InvestMacro FX

By Fast Brokers – Gold is beginning to cool down following the amazing gold rush that took place in reaction to the RBA being the first central bank to raise rates following the beginning of the credit crisis.  The AUD/USD took flight after the RBA’s decision in conjunction with much better than expected Aussie employment data.  Breakouts in gold and the AUD/USD spurred a broad-based depreciation of the Dollar, only fueling gold’s bolt towards new record nominal highs.  However, the psychological impact of the RBA’s monetary shock could start to wane since both the ECB and BoE kept their monetary policies unchanged today.  The EUR/USD and GBP/USD still have to deal with a few technical barriers before participating more fully in the broad weakness of the Dollar.  Attention will now turn to Q3 earnings season and the reaction of U.S. equities.  Better than expected Q3 results would likely depreciate the Dollar further and help gold extend its breakout.  Meanwhile, it seems gold will cool and consolidate as investors digest this week’s explosive movements.  Technically speaking, we can’t place a downtrend line yet since we’re dealing with uncharted topside territory.  However, we’ve laid a few downtrend lines to give an idea of support.  It seems the $1050/oz level will play a psychological role for the time being.  Regardless of current weakness, gold’s breakout to record highs sends a message of commitment to a longer-term uptrend in the precious metal.  For the time being investors should keep an eye on the EUR/USD and GBP/USD and their interaction with their respective topside technical barriers should they be reached.

Present Price: $1052.45/oz

Resistances: $1053/oz, $1056.34/oz, $1058.54/oz.

Supports: $1049.24/oz, $1046.55/oz, $1042.63/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 USD/JPY is retrenching above 10/27 and 9/28 lows as gold and the AUD/USD begin to top out.  However, the GBP/USD and EUR/USD are strengthening today, normally a negative catalyst for the USD/JPY.  The USD/JPY appears to be on a path of its own for right now since investors are debating whether to send the currency pair below our 1st tier uptrend line towards a retest of January lows.  Although present consolidation is encouraging and may continue over the immediate-term, the USD/JPY is still stuck in its debilitating downtrend.  Huge breakouts in gold and the AUD/USD are sending a message supporting a broad-based Dollar depreciation over the longer-term.  Though BoJ Minister Fujii reversed his hawkish tone in favor of supporting the Yen should it strengthen to critical levels, we are not sure exactly what levels Fujii is comfortable with.  Therefore, the Yen’s appreciation should continue so long as the BoJ’s future monetary policy remains hazy.  We can tell you that a failure of January lows would send up a red flag and pressure the BoJ to intervene.

Meanwhile, Japan will release Core Machinery Orders data late Thursday EST.  The CMO number will be closely watched since it’s a leading indicator.  A stronger than expected number would likely result in further appreciation of the Yen since it would support Fujii’s hesitance in participating in QE.  A solid number wouldn’t be surprising since Japan’s #1 trading partner, China, continues to experience strong economic growth.  In addition to the CMO number U.S. Q3 earnings will play a large role in determining the near-term path of the Dollar.  Encouraging Q3 results would lead investors away from the Dollar and place further downward pressure on the USD/JPY.  Lastly, the convincing breakouts in gold and the AUD/USD spell a longer-term depreciation of the Dollar.  Hence, there is little reason to change our negative outlook on the USD/JPY trend-wise.

Technically speaking, 10/27 and 9/28 lows should continue to serve as an immediate-term technical cushion.  However, a failure of these lows and our 1st tier uptrend line would ultimately lead to a retest of January lows.  As for the topside, the USD/JPY faces multiple downtrend lines along with 10/7 and 10/5 highs.  Additionally, the psychological 90 level is now working against the USD/JPY.

Present Price: 88.41

Resistances: 88.60, 88.85, 89.20, 89.45, 89.97, 90.30

Supports:  88.25, 87.97, 87.63, 87.12, 86.80, 86.13

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.

By Adam Hewison – There is no doubt about it – gold is getting a lot of press and media attention lately. So the question is, is the move in gold over or is it just beginning?

I don’t believe the move is over on the upside for gold, but in my new two-minute video I’m going to share with you an alternative to gold that should do just as well for many of the same reasons. This is a big liquid market and has great upside potential and is less volatile than gold.

As always, our videos are free to view and do not require any registration. If you think this is an important video, I strongly suggest you share it with your friends and comment about it on our blog.

