InvestMacro FX

Market Movers of the Day

Asia-Pacific

New Zealand Retail Sales rise 1.1% MoM versus 0.6% expected.

Japanese M2 Money supply was in line with analysts’ expectations at 3%

Europe

German Wholesale price index fell -8.1% YoY

UK RICS House Price Balance Surprised for the better reading 22%

UK BRC Retail sales Monitor rise 2.8% YoY

The Overall Sentiment

Sentiment was rather positive as investors continue to expect positive results from the upcoming earning season, pushing equities higher with the FTSE gaining 0.94% and the DAX Gaining 1.25%.In the UK RICS house price balance surprised for the better pointing a recovery in UK housing market. Although the positive indication on the UK housing market has helped to push UK equities higher sentiment for the Sterling was rather bearish as worries over the looming UK debt issue .The Sterling fell bellow the 1.58 against the Dollar and the Euro traded close to 0.94 £.However the overall picture for the Dollar was bearish with the Euro consolidating at the 1.48 level, Gold rising above 1058$ an ounce and Oil above 73$ a barrel.

The Day Ahead

The published National bank of Australia Business survey which surprised for the worse could affect sentiment in Australia and New Zealand to some extent. But the effect is expected to be short lived as the survey has been conducted before the RBA rate hike which has lifted sentiment for the Aussie economy. Moving to Europe some inflation figures are due with the Swiss Producer and Import prices, and in the UK CPI figure with both due ahead of the opening of the London session. Slightly later in the Day the German ZEW survey is due and is expected to shed light on the economic sentiment in Germany the largest economy in Europe. The reading will likely affect sentiment for both European equities and the Euro. The concluding data for the day will be the US ABC/Washington Post consumer confidence which is due at 21:00 GMT with investors eager to get a more robust reading of the consumer. Overall sentiment will largely affected by the earning releases due this week with investors looking for top line growth rather than profits from cost cutting as only top line growth will indicate the economy is back on the growth track.

Technical Analysis

GBP/USD

The fast moving average crossing the slow moving average downwards at the 1.644 area is signaling the pair is slowly but confidently gaining bearish momentum. The pair has broken successfully the 1.61 support and the 1.6 support and has settled above the 1.57 support which is rather meaningful. The 1.57 area trims the upper edge of the range thus a break of this specific support could drag the pair into a long bearish trend. The 1.51 area which acted as a support area not so long ago is now acting as the upper resistance for the pair. Although the 1.57 support is significant and the stochastic indicator shows sum potential for correction, a prolonged period in which the pair fails to break the 1.61 resistance might eventually allow the pair to gain sufficient bearish momentum to break the 1.57 support and trade closer to the 1.5 mark which is the next significant support.

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 following article is based on analysis from Robert Prechter’s Elliott Wave Theorist. For more insights from Robert Prechter, download the 75-page eBook Independent Investor eBook. It’s a compilation of some of the New York Times bestselling author’s writings that challenge conventional financial market assumptions. Visit Elliott Wave International to download the eBook, free.

By Nico Isaac

If you want the latest news on the U.S. Dollar Index, try a search under its new ticker symbol, RIP. — as in, “rest in peace.” Let the record show: In the early morning hours of Tuesday, October 6, the mainstream financial community officially declared “The Demise of the Dollar” (The Independent).
The “coroner’s report” cites these details as the causes of death:

• An alleged (and later denied) secret meeting among leaders of certain Arab States, China, Russia, and France which aimed for the immediate discontinuation of oil trading in U.S. dollars.
• And, an open statement from one senior United Nations official that proposed the dollar be replaced as the world’s reserve currency.

In the words of a recent Washington Post story: “The growing international chorus wants the dollar replaced… a move that would end the greenback’s six-decades of global dominance.”

And with that, the line between negative sentiment — AND — “EXTREME” negative sentiment was crossed. It occurs when the beliefs about a market lean so far over in one direction, that the boat investors are sitting in is about to tip over… Just like the last time.

