Today's Market Update London Session Published: October 30, 2009 7:01 AM
It is undoubtedly a good thing that the US economy pulled itself out of recession in the third quarter but market pricing this morning reflects only cautious optimism. While stocks in Asian hours had the added benefit of some good corporate earnings, EUR/USD remains below yesterday's best levels and the EUR has failed to gain vs the JPY. The failure of yesterday's 'better than expected' US GDP report to prompt a rally in risk reflects the support provided in Q3 by government spending and widening doubts as to how well the global economy will perform once fiscal and monetary supports are withdrawn.
Yesterday the Fed ended its USD300 bln Treasury purchases program, though it will continue to buy mortgage back securities. Yesterday also brought comments from the ECB's Weber that the ECB may not continue with its 12 mth auctions into next year, though there is one more scheduled for this year. Providing funds in the money market has been the mainstay of the ECB's extraordinary monetary policy reactions to the financial crisis. This morning the BoJ announced that it will stop buying corporate bonds by the end of the year even though it also forecast that deflationary pressures could last into 2011. Even though there are many signs that the banking system is healing, rising unemployment levels, downward pressure on real wages and an absence of inflation remain as very clear reminders of the sickness still suffered by many to the world's major economies. The withdrawal of bond purchasing plans and the eventually reversal of these programs will at some point pressure long term interest rates higher at a time when the reigning in of fiscal incentives is set to leave the consumer worse off. This backdrop provides compelling support for the persistence of low interest rates from the Fed, ECB, BoJ and the BoE for many months yet. It also supports the view that the rally in risk that has been in evidence since the spring could adopt a shallower trajectory going forward.
Comments from Japanese PM Hatoyama that he cannot be optimistic about the economy despite the BoJ's decision to end its bond buying program reflect a consensus view. This morning's slew of Japanese economic data provided confirmation of deflationary pressures with CPI falling -2.2% y/y in Sep. That said, the surprise fall in the Japanese Sep jobless rate to 5.3% provided a glimmer of light. UK data this morning were mixed to better. Gfk consumer confidence rose more than expected to -13 in Oct from -16 in Sep while the Nationwide house price index rose by +0.4% m/m. This was less than expected however, which prompted fears that the nascent recovery in the UK housing market may already be faltering. EUR/GBP has pushed moderately higher towards 0.8990. Cable is little changed from last night's close.
The AUD has recouped its overnight losses encouraged by the better tone of stocks, but as European stocks lose their footing into the US open, AUD/USD recovery has also stalled.
This afternoon Canadian Aug GDP is due. US data include Sep personal spending, the ECI, Oct Chicago PMI and the University of Michigan confidence index.
Yesterday the Fed ended its USD300 bln Treasury purchases program, though it will continue to buy mortgage back securities. Yesterday also brought comments from the ECB's Weber that the ECB may not continue with its 12 mth auctions into next year, though there is one more scheduled for this year. Providing funds in the money market has been the mainstay of the ECB's extraordinary monetary policy reactions to the financial crisis. This morning the BoJ announced that it will stop buying corporate bonds by the end of the year even though it also forecast that deflationary pressures could last into 2011. Even though there are many signs that the banking system is healing, rising unemployment levels, downward pressure on real wages and an absence of inflation remain as very clear reminders of the sickness still suffered by many to the world's major economies. The withdrawal of bond purchasing plans and the eventually reversal of these programs will at some point pressure long term interest rates higher at a time when the reigning in of fiscal incentives is set to leave the consumer worse off. This backdrop provides compelling support for the persistence of low interest rates from the Fed, ECB, BoJ and the BoE for many months yet. It also supports the view that the rally in risk that has been in evidence since the spring could adopt a shallower trajectory going forward.
Comments from Japanese PM Hatoyama that he cannot be optimistic about the economy despite the BoJ's decision to end its bond buying program reflect a consensus view. This morning's slew of Japanese economic data provided confirmation of deflationary pressures with CPI falling -2.2% y/y in Sep. That said, the surprise fall in the Japanese Sep jobless rate to 5.3% provided a glimmer of light. UK data this morning were mixed to better. Gfk consumer confidence rose more than expected to -13 in Oct from -16 in Sep while the Nationwide house price index rose by +0.4% m/m. This was less than expected however, which prompted fears that the nascent recovery in the UK housing market may already be faltering. EUR/GBP has pushed moderately higher towards 0.8990. Cable is little changed from last night's close.