Watch the New Video Here…

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

By Fast Brokers – The Cable finally decided to participate with the gold rush and broad-based weakness of the Dollar.  The GBP/USD popped above the psychological 1.60 level and 10/6 highs.  However, the Cable is buckling under the pressure of our 3rd tier downtrend line and 9/30 highs.  The GBP/USD finally shook free of its tight and is looking to piece together a more substantial rally than the one we witnessed on 9/30.  A strong movement past our 3rd tier downtrend line would likely yield such an outcome since it runs through 9/01 highs.  The BoE kept its monetary policy unchanged as did the ECB.  Both monetary decisions are in line with analyst expectations and are presently having a limited impact on FX markets.  However, more important will be the press conferences and quotes from BoE and ECB members over the remainder of the week.  Words have moved currencies as much as actions.  Therefore, investors will be looking to see if BoE governor King makes any additional dovish comments as he’s been prone to do.

Britain will be light on the econ data wire until tomorrow’s PPI Input and Trade Balance releases.  Both will be important gauges for future monetary policy.  Weak input prices and a large Trade Balance deficit would only encourage the BoE to maintain a dovish monetary stance to help buoy prices and stimulate external demand for British goods and services.  Therefore, volatility could pick up as the week comes to a close.  FX markets will also be sensitive to Q3 earnings releases.  Strong Q3 earnings would help drive equities hire while weakening the Dollar further, and vice versa.  However, the Pound should remain at a disadvantage regardless of any continued near-term broad based weakness in the Dollar due to the state of Britain’s economy and the comparatively dovish stance of the BoE.

Technically speaking, the GBP/USD faces multiple downtrend lines along with the 9/30 highs.  The Cable’s bounce past 1.60 is the first step to more significant gains, yet the currency pair will need to break through the aforementioned technical barriers before realizing more substantial movements to the topside.  As for the downside, the GBP/USD has cushions in 10/2 and 9/28 lows along with multiple uptrend lines.  Recent strength in the Cable has created some near-term breathing room.  Consecutive higher lows (9/28, 10/2, 10.7) create a strong base for the Cable to fall back on over the near-term.  Therefore, immediate-term movements to the downside should be limited.    However, a failure of these triple lows and our 1st tier uptrend line would heighten near-term losses.  Overall, extraordinary breakouts in gold and the AUD/USD create an environment for a new near-term uptrend line in the Cable.  Therefore, investors should keep a close eye on the Cable’s interaction with our technical barriers over the next 24 hours.

Present Price: 1.6049

Resistances: 1.6072, 1.6095, 1.6127, 1.6145, 1.6168, 1.6191, 1.6211

Supports: 1.6045. 1.6024, 1.5992, 1.5964, 1.5921, 1.5900

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.

Source: ForexYard

The Dollar is down today as investors await policy announcements from the European Central Bank (ECB) and the bank of England (BOE). Although no interest rate changes are expected, investors will be closely watching any accompanying remarks for clues as to the future of their monetary policy as well as exit strategies. U.S Unemployment Claims are also expected to be released today at 12:30 GMT as well as a testimony by Ben Bernanke at 11:00 GMT.

Economic News

USD – Dollar Falls toward 2-Week Low on Signs of Global Recovery

The U.S. currency weakened against 15 of its 16 most-traded counterparts as Asian stocks advanced and on expectations the European Central Bank (ECB) today will refrain from lowering interest rates amid signs the global economy is recovering.
The USD dropped toward a 2 week low against the EUR as signs the global economy is rebounding spurred demand for higher-yielding assets.

The greenback traded at $1.4753 against the EUR from $1.4691 yesterday. The U.S. currency depreciated earlier this week on concern the Federal Reserve will be slower to raise Interest Rates than policy makers in other nations. The Federal Reserve may start raising its benchmark rate in the 3rd quarter of 2010, according to analysts’ forecasts. Expectations that U.S. Interest rates will stay low as the economy tries to pull out of recession mean the Dollar could be the funding currency of choice for carry trades.

The decline in the U.S. Dollar is closely linked to the Federal Reserve’s unprecedented efforts to lift the U.S. economy out of the worst recession since the Great Depression. With its target Interest Rate near zero percent and the combination of fiscal stimulus and special Fed lending programs pumping trillions of Dollars into the U.S. economy, the U.S. government is effectively printing more U.S. Dollars. And as a result investors are wary of keeping too large a portion of their assets in U.S Dollars.