Case in point: Spring 2008. The U.S. dollar stood at an all-time record low against the euro after plunging more than 40% in value. And, according to the usual experts, the greenback was “dead”-set to meet its maker. On this, these news items from early 2008 say plenty:

• “The dollar is a terribly flawed currency and its days are numbered.” (Wall Street Journal quote)
• “It’s basically the end of a 60-year period of continuing credit expansion based on the dollar as the world’s reserve currency.” (George Soros at the World Economic Forum)
• “Greenback is losing Global Appeal… the ‘Almighty’ Dollar is Gone.” (Associated Press)

YET — from its March 2008 bottom, the U.S. dollar came back to life with a vengeance, soaring in a one-year long winning streak to multi-year highs. In the most current Elliott Wave Theorist (published September 15, 2009), Bob Prechter presents the following close-up of the Dollar Index since that trend-turning bottom. (some Elliott wave labels have been removed for this publication)

At a measly 6% bulls, the bearish dollar boat tipped over. The situation today is even more remarkable: The percentage of bulls is lower, at 3-4%, while the dollar’s value is higher than the March 2008 level.

It’s crucial to understand that markets don’t necessarily respond to sentiment extremes immediately. But, such extremes do indicate exhaustion of the trend — which is usually the opposite of what the mainstream expects.

For more information, download Robert Prechter’s free Independent Investor eBook. The 75-page resource teaches investors to think independently by challenging conventional financial market assumptions.

By CountingPips.com

The United States trade deficit decreased more than expected in August as exports rose and imports fell according to a release by the Commerce Department today. The U.S. trade deficit declined by 3.5 percent as the deficit registered $30.7 billion in August following a revised deficit of $31.9 billion in July. Market forecasts were expecting a deficit of approximately $33.0 billion for the month.

Helped by a weaker U.S. dollar, the U.S. had a total of $128.2 billion worth of exports in August which was a increase of $0.2 billion over July’s total. August saw a reduction in imports with a total of $158.9 billion worth of imports compared with $159.8 billion in July for a decrease of $0.9 billion. Also contributing to the lower trade deficit in August was a decrease in imports of petroleum products which declined by 5.7 percent for the month.

The politically sensitive U.S. trade deficit with China also edged down in August. The deficit with China declined to $20.2 billion from a deficit of $20.4 billion in July. Other notable U.S. trade deficits were with the European Union at a $5.4 billion, Japan at $4.3 billion, Mexico at $4.0 billion and OPEC at $6.4 billion. U.S. trade surpluses with other countries for August included Australia at $1.2 billion, Hong Kong at $1.3 billion, Singapore at $0.3 billion and Egypt at $0.4 billion.

US Dollar gains in Currency Trading today

The U.S. dollar has been mostly stronger in currency trading today against the other major currencies. The dollar gained today versus the euro, British pound, Japanese yen, Swiss franc, Australian dollar and New Zealand dollar while falling against the Canadian dollar at 1:41 pm EDT according to currency data by Oanda.

The U.S. stock markets have been positive at time of writing with the Dow Jones up by approximately 45 points, the Nasdaq gaining by roughly 10 points and the S&P 500 almost up by 3 points.  Oil has been virtually unchanged today and trading around the $71.55 mark while gold has fallen by approximately $10.00 today to trade at the $1,044.50 level.

USD/JPY Chart – The US Dollar gaining in trading versus the Japanese Yen today.  The USD/JPY is approaching the top of the downward sloping price channel after this week touching its lowest level since the end of January around the 88.00 level.

By Fast Brokers – Gold is continuing its cool-down following the explosive breakout earlier this week.  The precious metal has stabilized along our 2nd tier uptrend line and is presently trading just below the psychological $1050/oz level.  We notice a similar dip in the AUD/USD and it seems the two are solid correlations right now.  The reason for the consolidation in gold, besides oversold conditions, is the inability of the EUR/USD and GBP/USD to overcome our near-term technical barriers.  While movements in the AUD/USD should continue to impact the precious metal, the continuation of gold’s rush will likely depend upon an accompanying breakout in the EUR/USD.  Gold has been closely correlated with the EUR/USD throughout the year.  Therefore, a topside breakout in the EUR/USD would drive gold to its next leg higher.  As we mentioned, the EUR/USD does face a few immediate-term technical obstacles (refer to EUR/USD commentary).  Therefore, the EUR/USD’s upward trajectory isn’t secure quite yet.  Therefore, investors should eye the EUR/USD’s potential interaction with our topside technicals for the time being to gauge whether gold can leap past previous highs.