The AUD has recouped its overnight losses encouraged by the better tone of stocks, but as European stocks lose their footing into the US open, AUD/USD recovery has also stalled.
This afternoon Canadian Aug GDP is due. US data include Sep personal spending, the ECI, Oct Chicago PMI and the University of Michigan confidence index.
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.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4815 1.6120 90.15 1.0405 0.9130 0.9280
1.4785 1.6090 89.85 1.0375 0.9100 0.9255
1.4755 1.6060 89.55 1.0345 0.9070 0.9220
Support 1.4690 1.6000 88.90 1.0280 0.9005 0.9155
1.4660 1.5970 88.60 1.0310 0.8975 0.9125
1.4630 1.5940 88.30 1.0340 0.8945 0.9090
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.
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.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4815 1.6120 90.15 1.0405 0.9130 0.9280
1.4785 1.6090 89.85 1.0375 0.9100 0.9255
1.4755 1.6060 89.55 1.0345 0.9070 0.9220
Support 1.4690 1.6000 88.90 1.0280 0.9005 0.9155
1.4660 1.5970 88.60 1.0310 0.8975 0.9125
1.4630 1.5940 88.30 1.0340 0.8945 0.9090
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.
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.
ERU – 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.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4845 1.6095 89.00 1.0355 0.9115 0.9295
1.4825 1.6075 88.80 1.0335 0.9095 0.9275
1.4795 1.6045 88.50 1.0305 0.9065 0.9245
Support 1.4735 1.5985 87.90 1.0245 0.9005 0.9185
1.4705 1.5955 87.60 1.0215 0.8975 0.9155
1.4685 1.5935 87.40 1.0195 0.8955 0.9135
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.
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.
ERU – 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.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4845 1.6095 89.00 1.0355 0.9115 0.9295
1.4825 1.6075 88.80 1.0335 0.9095 0.9275
1.4795 1.6045 88.50 1.0305 0.9065 0.9245
Support 1.4735 1.5985 87.90 1.0245 0.9005 0.9185
1.4705 1.5955 87.60 1.0215 0.8975 0.9155
1.4685 1.5935 87.40 1.0195 0.8955 0.9135
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.
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.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4800 1.5985 89.30 1.0350 0.9000 0.9350
1.4775 1.5950 89.00 1.0325 0.8975 0.9325
1.4750 1.5915 88.80 1.0300 0.8950 0.9300
Support 1.4675 1.5840 88.25 1.0250 0.8885 0.9225
1.4650 1.5815 88.00 1.0225 0.8845 0.9200
1.4625 1.5795 87.70 1.0200 0.8810 0.9175
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!
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.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4800 1.5985 89.30 1.0350 0.9000 0.9350
1.4775 1.5950 89.00 1.0325 0.8975 0.9325
1.4750 1.5915 88.80 1.0300 0.8950 0.9300
Support 1.4675 1.5840 88.25 1.0250 0.8885 0.9225
1.4650 1.5815 88.00 1.0225 0.8845 0.9200
1.4625 1.5795 87.70 1.0200 0.8810 0.9175
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!
USD – USD Declines against Major Rivals as Equities Rise
The Dollar declined against most major counterparts Monday after some optimistic economic data pushed investors to move back into stocks and other risky assets. The USD declined against the EUR as stocks rose and a report showed U.S. service industries grew. The Dollar fell to $1.4691 per EUR from $1.4648 in New York yesterday. The Dollar declined to 89.02 Yen from 89.53 Monday.
The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90% of the US economy, rose to 50.9 from 48.4 in August. 50 is the dividing line between expansion and contraction, meaning the index is showing expansion for the first month since 2007. The positive report helped lessen the bitterness from Friday’s Employment reports and, along with several recommendations by Goldman Sachs, has helped boost equity markets which weighed on the Dollar.
Investors will keep a close watch on the U.S. weekly retail sales data, the EIA energy outlook for October and the U.S. API weekly crude stocks report to uncover more clues about the USD movement.
EUR – EUR boosted by Growth in Manufacturing and Services
The EUR received a boost Monday by a report that stated that Europe’s manufacturing and services industries grew more than initially estimated. The EUR bought $1.4657, up from $1.4576 on Friday. The common currency traded at 130.79 Yen from 131.15 Yen. The British Pound traded at $1.5942, down about 0.1% from late Friday while the EUR rose 0.7% to 91.96 pence.
Europe’s manufacturing and service industries expanded in September for a second month, rising to 51.1, from 50.4 in the previous month. The EUR was also boosted by Ireland’s overwhelming approval of an agreement to overhaul the European Union’s decision-making process in Friday’s referendum.