EUR – EUR Gains Broadly Ahead of Rates Decision

The EUR gained against the U.S dollar Thursday before a report forecast to show German industrial output rose for a second month, boosting demand for higher-yielding assets. The British pound dropped for a 5th day against the U.S Dollar, falling to $1.5891, from $1.5922, and leaving it 2.8% weaker against the U.S. currency in the past month.

Traders’ attention Thursday will be turned to the ECB and the Bank of England’s meeting. The ECB is fully expected to leave rates unchanged at a record low 1.0% on Thursday; having given few hints yet it is preparing to end some of its ultra-loose policy measures. The Bank of England meets the same day and is also set to hold rates at a record low 0.5%, while a majority of economists believe it has allocated all it intends to under its quantitative easing program.

JPY – Yen Touches 8-month High vs. Dollar

The Japanese Yen rose versus all 16 major currencies on speculation foreign investors will buy Japanese equities. The Yen rose to the highest level in more than a week against the U.S Dollar on speculation foreign investors will buy into a share sale by Nomura Holdings Inc., Japan’s biggest brokerage.

Traders said the JPY gained as market players tried to trigger stop-loss levels in major Yen pairs and as some Japanese retail investors were forced to sell currencies against the Yen. But further buying faltered as traders were wary of pushing the Dollar/Yen pair below 88 Yen, where large stop-loss sales lurked.

A strong Yen has raised worries for Japanese exporters and the economy because it makes their products more expensive for foreign buyers while cutting into profits generated overseas. Earlier, Japanese investors and exporters were heavy sellers of the Dollar/Yen cross following the report.

Crude Oil – Oil Rebounds above $70 on Weak U.S Dollar

Crude Oil rose as the U.S Dollar weakened against the EUR and a government report showed an unexpected drop in U.S. crude supplies, boosting optimism about a demand recovery in the biggest energy-consuming nation. The Energy Information Administration reported gasoline stocks leapt 2.9 million barrels last week, nearly three times the build that analysts had expected.

Crude prices rebounded above $70 a barrel on Thursday, clawing back some of the previous session’s losses, amid the market’s exuberance over a global economic recovery getting underway, while a weak U.S. Dollar also lent support.

Technical News

EUR/USD

After the pairs bullish run some bearish correction may be expected today as a bearish cross is evident on the 2 hour MACD as well as the Slow Stochastic chart and with the hourly RSI floating in the overbought territory on the hourly chart.

GBP/USD

A fresh bearish cross is evident on the 2 hour Slow Stochastic chart as well as the MACD; an impending bearish cross is also seen on the 4 hour Slow stochastic. The daily chart, however, shows a fresh bullish cross on the MACD. Going long with tight stops might be a good option today.

USD/JPY

A bullish correction may be expected for the pair after its recent bearish trend with the 2 hour and daily MACD sowing a fresh bearish cross and with the hourly and 4 hour and daily RSI floating in the oversold territory.

USD/CHF

The 2 hour, 4 hour and daily MACD are showing a fresh bullish cross as well as the 2 hour and daily Slow Stochastic. Furthermore the hourly RSI is floating in the oversold territory. Going long for today may be advised.

The Wild Card – Gold

Gold’s recent record breaking bullish run may experience some downward correcting today. A breach of the upper level of the Bollinger Bands is evident on the hourly, 2 hour and daily charts. Furthermore, a fresh bearish cross is evident on the hourly, 2 hour and daily Slow Stochastic chart, with the RSI floating in the overbought territory on the hourly and 4 hour charts. Forex traders involved in the commodities market will not want to miss out on the downward movement that this commodity is expecting.