Meanwhile, econ data Q3 earnings will heat up around the globe next week following Monday’s U.S. banking holiday.  Therefore, volatility in the FX markets should pick up, implying continued volatility in gold over the near-term.  Gold’s breakout this week likely implies more accelerated gains over the near to medium-term since the highly psychological $1000/oz barrier is out of the picture.  The near-term is about gold setting a new, lasting top from which to consolidate from.  For the time being we are unable to create any reliable downtrend lines.  We maintain our positive outlook on gold trend-wise due to the aforementioned analysis.

Present Price: $1046.95/oz

Resistances: $1049.24/oz, $1052.89/oz, $1058.54/oz, $1061.40/oz

Supports: $1045.63/oz, $102.63/oz, $1037.99/oz, $1035.54/oz.

Psychological: $1050/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is moving lower today at a brisk pace after failing to eclipse 9/30 highs and our 4th tier downtrend line.  The Cable has proceeded to pullback towards 10/7 lows as the FX markets experience a broad-based appreciation of the Dollar.  The GBP/USD’s inability to climb past the aforementioned topside technical barriers leaves the door open for the currency pair to revert back to its near and medium-term downtrends.  That being said, it will be important for the Cable to remain above 10/7 lows and our 1st tier uptrend line since bulls don’t want to break the streak of consecutive higher lows.  Such a development could spell the beginning of a more protracted near-term selloff.  Overall, the Cable has neglected to full participate in the breakout in gold and the AUD/USD and the battle between the bulls and bears lives to see another day.  Therefore, investors should eye the aforementioned topside and downside technical levels over the next few trading sessions.

Volatility should pick up next week since Q3 earnings season will shift up a gear and Britain will start releasing some key economic indicators.  It’s a bit disconcerting the Cable isn’t being buoyed by better than expected PPI Input data today.  Rising prices should discourage the central bank from committing to future dovish monetary shocks.  Perhaps investors prefer to wait for Tuesday’s CPI data and the tentative release of Britain’s Inflation Letter.  If higher input prices translate to climbing consumer prices then this could help buoy the Pound.  However, higher input prices and sluggish consumer prices would lead investors to believe that corporate profits are being pinched, implying the BoE would need to keep liquidity flowing to encourage lending.  We maintain our negative outlook trend-wise on the Cable until our topside technials are eclipsed and we see a broad, positive fundamental change in British econ data.  Furthermore, any uptrend in the Cable will continue to be hampered so long as the BoE holds its comparatively dovish monetary stance.

Present Price: 1.5941

Resistances: 1.5964, 1.5992, 1.6024, 1.6045, 1.6072, 1.6095, 1.6127

Supports: 1.5921. 1.5900, 1.5862, 1.5840, 1.5809, 1.5791, 1.5766

Psychological: 1.60

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 settling above Thursday lows and our 3rd tier uptrend line after pulling back from Thursday highs.  Much better than expected French Industrial Production data is helping buoy the Euro after investors decided to lock in profits earlier.  The outperformance of French versus German econ data stems from the negatively mixed PMI numbers we received a couple weeks back.  The underperformance of Germany’s economy is likely a key factor driving the ECB to keep liquidity flowing right now.  However, the economic versatility of the EU region is keeping the EUR/USD near our 3rd tier downtrend line and September highs.  The currency pair has logged four consecutive higher lows, a positive development technically.  In fact, the EUR/USD peaked just past our 3rd tier downtrend line yesterday before buckling.  This shows the EUR/USD is very close to a technical breakout since our 3rd tier runs through September highs.  After September highs all the EUR/USD has to deal with is the psychological 1.50 level before experiencing accelerated near-term movements to the topside.  As for the EUR/USD’s downside technicals the currency pair has multiple uptrend lines along with 10/7 and 10/5 lows serving as cushions.

