook is bearish; support at 0.9548 and then 0.9463 key low.

AUDUSD BULLISH Upside potential expected to target 1.0029; support lies at 0.9841/31 USDCAD NEUTRAL Push through 1.0190 exposes 1.0287; initial support at 1.0103

EURCHF BEARISH Violation of 1.2676 and 1.2649 exposes 1.2500 psychological support. Resistance at 1.2784 EURGBP NEUTRAL Resistance at 0.8553, support at 0.8426
EURJPY BEARISH Pressure on 109.57; a break here would expose 108.35. Resistance at 110.82

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.

By Dan Eduard

With some exceptions, the EUR/SEK pair has been in a continuous downward spiral for the last few weeks, dropping over 1900 pips. Technical indicators are now showing that a bullish correction may occur in the near future. This presents Forexyard traders with an excellent opportunity to enter into buy positions at a great starting price.

We will be analyzing the daily chart for EUR/SEK, provided by Forexyard. The technical indicators being looked at are the Relative Strength Index, Stochastic Slow and Williams Percent Range.

1. As can be seen, the Relative Strength Index is currently floating right above oversold territory. Should the indicator cross the lower support line, it would be a clear sign that the pair may stage a reversal.

2. A bullish cross has formed on the Stochastic Slow, in a clear sign that the pair is oversold. This further supports our theory that an upward correction is likely to take place soon.

3. The Williams Percent Range is currently right around the -80 level. Typically, anything below -80 indicates that the pair is in the oversold region, and that an upward correction is imminent.

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.

Source: ForexYard

The euro traded near a two-week low against the dollar on speculation some European nations and banks will struggle to raise funds amid the region’s debt crisis. The euro also fell to a series of fresh all-time lows against the Swiss franc, with the Swiss currency, along with the U.S. dollar and Japanese yen, benefiting from their roles as perceived safe harbors in times of trouble.

Economic News

USD – Dollar Gains on Renewed Euro Zone Concerns

The U.S. Dollar continued to strengthen against the EUR on Monday, as investors remain fearful that more euro zone nations will finally acknowledge the difficulties they’re having working within their fiscal budgets. By yesterday’s close, the USD rose against the EUR, pushing the oft- traded currency pair to near the 1.31 level.

Irish debt was downgraded, and though markets expected such a move by Moody’s, it nonetheless continues to put pressure on the Euro, which some analysts predict has quite a bit more room to fall.

In addition, traders have recently started to focus more on fundamentals such as economic growth and short-term interest rates. That shift, just getting underway, could take the shine off the soaring USD in the coming months. A stronger currency is important to the U.S. because it entices foreign investors to Treasury debt that finances the nation’s record budget deficit. The downside is that it may restrain profit growth at companies with international sales by making U.S. exports more expensive.

As far as the North-Western Hemisphere is concerned today, the United States is not due to release much data of concern. Canada, on the other hand, is going to release vital data regarding its retail sales levels, which last week caused a stir among the USD and EUR. Growth in Canadian sales may help return the Loonie back to a bullish posture, but forecasts appear modest at best. This Thursday’s US Core Durable Goods Orders and New Home Sales report appear to be this week’s primary events for dollar traders leading into the Christmas holiday.

EUR – EUR Falls on Spanish Debt Concern

The euro fell broadly on Monday on fears of further credit rating downgrades in Europe while global stocks wavered as investors fled from riskier assets to the safety of bonds and gold. As a result, the 16-nation single currency fell to a session low beneath $1.31 after Moody’s said it may cut the ratings on some Spanish banks.

The euro also slid to record lows against the Swiss franc and Australian dollar as traders fretted over Europe’s debt problems. The EUR/CHF fell to 1.2633, its weakest since the EUR’s launch in 1999. Investors already were skittish after last week, when Moody’s downgraded Ireland’s credit rating by five notches. Speculation that France and Belgium may also face possible cuts in their credit ratings also rattled investors.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not commonplace and present terrific opportunities to take advantage of the price swings for large profitable gains.

JPY – Yen Records Mixed Results against Majors

The Japanese yen finished yesterday’s trading session with mixed results versus the major currencies. The Japanese currency extended gains versus the EUR on Monday, to trade around 109.95 amid a broad sell-off in the EUR. The JPY did see bearishness as well as it lost over 50 pips against the AUD and closed at 83.20.

The Japanese markets were expected to have a relatively heavier effect on the JPY versus its major currency counterparts today as the Overnight Call Rate was released during the Asian trading session.

The rate was left unchanged, but traders will be paying close attention to the Bank of Japan’s (BOJ) Press Conference that will follow to look for expectations of Japan’s economic future, especially considering the speculation that measures will be taken to devalue the yen. A bullish statement from the BOJ could lead some traders to believe that it is forecasting a rosier financial climate in Japan. Others fear that the climate is declining and monetary measures may be taken to directly influence currency prices.

Crude Oil – Crude Oil Rises Above $89 a Barrel

Crude oil prices advanced on Monday and closed around $89.20 a barrel as bitterly cold weather in Europe and the United States boosted expectations of rising heating fuel demand over the Christmas holiday period. Oil was also lifted after Congress approved last week the extension of sweeping tax cuts and a jobless benefits deal that analysts expect to boost US growth in 2011.

President Barack Obama signed the bill into law shortly after markets closed on Friday.

Looking ahead, traders are advised to watch carefully the global stock markets and the major economic indicators which will be published from the U.S. and Europe in order to predict the next movements in oil prices.

Technical News

EUR/USD

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

GBP/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating in the neutral territory. However, there is a fresh bullish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. Going long might be a wise choice.

USD/JPY

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

USD/CHF

This cross experienced much bearishness yesterday, and currently stands at the 0.9630 level. There is much evidence in the chart’s oscillators that supports a possible bullish correction today. This is supported by the 4-hour chart’s Slow Stochastic. Going long with tight stops may turn out to bring big profits today.

The Wild Card

AUD/NZD

The AUD/NZD cross has experienced a bullish trend for the past week. However, it seems that this trend may be coming to an end. For example, the daily chart’s Slow Stochastic signals that a bullish reversal is imminent. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

Forex Market Analysis provided by 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.