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 Home Loans falling -0.6%

Australian Investment Lending rise 7.6%

Japanese leading Economic leading Index in line with expectations at 83.3

Japanese adjusted current account at ¥1233.5B

Japanese trade balance at ¥303.7B

Europe

Swiss unemployment as expected at 4.1%

EU GDP falling -0.2% QoQ versus a -0.1% consensus

UK BRC shop price index flat MoM

German factory orders rising 1.4% MoM surprising for the better

Americas

EIA Crude Oil Stocks change at -1M barrels

US Consumer credit disappointing with a -$12B fall

The Overall Sentiment

Sentiment was rather mixed with most major indexes closing flat in response to relative disappointing economic data and profit taking which weighed on markets. In Europe EU GDP fell -0.2% QoQ slightly more than the -0.1% expected, German factory orders surprised modestly for the better rising 1.4% MoM versus 1.2% and in Switzerland unemployment was in line with surveys standing at 4.1%.Moving to the US consumer credit fell more than expected falling -$12B in August, suggesting US consumption and credit is still at subdued levels. The FX sentiment was largely counter dollar despite a mixed picture in equities, the Euro moved back above the 1.47$, sterling advanced close to the 1.6$ area and the Yen retested 88 support. In the commodities arena metals again took the lead with strong gains for Gold and silver as concerns over dollar weakness continued to mount. Gold reached an historic record for the third day in a row settling around 1050$ and silver edged close to 18$ an ounce. Oil on the other hand retraced to the 70$ zone with investors largely ignoring the fall in Crude oil stocks released by EIA as EIA figures also pointed gasoline supplies climbed and refineries production rose suggesting petroleum market might be over supplied.

The Day Ahead

At the opening of the Asia session the better than expected Australian unemployment figure pointing a surprise decline of 0.1% to 5.7% from a month before, against an expected expansion by markets, could provide bullish support for the Aussie versus the Dollar and the Yen and push Australian equities to the green. In the US initial Jobless claims will gather some attention However the main “course” of the Day will be the rate decision by the ECB, the BoE and the speeches by the two major central bankers Jean Claude Trichet and Fed chairman Ben Bernanke. Although key rates are expected to be left unchanged market eyes will focus on exit strategies by the three major banks with the Australian surprise rate hike at the beginning of the week raising the question of when will the central bankers begin tightening monetary policy and move rates to a normalized level. Any suggestion of an exit strategy or a rate hike by either of the three has the potential to swing markets strongly with the Dollar play at the centre.

Technical Analysis

AUD/USD

The pair has reached the 14 month record trading slightly above the 0.90 area. Although the major bullish trend is rather strong the swift move towards the 0.90 hovering the higher end of the Bollinger bands, and the fact the stochastic indicator readings is above 90 might suggest the pair is in for some profit taking ahead of reaching the 0.92 area. The 0.87-0.88 price level is in line with the bullish trend line and could provide a good buying opportunity for the Aussie bulls in case of a dip. A break of the 0.87 level downwards will point the 0.85 as the next 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.

By CountingPips.com

The Eurozone saw a further contraction of its economy in the second quarter of this year according to a final estimate by Eurostat released today. The 16-nation eurozone gross domestic product declined by 0.2 percent in the April to June quarter of 2009 following a GDP contraction of 2.5 percent in the first quarter. The contraction in GDP surpassed the earlier preliminary release that had put the decline at 0.1 percent for the second quarter. Market forecasts were also looking for a 0.1 percent delcine for the quarter. The Eurozone has now had five straight quarters of GDP decline and is in the first recession on record for the euro area.

On an annual basis, the eurozone economy declined by 4.8 percent over last year’s second quarter following the 1st quarter’s annual contraction of 4.9 percent. Economic forecasts were looking for an annual decrease of 4.7 percent.

Household consumption bounced back in the second quarter with an increase of 0.1 percent after decline by 0.5 percent for two quarters in a row while government spending also rose in the second quarter to 0.7 percent from a 0.6 percent in the first quarter. Exports registered a 1.5 percent decline in the second quarter after a 9.2 percent fall in the first quarter while imports fell by 2.9 percent in the second quarter compared with a 7.9 percent decrease in the first quarter.

Germany, the eurozone’s largest economy, emerged out of recession in the second quarter with a GDP gain of 0.3 percent following a GDP decline of 3.5 percent in the first quarter. France, the eurozone’s 2nd largest economy, also came out of recession as their economy grew in the second quarter by 0.3 percent after a decline of 1.4 percent in the first quarter.  Other EU16 countries showing a positive GDP in the quarter were Greece, Poland, Portugal, Slovenia and Slovakia.

By Adam Hewison – In our previous gold video, we were right in terms of gold making a low around the first of October.