Meanwhile, gold and the AUD/USD are developing new bases and could add onto earlier gains over the next week.  However, it remains to be seen whether these strong pulls on the Dollar will experience a little more profit taking before setting a true bottom.  That being said, investors should keep in mind that the breakout in gold and the AUD/USD doesn’t necessarily guarantee a similar topside breakout in the EUR/USD.  The Aussie and EU economies are structured differently and the central banks will approach their exit strategies as they see fit.  Though the EUR/USD’s topside technical barriers are wearing thin they exist nonetheless.  Hence, a downward pressure is still hampering larger immediate-term gains.  The Euro’s near-term performance ultimately depends on upcoming Q3 earnings results and next week’s econ data from both the EU and U.S.  Investors need to see fundamental economic improvements in the EU and encouraging U.S. earnings before committing to a movement towards 1.50 and higher. Additionally, unexpected central bank comments could always jolt the FX markets psychologically.   The first big econ release from the EU next week will be Tuesday’s German ZEW Economic Sentiment data.  Trading should be light on Monday since the U.S. will be off on a banking holiday.

Present Price: 1.4745

Resistances: 1.4769, 1.4799, 1.4823, 1.4881, 1.4905, 1.4946

Supports: 1.4721, 1.4704, 1.4683, 1.4648, 1.4625, 1.4589, 1.4567

Psychological: September Highs, 1.50

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 USD/JPY is popping nicely above October lows after Core Machinery Orders data came in lighter than analyst expectations.  Broad-based Dollar strength is only helping the USD/JPY head higher as we recognize pullbacks in both the GBP/USD and EUR/USD.  Hence, investors are still a bit cautious despite the optimism resulting from the RBA’s monetary shock and consequent breakout in gold.  The USD/JPY has responded by creating some distance between price and our important 1st tier uptrend line.  Despite the potential for more immediate-term gains in the USD/JPY, the currency pair still faces our 2nd tier uptrend and downtrend lines along with the highly psychological 90 level.  Therefore, investors should refrain from becoming too optimistic in reaction to today’s bounce.  The longer-term downtrend line persists and a pop on oversold conditions is healthy.  As for the downside, the USD/JPY only has our 1st tier uptrend and October lows separating the currency pair from a retest of key January lows.

The USD/JPY’s near-term path will rely upon the combination of important econ data next week, Q3 earnings reports and outlooks, and the BoJ’s monetary policy decision on Tuesday.  Volatility should increase considerably before Tuesday’s meeting since great uncertainty surrounds the true monetary stance of the BoJ.  Tuesday’s decision will be the first under the leadership of Minister Fujii.  Though we don’t expect the BoJ to alter its monetary policy on Tuesday, investors will carefully analyze Fujii’s comments.  Investors will look to see if Fujii reveals whether the BoJ is comfortable with the Yen appreciating further and if/when the central bank would intervene to defend exporters.  However, we don’t expect too much clarity, only further haze and uncertainty.  Meanwhile, Monday’s trading session should be quiet since U.S. markets will be closed for a banking holiday.

Present Price: 89.33

Resistances: 89.45, 89.68, 89.82, 89.97, 90.21, 90.43

Supports:  89.16, 88.91, 88.63, 88.43, 88.16, 88.00

Psychological: 90, 2009 and 2008 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.

Source: ForexYard

Federal Reserve Chairman Ben Bernanke’s speech yesterday gave a much needed boost to the Dollar against its major currency counterparts, particularly the JPY. Bernanke shifted to a more hawkish tone in terms of the timing of exit strategy following moves by other central banks, stating the bank is ready to tighten monetary policy once the economy improves. ECB President Trishet also supported a strong Dollar in his statement yesterday.