Today traders will be focusing on the GBP with the release of the Halifax HPI at 8:00 GMT and the Manufacturing Production at 8:30 GMT. Better than expected results might provide a much needed boost for the Pound.
JPY – Yen Drops on Comments by Finance Minister Fujii
The Japanese yen retreated earlier against most of its major counterparts after Japan’s Finance Minister Hirohisa Fujii issued a warning that his nation is open to intervening in the currency market. The Yen traded at 131.14 per EUR, following a 0.2% decline. Japan’s currency was 89.53 per USD, after appreciating 0.3%.
Fujii’s position changed since his initial remarks when he took office in September. He previously opposed intervention in the foreign exchange markets in order to artificially weaken the Yen. However, the currency’s appreciation last week to an eight-month high of 88.24 against the Dollar began threatening exporters’ profits and thus Japan’s economic recovery. Since Japan is highly dependent on exports, a strong currency makes its exports too expensive and erodes any profit from an increase in trade.
With a light news day today with no news releases from Japan, U.S or Euro-Zone, Yen’s levels will likely be determined by equity movements as well as investors’ risk appetite.
Oil – Oil above $70 a Barrel
Crude Oil futures ended above $70 a barrel Monday, after an optimistic survey of the U.S. services sector reignited hopes for economic recovery. Crude Oil prices were also boosted by a rally in equities. Oil for November delivery climbed 46 cents to settle at $70.41 a barrel Monday. Futures have traded between $65.05 and $75 since Aug. 1.
Also helping Crude was the U.S. Dollar’s decline against most major currency counterparts after finance ministers from the Group 7 nations made no specific mention of the currency in a communiqu? at their weekend meeting, disregarding its weakening status.
Along with Dollar levels, traders should also pay attention to third-quarter company earnings reports which will begin to be published this week since Oil levels are highly correlated with equity movements.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4815 1.6125 90.00 1.0360 0.8940 0.9302
1.4765 1.6075 89.75 1.0340 0.8920 0.9260
1.4735 1.6025 89.50 1.0310 0.8890 0.9230
Support 1.4650 1.5900 88.60 1.0250 0.8800 0.9160
1.4600 1.5845 88.25 1.0220 0.8755 0.9120
1.4565 1.5800 88.00 1.0190 0.8720 0.9080
Technical News
EUR/USD
The bullish trend continues with plenty of steam as the pair now trades around 1.4700. The Slow Stochastic of the hourlies indicates that there is still more room to run. The next target price might be 1.4765. Going long with tight stops seems like the right choice today.
GBP/USD
This pair is in the midst of a narrowing upward channel and is now floating in the middle of it. The hourlies are showing mixed signals with its RSI floating in neutral territory. However, the Slow Stochastic of the daily chart is showing quite a strong bullish momentum, and the RSI confirms that the direction is indeed up. All indications are that there is more room for further upward movement and the preferable strategy today will be to go long on dips.
USD/JPY
There is a very accurate bearish channel forming on the daily chart, as the pair is now floating in the middle of it. A bearish cross on the 4-hour chart’s Slow Stochastic is also suggesting that the bearish move has more steam in it. This might be a good opportunity for forex traders to join a very promising trend.
USD/CHF
The pair is in the middle of a very intensive downtrend that still shows great momentum and on a bigger scale appears to have more room to run. The hourly chart is showing a strong bearish cross, and the 4-hour chart is also joining to that notion with the Slow Stochastic pointing to the continuation of the bearish movement. Being on the sell side appears to be the right choice today.
The Wild Card
Oil
This commodity has been on a sharp upward movement over the last day and this bullish correction is likely to stick around in the near future. All charts are still providing a mild bullish signal; however, there may be short-term corrections during this uptrend. Therefore, forex traders can maximize profits by buying on lows and taking advantage of this bullish trend.
The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90% of the US economy, rose to 50.9 from 48.4 in August. 50 is the dividing line between expansion and contraction, meaning the index is showing expansion for the first month since 2007. The positive report helped lessen the bitterness from Friday’s Employment reports and, along with several recommendations by Goldman Sachs, has helped boost equity markets which weighed on the Dollar.
Investors will keep a close watch on the U.S. weekly retail sales data, the EIA energy outlook for October and the U.S. API weekly crude stocks report to uncover more clues about the USD movement.