The gold market finally moved into new high ground and confirmed that a major up-move is now underway. In this new short video on gold, we scope out some upside target levels and also some time frames where we see gold heading.

At the end of my new video on gold I’m offering a special bonus to everyone who views the video. I believe the bonus will allow you to become a better trader and catch this move in gold.

Watch the New Video Here…

As always our videos are free to view and do not require any registration. If you think this is an important video, I strongly suggest you share it with your friends and comment about it on our blog.

All the best,
Adam Hewison
President of INO.com
Co-creator of MarketClub.com

Source: ForexYard

With the US Dollar’s future feeling uncertain, attention seems to have turned towards Crude Oil following speculation that the Gulf States recently discussed dropping the USD for oil trading in exchange for a basket of currencies. While the rumor was denied later by Gulf State leaders and foreign ministers, the impact created a moment for pause in the market. As a result, many are now focusing their attention on today’s Crude Oil Inventories report to find out where the relative level of demand for the commodity currently stands to gauge if these rumors have any substance behind them.

Economic News

USD – Dollar Falls on Increased Risk Appetite

The US Dollar fell against most of its major currency pairs yesterday on a media report, later denied, that Gulf Arab states were in talks to abandon the Dollar in oil trading. By yesterday’s close, the Dollar had fallen 0.5% against the JPY to 88.70, nearing an 8-month low hit last week. The greenback experienced similar behavior against the EUR and closed at 1.4723.

A rise in equity and commodity prices on the back of strong U.S. data also drove investors from the U.S. Dollar and into perceived riskier assets.

The buck had already been under pressure on expectations the U.S. Federal Reserve would not rush to raise its interest rates and on the growing view that the greenback has become a funding currency for carry trades. In addition, analysts attributed the fall in the Dollar, which has been treated as a lower risk, safe-haven investment, to growing optimism that the worst of the financial crisis has passed. This has caused investors to buy commodity-linked and higher-yielding currencies, which rallied earlier this week.

Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the Crude Oil Inventories report at 14:30 GMT. Traders will be paying close attention to today’s announcement as it has the potential to impact the price of oil, and thus the USD, in today’s trading.

EUR – EUR Rises on Weaker Dollar

The EUR finished yesterday’s trading session with mixed results versus the major currencies. The 16-nation currency extended gains versus the U.S. Dollar on Tuesday, to trade above $1.4720 amid a broad sell-off in the greenback. The EUR did see bearishness as well as it lost 50 points against the JPY and closed at 130.54.

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

The Pound Sterling hit a one-week low against the EUR yesterday after an unexpected fall in UK manufacturing output raised doubts about the economy’s recovery prospects. British manufacturing output fell 1.9% on the month in August — the steepest fall since January — and compared with July’s downwardly revised rise of 0.7%.

Looking ahead to today, the most important economic indicator scheduled to be released from Euro-Zone is German Factory Orders at 10:00 GMT. Analysts are forecasting this figure to decrease from its previous reading. Traders will be paying close attention to today’s announcement as a better than expected result may continue to boost the EUR in today’s trading.

JPY – Yen Continues its Bullishness against Major Currencies

The Japanese Yen strengthened against most of its major counterparts yesterday, continuing to prove that for the time being this is the solid currency that traders can rely on to provide them with steady profits. The Yen extended gains versus the Dollar on Tuesday, to trade at about 89.40 amid a broad sell-off in the USD. The JPY also saw bullishness against the EUR and closed at 130.60.

The yen gained against the Dollar after Japanese Finance Minister Hirohisa Fujii said that he told officials from the Group of Seven (G7) nations in Istanbul last weekend that governments shouldn’t pursue policies that seek to devalue their currencies.

Further strengthening could be seen in the Yen if other nations begin to raise interest rates in order to ward off inflation. This could potentially wreak havoc on the Japanese economy by making Japanese exports relatively more expensive compared to their foreign counterparts. The yen has gained 14% against the Dollar in the past year, hurting earnings for export-dependent Japanese companies.

Crude Oil – Crude Oil Inventories Data to Drive Oil Trading Today

Crude Oil prices experienced another day of appreciation as the oft-traded commodity rose above $71 a barrel during yesterday’s trading session. Crude Oil prices rose yesterday as traders took their cue from the weak US Dollar, hit by a report that Gulf States considered dropping the greenback for oil transactions.