Economic News

USD – Dollar Recovers Losses after Trichet-Bernanke Exchange

While starting the day with bearish tendencies, the US Dollar seemingly rebounded in later trading. Spiking to as low as 1.4820 against the EUR, the USD recovered and is currently trading just above 1.4700. Similar price swings were experienced against the JPY, CHF and GBP yesterday as well.

Positive economic data, a boost in market confidence and a consequent rise in equities all took their toll on the greenback in today’s early trading hours. However, the buck saw a rebound following statements from European Central Bank President Jean-Claude Trichet which was less hawkish than anticipated. Better than expected figures in the US Unemployment Claims report also added a small boost in USD appetite.

Later in the day, Federal Reserve Board Chairman Ben Bernanke spoke, responding to Trichet’s comments with a verification of tightening monetary policy to help keep the Dollar strong. Trichet’s remarks were not as forceful as most expected and Bernanke’s comments were strong enough to counter some of the EUR’s recent gains, leading the greenback to a late-session rally Thursday evening.

Looking ahead to the end of this week’s trading, there are 3 important pieces of data to consider today. First is a speech being made by Trichet at a university in Venice, Italy. After yesterday’s comments about forex markets, the EUR and the USD, Trichet may use this speech to reiterate some sentiments regarding the EUR’s recent bullish movement. Later in the day, the US will report its trade balance figures, but more importantly, Canada will be releasing its Unemployment Rate as well as some important housing numbers. The CAD may be one of the day’s leading market movers and traders need to keep an eye on it in order to make some reasonable profits.

EUR – EUR/CHF at Trend Peak, Due for Downward Correction

The EUR experienced mixed results today against its primary currency rivals. Following the European Central Bank’s (ECB) monetary policy statement, the EUR saw reversal to its previous upward movements, and Federal Reserve Board Chairman Bernanke’s comments later in the day only reinforced the USD’s ascent versus the 16-nation currency. The EUR finished the day against the USD at 1.4723, and down around 0.9190 against the Pound Sterling.

While holding interest rates steady, both the Bank of England (BOE) and the ECB expected to see moderate gains directly afterward. However, ECB President Trichet’s comments were seen as less forceful than was expected and resulted in a corrective move against its primary rival, the US Dollar.

The EUR has also reached a peak point versus the Swiss Franc (CHF) in today’s trading and many investors are now expecting a reversal to its latest uptrend. This behavior is following suit within a distinct, long-term bearish channel in the EUR/CHF pair.

Today’s economic data from the Euro-Zone will be very limited with only a few minor reports being released regarding French and Italian industrial production. But Jean-Claude Trichet is due to speak at a university in Venice and could reiterate some of his stronger sentiments about the EUR’s recent bullishness during his talk. Traders should watch for any news regarding this speech as it may be the leading factor in the EUR’s movements today.

JPY – JPY Falls before Holiday Weekend

The Japanese Yen appeared to take a hit across the boards in today’s trading. The JPY closed the day down against most of its primary currency rivals. The GBP/JPY pair ended Thursday’s trading at 142.89, while the USD/JPY finished at 89.15. It doesn’t appear as if the JPY has broken out of its bullish channel versus these major currencies, but yesterday’s movements have some investors covering their short positions before the weekend begins.

Adding to this short-position covering is the anticipation of a long weekend in Japan as the island economy gears up to celebrate Health Sports Day on Sunday. Traders are ditching their JPY positions in exchange for other assets which will carry normal volume levels going into the start of a fresh week. This lends credence to the idea that the JPY will begin to recover these losses by Tuesday or Wednesday of next week. As for economic news, Japan has no news being anticipated, which means investors will be focusing on the economies of the West in Friday’s trading.

Crude Oil – Crude Oil Price near Short-Term Peak; Correction on the Way?

Crude Oil’s price has held steady between $66 and $74 a barrel over the past 3 months and recent price behavior doesn’t suggest any changes in this pattern. After climbing back above $70 a barrel this week, the price of Crude Oil has seemingly reached a short-term peak and may head downward as this week comes to an end.