EUR – EUR boosted by Growth in Manufacturing and Services
The EUR received a boost Monday by a report that stated that Europe’s manufacturing and services industries grew more than initially estimated. The EUR bought $1.4657, up from $1.4576 on Friday. The common currency traded at 130.79 Yen from 131.15 Yen. The British Pound traded at $1.5942, down about 0.1% from late Friday while the EUR rose 0.7% to 91.96 pence.
Europe’s manufacturing and service industries expanded in September for a second month, rising to 51.1, from 50.4 in the previous month. The EUR was also boosted by Ireland’s overwhelming approval of an agreement to overhaul the European Union’s decision-making process in Friday’s referendum.
Today traders will be focusing on the GBP with the release of the Halifax HPI at 8:00 GMT and the Manufacturing Production at 8:30 GMT. Better than expected results might provide a much needed boost for the Pound.
JPY – Yen Drops on Comments by Finance Minister Fujii
The Japanese yen retreated earlier against most of its major counterparts after Japan’s Finance Minister Hirohisa Fujii issued a warning that his nation is open to intervening in the currency market. The Yen traded at 131.14 per EUR, following a 0.2% decline. Japan’s currency was 89.53 per USD, after appreciating 0.3%.
Fujii’s position changed since his initial remarks when he took office in September. He previously opposed intervention in the foreign exchange markets in order to artificially weaken the Yen. However, the currency’s appreciation last week to an eight-month high of 88.24 against the Dollar began threatening exporters’ profits and thus Japan’s economic recovery. Since Japan is highly dependent on exports, a strong currency makes its exports too expensive and erodes any profit from an increase in trade.
With a light news day today with no news releases from Japan, U.S or Euro-Zone, Yen’s levels will likely be determined by equity movements as well as investors’ risk appetite.
Oil – Oil above $70 a Barrel
Crude Oil futures ended above $70 a barrel Monday, after an optimistic survey of the U.S. services sector reignited hopes for economic recovery. Crude Oil prices were also boosted by a rally in equities. Oil for November delivery climbed 46 cents to settle at $70.41 a barrel Monday. Futures have traded between $65.05 and $75 since Aug. 1.
Also helping Crude was the U.S. Dollar’s decline against most major currency counterparts after finance ministers from the Group 7 nations made no specific mention of the currency in a communiqu? at their weekend meeting, disregarding its weakening status.
Along with Dollar levels, traders should also pay attention to third-quarter company earnings reports which will begin to be published this week since Oil levels are highly correlated with equity movements.
EUR/USD GBP/USD USD/JPY USD/CHF AUD/USD EUR/GBP
Daily Trend
Weekly Trend
Resistance 1.4815 1.6125 90.00 1.0360 0.8940 0.9302
1.4765 1.6075 89.75 1.0340 0.8920 0.9260
1.4735 1.6025 89.50 1.0310 0.8890 0.9230
Support 1.4650 1.5900 88.60 1.0250 0.8800 0.9160
1.4600 1.5845 88.25 1.0220 0.8755 0.9120
1.4565 1.5800 88.00 1.0190 0.8720 0.9080
Technical News
EUR/USD
The bullish trend continues with plenty of steam as the pair now trades around 1.4700. The Slow Stochastic of the hourlies indicates that there is still more room to run. The next target price might be 1.4765. Going long with tight stops seems like the right choice today.
GBP/USD
This pair is in the midst of a narrowing upward channel and is now floating in the middle of it. The hourlies are showing mixed signals with its RSI floating in neutral territory. However, the Slow Stochastic of the daily chart is showing quite a strong bullish momentum, and the RSI confirms that the direction is indeed up. All indications are that there is more room for further upward movement and the preferable strategy today will be to go long on dips.
USD/JPY
There is a very accurate bearish channel forming on the daily chart, as the pair is now floating in the middle of it. A bearish cross on the 4-hour chart’s Slow Stochastic is also suggesting that the bearish move has more steam in it. This might be a good opportunity for forex traders to join a very promising trend.
USD/CHF
The pair is in the middle of a very intensive downtrend that still shows great momentum and on a bigger scale appears to have more room to run. The hourly chart is showing a strong bearish cross, and the 4-hour chart is also joining to that notion with the Slow Stochastic pointing to the continuation of the bearish movement. Being on the sell side appears to be the right choice today.
The Wild Card
Oil
This commodity has been on a sharp upward movement over the last day and this bullish correction is likely to stick around in the near future. All charts are still providing a mild bullish signal; however, there may be short-term corrections during this uptrend. Therefore, forex traders can maximize profits by buying on lows and taking advantage of this bullish trend.