Oil and other commodities denominated in dollars for global trading tend to rise when the U.S. currency falls as they become cheaper for holders of other currencies. A move away from Dollar-based pricing of the world’s leading commodity could further weaken the greenback.

As for today, traders should pay attention to the U.S Crude Oil Inventories report scheduled, as it tends to have a large impact on Crude Oil’s prices, especially in the short-term.

Technical News

EUR/USD

The price has been floating in the over-bought territory on the 4-hour RSI for some time now, but appears to be cascading downward back into neutral territory. This suggests that the momentum has turned for the time being and traders may see some bearishness later today. The impending bearish cross on the daily Slow Stochastic supports this notion. Going short appears to be today’s preferable strategy.

GBP/USD

There seems to be what looks like a bullish cross on the 4-hour Slow Stochastic, suggesting an impending bullish correction. As the price sits just above the over-sold territory on the daily RSI, there may indeed be a hint of upward pressure. Going long might not be a bad tactic today.

USD/JPY

The price of this pair has recently entered the over-sold territory on the 4-hour RSI, suggesting upward pressure. The series of bullish crosses on the daily MACD strong support the notion of an imminent upward move. Going long on this pair could turn out to be a wise decision today.

USD/CHF

This pair seems to be giving off mixed signals. The price is floating in the over-bought territory on the hourly RSI; however, the bullish crosses on the daily Slow Stochastic, as well as the hourly and 4-hour MACD suggest upward momentum. This indicates range-trading price behavior. The pair may see a small downward move in the nearest time-frame, but the overall trend right now is bullish. Going long with wider stops, to allow for the fluctuation of the trend, may be a good choice today.

The Wild Card – Gold

The recent upward movement of this commodity’s price has pushed its technical indicators into a corrective posture. The 4-hour and daily Slow Stochastic are showing bearish crosses and the 4-hour RSI has the price floating near the highest level of the over-bought territory, suggesting very strong downward pressure. Forex traders involved in the commodities market will not want to miss out on the apparently obvious downward movement that this commodity is expecting!

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.

The Rally Continues, Gold Comes Back Into Focus

Numerous events had an effect on yesterday’s session, driving Wall Street and the major currency pairs higher. The Bank of Australia surprised the markets, increasing their central rate from 3% to 3.25%. Gold jumped above the $1000 mark and rumors that the Dollar might lose its status as a major currency in the oil trade, helped to push the indices higher.  The S&P500 closed the session with a gain of 1.37%, while the Nasdaq finished higher by 1.77%.

The trading day started on a positive note, as the RBA mentioned that they expect the Australian economy to return to a normal state during 2010. The bank took certain measures against future inflation, raising their central bank rate.  The RBA finished their speech by mentioning that with inflation now around stable levels and growth likely to be close to trend over the year ahead, they feel that it is now time to start to remove the stimulus provided by monetary policy from the markets.

Even though all the Australian Dollar crosses felt an impact from the bank’s decision the AUD/USD showed the most movement, continuing higher within its recent trend. After bouncing off trend line support last week, the AUD/USD climbed during yesterday’s session reaching the middle of its current channel.

Gold Climbs to new Levels.

The buzz of the day was Gold, reaching an intraday high of $1042.32. Already during mid-day, European hours, this hot commodity broke its prior minor range and headed higher. Within a matter of a couple of hours, Gold broke all resistance levels and climbed higher. Gold finished the day around its highs and held at $1040 during the overnight session.

From a technical point of view Gold has now breached its prior high formed in early 2008. When taking a glance at the weekly chart below one can see that even though this commodity is trading around high levels, indicators aren’t yet pointing yet to an overbought situation. According to some analysts including J.P Morgan, Gold could see higher levels in months to come due to the current situation. With the Fed expected to keep interest rates at low levels, investors are now heading out of the U.S Dollar, rushing to counterparts, which include Gold.

Market Data to Watch Out For

Looking forward, today’s session will be characterized by investors preparing for tomorrow’s interest rate decision. Even though the markets are expecting a ‘no change’ statement from both the banks, recent actions by the RBA have shocked traders, showing them that anything can happen.

GDP is scheduled to be released shortly in Europe and is expected to show a -0.1% figure. In addition, Australia will continue to shake the market, releasing their employment figures later on during the trading day.

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.