Contrary to this prediction, however, is this week’s US Crude Oil Inventory report which showed inventories falling by 1.0 million barrels last week. This news highlights a potential trend of growth in oil consumption, and thus slightly higher demand. If demand is indeed on the rise, traders could see oil prices climb beyond their current level of $71 a barrel and go as high as $73 by early next week.

Technical News

EUR/USD

The typical range trading on the 4-hour chart continues. The daily chart RSI is floating in neutral territory. However, there is a fresh bullish cross forming on the hourly chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. Going long might be a wise choice.

GBP/USD

There is a fresh bullish cross forming on daily chart’s MACD indicating a bullish correction might take place in the nearest future. The upward direction on the hourly chart’s Momentum oscillator also supports this notion. When the upward breach occurs, going long with tight stops appears to be preferable strategy.

USD/JPY

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the hourly Chart’s RSI is already floating in the overbought territory indicating that a bearish correction might take place in the nearest future. Going short might be a wise choice.

USD/CHF

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

The Wild Card – AUD/JPY

The pair may experience a correction to its recent bullish run. A bearish cross is evident on the hourly, 2 hour and 4 hour Slow Stochastic charts and with the RSI floating in the overbought territory on the hourly, 2 hour and 4 hour charts. Furthermore a breach of the upper level of the Bollinger Bands is evident on the 4 hour and daily charts. Forex traders are advised to go short for the day.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Movers of the Day

Asia-Pacific

Australian Unemployment surprisingly fell to 5.7%

Japanese Eco watchers outlook at 43.1

Japanese Machine tool orders fell -61.9% YoY

Japanese Core machinery orders rise 0.5% surprising for the better

Europe

UK Rate decision with rates left at 0.5%

ECB rate decision with rate left at 1%

German Industrial Production rising 1.7% versus 1.5% expected

Speech by ECB president Trichet

Americas

US Initial Jobless claims at 521k versus 541k expected

US Wholesale inventories drop -1.3%

The Overall Sentiment

Sentiment was bullish as risk appetite pushed equities higher with most major indexes in the money. The opening data for the Day was the Australian unemployment which surprised investors for the better by declining to 5.7% against analysts’ surveys which expected a climb to 6%.The positive surprise which comes not so long after the surprising rate hike of the RBA has spurred more assessments a cycle of rate hikes around the world is getting closer. Sentiment for the Aussie was strongly bullish pushing the Australian Currency above the 0.9 mark with markets eyes on the currency reaching parity with the dollar in the not so distant future. The broad Sentiment in Asia-pacific also reacted positively to the data with the Nikkei climbing 0.34% and the Hang Sang gaining above 1%.Another factor fuelling the market was market growing expectations for a positive earning season as Alcoa the world largest aluminum producer surprised by returning to the black for first time in a year spurring optimism among inventors.

Moving to the London session market eyes were focused mostly on the rate decisions by the BoE, the ECB and the speech by ECB president Jean Claude Trichet that followed. Rate on both the UK and EU were left unchanged as expected but expectations by market players the ECB will suggest an exit plan have been in vain. ECB president  Trichet has stressed key rates in the ECB are “appropriate” and will remain low as to avoid a regression in the fragile recovery of the EU economy and ease the negative economic effect  the Euro appreciation has on the region.

In the US initial jobless claims were at the centre of market attention with a surprise figure of 521K versus an expected 541k by investors’ surveys. The better than expected Job data has helped to lift markets expectations for theQ3 earnings season with investors continuing to buy into equities. As risk appetite was elevated investors sold the Dollar rather strongly moving the Dollar index to a 14 month low in a broad anti Dollar rally. The Euro revisited the 1.48$ zone and the Sterling edged above the 1.6$ mark.

In  commodities sentiment for metals was largely led by higher inflation expectations and reacted in tandem with a large Dollar selloff. Gold surged to yet another record reaching 1060$ an ounce. In the Petroleum arena Oil futures moved above the 72$ before retreating lower and Natural Gas hovered around 5$.

The Day Ahead

Sentiment could be modestly negative as markets strong run for the week and risk of profit taking in short dollar positions potentially ignited by the speech of Fed chairman, might move investors to the sidelines and risk off the table. The opening data for the Day will by German CPI and trade balance which will reflect on the inflation level of Europe’s largest economy and the negative headwinds the strong Euro has on EU exports. In the UK the PPI will reflect on potential inflation, a looming problem for the UK in the not so distant future. Later in the day ECB chairman Trichet is expected to speech which might affect sentiment on the Euro. The concluding data for the day and the week will be the US trading balance with investors surveys pointing an expected increase of the deficit to -$32.7B as a larger trade deficit in associated with better US economy.

Technical Analysis

EUR/USD

The pair is currently in a strong rally toward a retest of the 1.5 resistance. However the 1.5 zone is significant moreover the pair has failed to break the resistance for several times before. The pair has currently topped around 1.48 and is showing signs of creating a double top pattern. If this is the case the pair might pull back to gain support around the 1.45-1.46 area. Although this technical adjustments if not likely to signal the end of the overall bullish trend the 1.5 resistance is a good contender to be the top mark for the pair in the near term and a failure to break that level for several times could spark a much more massive bearish adjustment.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By CountingPips.com

A busy news day today was highlighted by the interest rate decisions coming from the Bank of England and the European Central Bank and as widely expected, both central banks held their respective rates steady.

The Bank of England announced the decision to maintain its interest rate at its lowest standing in the bank’s history at 0.50 percent. The BOE had last reduced its interest rate by 50 basis points on March 5th and also cut its rate by the same amount in each of January and February. The notable news from the bank statement today was that its members “voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves” that was first announced on March 5th and that the program will be completed in another month.

The European Central Bank, meanwhile, also held its interest rate today at its lowest standing in the banks history as widely expected.  The ECB last reduced its interest rate by 25 basis points on May 7th to its current level of 1.00 percent. The ECB also had reduced the rate in April by 25 basis points and by 50 basis points in March.

Jean-Claude Trichet, the President of the ECB, commented on the economy and the interest rate in his press conference today saying that, “The current rates remain appropriate. The incoming information and analyses since our last meeting in early September have confirmed our previous assessment. While annual HICP inflation was still slightly negative in September, according to Eurostat’s flash estimate, it is expected to turn positive again in the coming months and to remain at moderately positive rates over the policy-relevant horizon. At the same time, the latest information further supports our view that the euro area economy is stabilising and is expected to recover at a gradual pace.”

Australian employment jumps

Released early today was positive job numbers out of Australia by the Reserve Bank of Australia.  September employment increased by 40,600 workers after a revised  decline of 26,100 workers in August.  This job increase was the largest gain in two years and surpassed forecasts expecting a decline of 10,000 for the month. The unemployment rate fell by 0.1 percent to 5.7 percent.

US Jobless Claims fall

In some positive U.S. news, new weekly jobless claims fell by 33,000 workers in the week ending on October 3rd to a total of 521,000 claims.  This beat forecasts expecting a decline to 541,000 workers after a revised 554,000 workers filed claims the week prior.  The 4-week moving average declined by 9,000 workers to an average of 539,750 workers.

Workers seeking continuing jobless benefits also declined in the week ending September 26th by 72,000 workers.  The 4-week moving average fell by 15,750 to a total of 6,144,250 workers.

US Dollar declines in Fx Trading as Stocks, Oil, Gold rise

The US dollar fell against most of the other major currencies in forex trading today.  The American currency has declined versus the euro, British pound, Canadian dollar, New Zealand dollar, Australian dollar and Swiss franc while increasing versus the Japanese yen at 4:33pm EDT in the US trading session.

The stock markets, meanwhile, gained ground today as the Dow Jones rose by 61.29 points, the Nasdaq increased 13.60 points and the S&P 500 showed a 7.90 point gain. Oil has traded higher by $1.80 to $71.37 while gold rose to a new alltime high above $1,060.00 an ounce before settling in at the $1055.90 per ounce level for a daily gain of $12.60.

AUD/USD Chart – The Australian dollar continuing its ascent versus the US dollar in forex trading as the Aussie reached a new yearly high today at the 0.9090 level.